3/28/24 – Issue 8.60 – Your weekly news on all things board. 

In 2019, Dave Calhoun was hired at Boeing to help repair the reputation of the company after a pair of deadly plane crashes. This week, he resigns as CEO, plagued by many of the issues he was brought in to fix as Boeing contends with a string of safety mishaps. Boeing board chair Larry Kellner also announced his departure, as did the head of the company’s commercial plane unit. There are plenty of questions about what the board knew and did, and when. The Boeing situation is another study in governance, crisis management, and accountability.

Risk and crisis management loom large in this week’s news. Some crises are a slow burn that eventually ignites, like Boeing appears to be; other events with impact, like Baltimore’s Key Bridge tragedy, erupt without warning. In our webinar this week, Amazon and Verisign board member and crisis management expert  Jamie Gorelick stresses the importance of having a plan. “It’s the one thing I think we underprepare for…at least talking about what you would do in the event of something really serious or even existential is a very good conversation to have in advance.”

In other news, Neumann’s puts in his bid to buy back WeWork; BlackRock’s Larry Fink releases his annual letter; how the Key Bridge crash affects the supply chain; and re-evaluating acceptable board risk.

In the Spotlight

Boeing C.E.O. to Step Down in Major Reshuffle

Dave Calhoun leaves in wake of ongoing safety problems

“Boeing CEO Dave Calhoun will step down by year-end in a broad management shakeup brought on by the planemaker's sprawling safety crisis exacerbated by a January mid-air panel blowout on a 737 MAX plane. In addition, board chair Larry Kellner and Stan Deal, head of the company's commercial planes business, are also leaving as Boeing's board tries to get control of the myriad issues that have shaken confidence in the iconic planemaker over several weeks. The January incident was the most recent in a series of safety crises that have shaken the industry's confidence in the planemaker and hampered its ability to increase production. Calhoun, 66, was brought in as CEO following a pair of crashes in 2018 and 2019 that killed nearly 350 people. Immediately after the Jan. 5 panel blowout, airline executives expressed support for Calhoun, but those good feelings ebbed after additional production delays and as regulators detailed quality problems at its key manufacturing hub outside Seattle.” REUTERS

Boeing Shakeup Raises Questions After 737 Max 9 Blowout

After repeated safety concerns, experts wonder if Boeing needs a different plan

“Ashley Fulmer, assistant professor of managerial science at the Robinson College of Business at Georgia State University, told The Hill that the ‘leadership shakeup provides a visible signal to show that Boeing is taking accountability.”“However, it is a strategy that Boeing has used repeatedly, without successfully addressing their safety problems,’ Fulmer added…Robert Bird, a professor of business law at the University of Connecticut, told The Hill that ‘Boeing’s change in leadership is not enough to fix its problems…Boeing must undergo a long and difficult process of changing the culture under which it operates. Safety and quality must be second to none,’ Bird said.” THE HILL

From Boardspan this Week:

Recording Available: Board Succession Planning: Define Your Board’s Future

Boardspan Founder and CEO Abby Adlerman and Jamie Gorelick, Lead Independent Director at Amazon and member of the Corporate Nominating & Governance Committee at Verisign, discussed how Board Succession Planning is key to aligning your board to the strategic vision and goals of the company and the constantly evolving market landscape. Watch the recording here.

Across the Board

Adam Neumann Bids to Buy Back WeWork for More Than $500M

After working to assemble investors, the co-founder presents his offer 

“Adam Neumann, the former chief executive and co-founder of WeWork, recently submitted an offer to buy the bankrupt co-working company for more than $500 million, according to people familiar with the matter. It wasn’t immediately clear how Neumann would finance the acquisition, the people familiar with the matter said. Neumann has been trying to regain control of WeWork after he was ousted five years ago by the board. Last month, Neumann’s lawyers sent a letter to WeWork’s advisers saying he was joining with Dan Loeb’s Third Point hedge fund and other investors in exploring a bid for the company.” THE WALL STREET JOURNAL

Larry Fink Reflects on Investment and Our Aging Population
In his annual letter, Fink talks about the reality of retirement in 2024

“When my mom passed away in 2012, my dad started to decline quickly, and my brother and I had to go through my parents’ bills and finances. Both my mom and dad worked great jobs for 50 years, but they were never in the top tax bracket. My mom taught English at the local state college (Cal Northridge), and my dad owned a shoe store. I don’t know exactly how much they made every year, but in today’s dollars, it was probably not more than $150,000 as a couple. So, my brother and I were surprised when we saw the size of our parents' retirement savings. It was an order of magnitude bigger than you’d expect for a couple making their income. And when we finished going over their estate, we learned why: My parents' investments. My dad had always been an enthusiastic investor.” BLACKROCK

Baltimore Bridge Collapse Resets U.S. Supply Chains
The Port of Baltimore is a major hub for coal and vehicles

