June 01, 2023More annual meetings and shareholder activism in the news. This week, Glass Lewis recommends that Toyota shareholders vote against board chair Akio Toyoda, citing a lack of board independence. Freshpet’s largest investor demands board and governance changes, and Carl Icahn gets one of his activist candidates elected to the Illumina board. In other news, Icahn gains ground at Illumina but loses money over Hindenburg Research accusations; PwC Australia faces a leadership overhaul amid a tax leak scandal; embracing the idea of an “imperfect” CEO; and a new book sheds light on the achievements of women in the boardroom.
May 25, 2023This year has already seen record numbers of shareholder-led proposals on social and environmental issues. This week alone, Carl Icahn’s battle with Illumina comes to a head, Amazon faced a record 18 shareholder proposals, and Shell’s annual meeting was disrupted by climate protests for over an hour. Illumina’s vote is still to come, but Amazon’s and Shell’s proposals were voted down as investors backed the board. Quality discourse over ESG issues is critical, and activist pressure isn’t going away. But do these proposals move the needle? Or do they simply create more noise? In other news, Morgan Stanley’s CEO succession plan draws questions on diversity in leadership; Panera Bread shakes up their leadership and board influence as the company announces its renewed plans to go public; and check out these recommendations your board can use for navigating ESG pressures.
May 18, 2023Twitter is getting a new CEO. Who is Linda Yaccarino and why did Musk pick her? And as she takes the stop spot, what does it mean? According to some analysts, the breadth and depth of Twitter’s problems may be more than a new leader at the helm can solve. Meanwhile, Tesla shareholders are demanding good governance and better oversight from Musk. Will they get it? In other news, Wells Fargo agrees to pay out a billion dollars to settle its 2016 lawsuit; Shake Shack faces pressure from activist shareholders; What makes activists tick in 2023; How boards are responding to ESG pushback in 2023; And meet Google’s new public sector board of directors.
May 11, 2023Boards understand the connection between Governance and AI: A thorough understanding of its risks and oversight of its use within a business is critical. But AI’s impact ripples through Environmental and Social concerns, too, potentially affecting everything from carbon footprint to diversity of people and ideas. A recent examination of boards and AI oversight explores the ESG connection. The White House weighed in this week on the complexities of regulating AI, and LinkedIn founder Reid Hoffman talks about his perspective on AI as a member of Microsoft’s board in this week’s Washington Post Live. In other news, firing leadership after a scandal can backfire; check out the need-to-know items regarding corporate governance; Ten ways your board can boost corporate sustainability; and The Church of England becomes a shareholder activist.
May 04, 2023The SEC’s proposed new rules for cybersecurity have boards talking about their role in oversight. This week, Harvard Business Review proposes that boards might be looking at cyber governance all wrong. Find out how boards are talking about cybersecurity, and what they should be talking about instead. Also, what’s a sure sign that companies are getting serious about cybersecurity? Hiring the leading national expert on decoding intelligence and cybersecurity, for one thing. That’s what General Motors just did. In other news, J.P. Morgan buys First Republic Bank after its failure; the FDIC investigation into Signature Bank points the finger at the bank’s board and leadership; Revlon overhauls its board of directors; more women in the boardroom often equals more profits; and too many people in the boardroom may hurt effectiveness.
April 27, 2023Succession planning is back in the headlines this week as the longtime CEO of NBCUniversal resigns in the wake of complaints about inappropriate conduct. Does the company have a plan? And a new episode of The Journal. podcast dives into the world of LVMH chair Bernard Arnault and his long game for succession. In other news, what happens when Disney files suit against a sitting governor?; a look at the partnership between Apple and Goldman Sachs; big tech companies see stock surges with new earnings reports; why AI governance starts in the boardroom; and navigating activist investor campaigns during the 2023 proxy season.
April 20, 2023This week’s giant settlement between Fox Corp and Dominion Voting Systems brings up questions about ethics and corporate reputation. The last-minute agreement headed off what one law professor described as the “the strongest defamation case we’ve ever seen against a major media company” that would have brought a mountain of potentially damaging evidence into the public eye. Can a company settle its way out of a reckoning? And how does Dominion, who claims serious reputational damage and has several other suits pending, go forward in the aftermath? In other news, Reserve Bank splits its board in two; three ways to prepare for upcoming SEC cyber rules; and LGBTQ-inclusive board policies are on the rise with the proposed Nasdaq board diversity rule.
