2/23/23 – Issue 8.06 – Your weekly news on all things board. 

As we approach the three-year anniversary of the COVID lockdown, there’s no doubt things have changed…permanently. Many companies think about getting “back to normal” in an office, but there’s a new normal. Calls for a four-day workweek are everywhere, and Amazon employees are pushing back hard against going back to the office. Even executives want to work differently, on a fractional basis. And the data doesn’t lie. In England, revenue stayed the same or grew while workers switched to four days a week. 

We’re not saying everyone should work four days a week, or CEOs should be part time. But don’t be the last to notice when “normal” isn’t normal any more. Observe. Listen. And work closely with the CEO to ensure that the company’s culture aligns with what’s best for the organization, not what fits someone’s idea of the status quo.

In other news, how to manage third-party risk; governance in the age of AI; Deutsche Bank’s board gets a big shakeup; and one of the most prominent women in Silicon Valley is stepping down. 

In the Spotlight

Introducing the Part-Time Executive

"Fractional executives” are a growing trend, and they’re shaking up the C-suite as we know it.  

“Will the future C-suite look more like the gig economy? Part-time executive jobs are on the rise…Fractional executives—usually with long experience in their fields—typically work with two or more clients at a time, often in positions such as chief financial officer or CMO. The part-time leadership positions take advantage of their expertise but avoid the 24/7 pressures of the typical executive role, giving seasoned professionals more autonomy in their lives.” THE WALL STREET JOURNAL

Are We Ready for the Four-Day Work Week?
In Britain, a trial for the four-day work week is seeing success. Will it start to take hold in the U.S.? 

“A trial of a four-day workweek in Britain, billed as the world’s largest, has found that an overwhelming majority of the 61 companies that participated from June to December will keep going with the shorter hours and that most employees were less stressed and had better work-life balance. That was all while companies reported revenue largely stayed the same during the trial period last year and even grew compared with the same six months a year earlier.” LOS ANGELES TIMES

Amazon Employees Resist the Return to Office
Thousands join an internal Slack channel and sign petitions demanding the right to work where they want. 

“Amazon employees on Tuesday continued to sound off about CEO Andy Jassy’s recently announced return-to-office mandate, including spamming an internal website with messages conveying their opposition to the new policy. A group of tech workers created a Slack channel and drafted an internal petition pushing back on the mandate, which requires them to be back in the office at least three days a week beginning May 1…The group has since amassed 16,000 members, and about 5,000 employees have signed the petition as of Tuesday night.” CNBC

From Boardspan this Week:

How Boards Set the Tone for the Organization

A strong corporate culture reinforces values critical to a company’s success. And boards help set the tone. This Boardspan Library piece looks at how to understand and oversee culture. 

“Board directors tend to underestimate the importance of corporate culture when they should see it as among their top governance imperatives. Culture is inextricably linked with strategy and risk, and it can be an organization’s biggest asset or its greatest liability. Yet, recent studies indicate that more than 80 percent of directors don’t have a firm grasp on the culture that exists in the organizations they serve. Most directors would be hard pressed to define corporate culture, and those that can don’t always know what their role should be in influencing it.” CORPORATE COMPLIANCE INSIGHTS via BOARDSPAN

Across the Board

Do Non-GAAP Earnings Overinflate CEO Comp? 

"Overpaid” CEOs are under scrutiny right now. Often non-GAAP earnings are a determining factor in awarding high compensation to CEOs. Is that an accurate measure? This article takes a closer look. 

"Managers routinely claim that non-GAAP adjustments remove transient items in GAAP earnings and are thus more informative about their core, or ongoing, economic performance…However, other non-GAAP exclusions are persistent, suggesting some managers exclude losses and expenses not to inform but to increase investors’ perceptions of core operating earnings by reporting ‘everything but bad stuff’...legitimizing high CEO pay appears to be one of the potentially important reasons for firms to use non-GAAP earnings in contracting.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Overseeing Third-Party Risk

How do you manage risk that comes from the outside: From partners, vendors, supply chain infrastructures, and more? Third-party risk is unavoidable and boards need to have a plan.

“In many companies, boards of directors and C-suite leaders have seen firsthand how rapidly risks related to third parties can threaten their own company’s ability to deliver on its mission and strategy. Some companies have also experienced how significantly the missteps of third parties—as well as fourth parties, fifth parties, and sixth parties in a third-party ecosystem—can tarnish the company’s brand and reputation.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Deutsche Bank’s Board Faces Reconstruction

Seven of the ten employee representatives on the board call it quits. 