“The collapse of a major bridge along a crucial trade corridor outside Baltimore idled shipping at one of the East Coast’s busiest ports, tied up coal shipments and pushed retailers, truckers and industrial firms to reroute shipping volumes to contain the economic fallout of the catastrophic event…​​The Port of Baltimore was the country’s second-largest gateway for coal exports last year, after the Port of Virginia in Norfolk, accounting for about a third of outbound shipping volumes in the first quarter of 2023, according to S&P Global…Companies including Amazon.com with large distribution centers near the bridge were still assessing the impact that the port shutdown, closed roads and loss of the bridge would have on their operations. But logistics experts say a broader economic impact would likely be limited because of the large number of alternate highways and seaports along the densely-populated Eastern Seaboard.”   THE WALL STREET JOURNAL

McDonald’s Makes Changes to Board
Rick Hernandez Jr. retires after 28 years on the board

“McDonald’s Corp. announced on March 19 that Chris Kempczinski will assume the combined role of chief executive officer and chairman of the board following the retirement of Enrique ‘Rick’ Hernandez Jr… Miles White will assume the role of lead independent director. Also announced was the nomination of Mike Hsu, chairman and CEO of Kimberly-Clark Corp., as an independent director of the board…During Hernandez’s 28 tenure on the McDonald’s board, the company has delivered over 2,000% in total shareholder return. Also during his service, McDonald’s more than doubled its restaurant count, including expanding into more than 100 markets.” MEAT + POULTRY

Tinder Owner Match Group Names New Board Directors After Elliott Push

Elliot forced Crown Castle last year to review its fiber business and replace two directors
 

“Tinder-owner Match Group named Instacart executive Laura Jones and Zillow co-founder Spencer Rascoff to its board on Monday, after talks with activist investor Elliott Investment Management to improve its performance…Match disclosed for the first time that it has an information-sharing deal with Elliott, whose push for change at the dating firm follows a big win for the hedge fund at wireless tower operator Crown Castle in December…Growth has slowed at Match from the peaks hit during the pandemic, as economic uncertainty and a lack of new features prompt people to cut back on spending on its dating apps.” REUTERS

What Reddit’s IPO Means for Corporate Governance
The listing of dual-class shares will mean the partial disenfranchisement of many investors

“This week Reddit has gone public on the New York Stock Exchange in a highly anticipated listing. However, the excitement over the initial public offering has diverted attention from an important issue that could have greater ramifications for capital markets.Reddit has listed with unequal voting rights under a dual-class share structure. This means some shareholders — mostly insiders and pre-IPO investors — hold superior voting rights over those for independent shareholders. In doing so, the company is contributing to a trend that undermines a fundamental tenet of good corporate governance and may potentially cause further detriment for long-term investors and the savers served by fund managers and pension funds.” FINANCIAL TIMES

Boards May Need To Reevaluate Their Idea Of Acceptable Risk

Boards are being held to a higher standard regarding risk

“Some companies are posting record earnings as the major stock exchanges continue setting records—so investors ask, why isn’t my company? Corporate board members might want to reevaluate the risk assumptions they’ve already made about their business plans and determine whether those risks are still acceptable once future changes in market conditions and anticipated interest rate cuts by the Federal Reserve are factored in. Hertz Corporation CEO Stephen Scherr recently stepped down after the company’s decision to build the largest electric vehicle rental fleet in North America backfired.” CORPORATE BOARD MEMBER

The Crucial Role Of Boards In Advancing Organizational Equity

The priorities set by boards should reflect a genuine shift in the perspectives of leaders

“Just a few years ago management consulting firms ranging from Accenture to Korn Ferry, released study after study on the importance of board involvement in organizational equity efforts. In many instances, board diversity was linked to greater profitability; a study by the Boston Consulting Group reported that companies with above-average diversity at the management level generate 19% higher innovation revenues than companies with below-average diversity. Similarly, a 2020 study by BoardSource highlighted that nonprofit organizations with diverse boards were more likely to engage effectively with the communities they serve, leading to enhanced organizational performance.” FORBES

Seat at the Table

• Hasbro welcomes to its board Frank Gibeau, President of Zynga; Darin Harris, CEO of Jack in the Box; and Owen Mahoney, former President and CEO of Nexon

• AOL appoints to its board Hugh Johnston, EVP and CFO of PepsiCo

• Fossil Group elects to its board Eugene Davis, Chairman and CEO of PIRINATE Consulting Group; and Pamela Corrie, former General Counsel for Risk and Restructuring at General Electric Capital Corporation

• Green Dot welcomes to its board Robert Millard, CFO at CHG Healthcare

• Sagimet Biosciences announces to its board Tim Walbert, former President and CEO of Horizon Therapeutics; and Paul Hoelscher, foreigner EVP and CFO of Horizon Therapeutics

• Tetra Technologies appoints to its board Angela John, former Senior Vice President of Marketing and Origination for BP

• Ballard Power Systems elects to its board Jacqui Dedo, former Chief Strategy and Supply Chain Officer for Dana Holding Corp

• Clean Energy Fuels announces to its board Patrick Ford, former Audit Partner at KPMG

• Cabinet manufacturer MasterBrand adds to its board Patrick Shannon, former SVP and CFO of Allegion

• Silverbow Resources welcomes to its board Leland Jourdan, former Chief Diversity and Inclusion Officer at Chevron 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.