Across the Board
Musk Given Deal Deadline
"A Delaware Chancery Court judge ruled Thursday that Elon Musk has until Oct. 28 to close his acquisition of Twitter if he wants to avoid a trial, granting Musk a slight delay… the Tesla CEO said he wanted to return to his original agreement to buy Twitter for $54.20 a share, and asked the social media company to end all litigation in order to close the deal. Twitter refused to oblige…Musk argued that the trial would distract his team from securing the financing necessary to close the deal…Twitter responded by saying that Musk and his legal team are being disingenuous. Only days before a trial was to commence, Musk’s team suddenly declares ‘they intend to close after all,’ the lawyers wrote.” CNBC
Your Board and the Big Three ESG Disclosures
“After years of increasingly vocal demand for enhanced transparency about ESG matters from investors and other stakeholders, regulators and standard setters in various jurisdictions issued definitive proposals to transform ESG reporting in 2022. So far this year, proposed ESG disclosures have been released in the European Union (EU) as part of the Corporate Sustainability Reporting Directive (CSRD), internationally by the International Sustainability Standards Board (ISSB), and in the US by the SEC. These ‘big three’ proposals would each require expansive sustainability disclosures although their proposed scopes and other details vary…Proactive companies are in the process of assessing the scope and applicability of the proposals so that the appropriate planning can begin now. An SEC registrant that has a subsidiary listed in the EU and a subsidiary in a jurisdiction that requires ISSB reporting, for example, may be subject to the requirements in all three proposals.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Core Expertise in the Board Room
“Disney, McDonald’s, and GM appointed new board members…for reasons that aren’t difficult to parse. GM, for instance, wants to outsell Tesla in the electric vehicle category by 2025; its newest director, Jon McNeill, is a former Tesla executive. The unique mix of talent and expertise that make up the ideal board is of course going to vary greatly from company to company. But during wildly uncertain times, and given the growing expectations of modern boards, there seem to be a few subject matter experts who belong at virtually every table these days… as the borders between industries blur, boards need directors who understand sectors adjacent to their own. Health care boards need tech experts…But it’s also unwise to have directors who only understand the traditional version of the industry, not where it’s going. Executives from adjacent sectors, who have already experienced the same sorts of transitions a company is facing, bring valuable information and a readiness to act.” FORTUNE
Private Company Board Compensation
“Board members at privately held and family-owned companies play an important role in governance and oversight and should be appropriately compensated for their contributions and efforts. However, the appropriate amount of compensation has been difficult to determine due to the lack of available market data on private company board pay…The total cost of governance is correlated with company size. This relationship is driven by differences in the amount of compensation given to individual directors, as well as differences in the size of the board. As a company’s revenue increases, the complexity of operations, regulatory requirements, and the responsibilities of the board also increase. To deal with this greater responsibility, larger companies may have a larger board and separate committees. Higher compensation is needed to attract qualified talent and reward them for a more significant time commitment.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
What the SEC’s Proposed Cybersecurity Rules Mean for your Board’s Responsible Oversight
“Earlier this year, the Securities and Exchange Commission published a new set of proposed cybersecurity disclosure rules for public companies. The proposed rules would significantly increase SEC scrutiny of public companies’ cybersecurity-related business activities, decision-making processes, and the Board’s new role in overseeing cybersecurity… One of the most significant new obligations requires public company Board oversight and involvement in the review, assessment, and implementation of cybersecurity policies and procedures…Determine whether the full Board, or a subset of the Board, will be primarily responsible for oversight, and ensure that they have been properly educated and approve of the company’s policies and procedures.” JD SUPRA
Are the CISO and Your Board in Disagreement on Cyber Security?
Congress, federal agencies and a growing number of states are demanding robust and immediate disclosure of cybersecurity incidents following the 2020 nation-state attack against SolarWinds… Among those demands for regulatory oversight, the Securities and Exchange Commission in March proposed rapid disclosure within four days of material cybersecurity incidents. The agency also called for periodic updates regarding corporate security policies and oversight... Board members and CISOs share some concerns about cyberattacks…However, CISOs ranked insider risk as their top concern, but board members place it much lower on the scale. Major disagreements exist about the consequences of an attack: Board members are most concerned about internal data being disclosed publicly, alongside reputational damage and loss of revenue. CISOs are most concerned about significant amounts of downtime, how an incident will disrupt operations and how an incident will impact business operations.” CYBERSECURITY DIVE
From the Boardspan Library
A Board’s Eye View of Reputation Management
"The primary responsibility for safeguarding a company’s reputation must lie with management. They know the environment, industry, company, key constituents, and history—and have the resources to address the issues. But through its oversight of the company at large, the corporate board plays a crucial role in managing reputational risk… Most boards and management teams strike a good balance between their respective roles in the reputation-management process. But there is a risk in well-run companies that reputation-management procedures may lose effectiveness. Leadership may conduct an annual review of risk, but stop short of determining where the next problem will come from or what they will do about it when the problem arrives… Critically, the board must take an active role in reputation management. If executives grow too reliant on old systems and procedures, they may miss emerging threats. This is why the board must oversee and be accountable but not responsible for reputation management.” KELLOGG INSIGHT via BOARDSPAN