“Deutsche Bank AG’s supervisory board is facing its biggest revamp in several years as the majority of labor representatives are set to be replaced…Only three incumbents — Jan Duscheck, Timo Heider and Manja Eifert — are seeking a renewal of their mandates. That would be the largest number of new appointments since at least 2018 for the board, which currently has 20 members.” BLOOMBERG

Shifting Dynamics in Board Composition

For the first time, one out of five board members are racial and ethnic minorities, while the percentage of women joining boards dipped slightly in 2022.

“Racial and ethnic minorities now hold 20% of all board seats at the nation’s largest public companies for the first time, according to a new study. Black people have experienced some of the biggest gains…Asian directors filled 7.2% of board seats while Hispanic directors held 3.6%, according to ICS. Directors of Middle Eastern or North African descent as well as Native American, Alaska Native, or Native Hawaiian directors each occupy less than 1% of board seats. The analysis shows the impact of investors pushing portfolio companies to diversify their boards.” THE WALL STREET JOURNAL

"The percentage of women joining boards slipped to 39% in 2022 from more than 40% in both 2019 and 2021…As of Dec. 31, 2022, women hold 28% of board seats at companies in the Russell 3000 index of the country’s 3,000 largest public companies, a 0.2% increase from the previous quarter and a 1.7% increase year-over-year.” BIZ WOMEN

Boards Governing AI Use in Companies

AI is suddenly everywhere in business, from determining actions to writing content. How much does the board need to oversee its use?

“The rapid evolution of generative AI challenges the ability of corporate governance to understand the new technology and to take the steps that may be necessary to monitor the application of AI within the organization. This ability of computer systems to quickly generate detailed text and visuals from simple input prompts offers companies a wealth of exciting opportunities, as well as certain unknowns. It’s ultimately the board’s job to keep tabs on both.” FORBES

Susan Wojcicki is Stepping Down from YouTube

Neal Mohan, the company’s chief product officer, will take over as CEO.

“Ms. Wojcicki’s departure signifies an end to the early, pioneering days of YouTube and its parent company, Google, and adds to a lengthening list of women who have left senior roles at big Silicon Valley companies in recent years. Google spent some of its early days headquartered in Ms. Wojcicki’s garage.” THE NEW YORK TIMES

Robin Hood Foundation Chooses a New Chair

Goldman Sachs executive Dina Powell McCormick will take the helm.

“Goldman Sachs executive Dina Powell McCormick has been named chair of the Robin Hood Foundation, a nonprofit backed by Wall Street executives and other business leaders that aims to combat poverty. McCormick, who was the group’s vice chair, was elevated by the board to chair on Wednesday, the foundation announced in a statement. Former Chairman, John Griffin, founder of Blue Ridge Capital, will remain on the board…” CNBC

Seat at the Table 

• Abercrombie & Fitch Co. welcomes to its board Helen Vaid, former CEO of brand acquisition platform Foundry Brands

• Bath & Body Works appoints to its board Steve Voskuil, Senior Vice President and Chief Financial Officer at The Hershey Company

• Energy company Halliburton elects to its board Janet Weiss, former President of British Petroleum Alaska; and Maurice Smith, President and CEO of insurer Health Care Service Corporation

• Asset manager Apollo Global Management adds to its board Patrick Toomey, former U.S. Senator

• Commercial technology company Cognex Corporation announced to its board Angelos Papadimitriou, former Co-CEO of tire manufacturer Pirelli

• Mobile games platform Skillz welcomes to its board Kevin Chessen, Co-Founder of investment firm BTIG

• Building materials company Beacon elects to its board Racquel Mason, former Executive Vice President and Chief Marketing Officer at Elanco Animal Health 

• Industrial technology company EnPro Industries adds to its board Ron Keating, President and CEO of Evoqua Water Technologies

• Invesco Mortgage Capital announced to its board Katharine Kelley, President or real estate firm Green Street Properties

• International energy company Occidental welcomes to its board Ken Robinson, former Senior Vice President of Audit and Controls at nuclear power company Exelon Corporation

About Boardspan
Boardspan is the leading provider of digital governance solutions for boards across all sectors. Our cloud-based assessments, benchmarking analytics and governance education programs complement our board search and advisory services to deliver a holistic approach to governance. Boards of all sizes and stages rely on Boardspan to deliver analytics, insights and outcomes that improve their effectiveness and performance. Clients include KKR, The Kellogg Foundation, Ingersoll Rand, Farfetch, McAfee, Beyond Meat, Box, e.l.f. Beauty, Satellite Healthcare and the U.S. Olympic & Paralympic Committee.