April 13, 2023ChatGPT and other AI-related products continue to be hot topics in and out of the boardroom. As Google and Microsoft move quickly to get their own AI solutions to market, it’s triggering questions about whether the quest to be an AI market leader is an ethics tradeoff. What does that mean for boards overseeing these initiatives? Other ethical quandaries are in the news this week. In Canada, the board and leadership of the Trudeau Foundation quit over questions about a donation linked to the Chinese government. And a Fox Corp shareholder files a suit against Rupert Murdoch and four other board members alleging that the board breached their ethical duties by failing to stop Fox News from reporting falsehoods about the 2020 election. In other news, Southwest seems like business as usual three months after its epic holiday meltdown; encouraging a board culture that fosters healthy debate; and how Tyson Foods illustrates the complexities of overseeing a family-owned business.
April 06, 2023First came the news of banking turmoil; then the analysis; now we have the lessons learned in hindsight. This week, Directors & Boards talks about what boards can take away from the Silicon Valley Bank collapse. And Jamie Dimon shares his thoughts in his annual letter to JPMorgan shareholders. The Biden Administration also hinted that tighter regulations for mid-sized banks might be coming. In other news, Tech giant Alibaba is splitting into sixths; Starbucks shareholders demand an examination of the company’s stance on workers’ rights; Illumina urges shareholders to push back against Carl Icahn with their votes.
March 30, 2023More bank moves this week: The chairman of Credit Suisse’s largest investor has resigned after his comments caused significant panic at the financial institution. And First Citizens steps up to buy Silicon Valley Bank. In addition, former CEOs are boomeranging back, including former UBS head Sergio Ermotti returning to oversee the integration of Credit Suisse. In other news: Elliott Management backs off on its bid to gain board seats at Salesforce; Disney lays off Marvel Entertainment Chair Ike Perlmutter; And how do you go from being a good board director to a great one?
March 23, 2023The Silicon Valley Bank story continues to develop. This week, Janet Yellen weighs in on federal government intervention, and governance lessons learned from the collapse. In other news: Dominion lawsuits hold Fox’s board accountable; Amazon announces 9,000 layoffs; A new CEO takes the helm at Starbucks; GE cuts CEO stock awards citing company underperformance; and a look at the real cost of sexual harassment in the workplace.
March 16, 2023After Silicon Valley Bank’s seemingly sudden collapse and the tumultuous week that followed, board members and corporate leaders are asking: What happened? And, what’s next? Unimaginable events and black swan crises seem to be less unusual all the time, prompting many boards to focus more attention on risk. In other news: Meta announces more layoffs and project cuts; Even on diverse boards, Latino directors are not proportionally represented; And Carl Icahn is in the news again as he sets his sights on Illumina.
March 09, 2023Risk management is a job that never ends for boards and company leadership. Just staying aware of the myriad risks to your organization takes ongoing work. But faced with those risks, boards face another challenge: Where do you start? Given multiple risks, how do you prioritize where to focus your efforts? As the types of risk increase, it gets harder to make those decisions without analysis and advisory. This week, what the risk agenda looks like in 2023; and one company’s way of reporting risk to the board and the C-suite. In other news: The “engagement priorities” of big investors this proxy season; A lawsuit continues for Shell and another one begins for JetBlue and Spirit; The shared oversight responsibility of the board and corporate officers; And a look at why you want to join Abby Adlerman and Tarang Amin for our March 29 webinar.
March 02, 2023One legacy ends, another stays alive with positive news despite a rough year. Doug Parker, the long-serving CEO and current Chairman of American Airlines, is retiring. Taking the helm 10 days before the September 11 attacks in 2001, Parker successfully steered American through that crisis and others and helped grow the airline into the largest in the world. And Marc Benioff, the driving force behind Salesforce, has faced heavy criticism lately about the direction of the company. Nonetheless, this week’s earnings call announced strong projections and some bold reorganizations. Join us for our first webinar of the year: Abby Adlerman in conversation with Tarang P. Amin, the Chairman and CEO behind e.l.f. Beauty’s extraordinary success. In other news, the former Airbnb Chief Ethics Officer talks about the power of real diversity; Fox Entertainment’s executives and board face claims that they knowingly reported false election news; and the Economist looks at the increasing demands on board members.
February 23, 2023As 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.
February 16, 2023As one proxy fight ends, another might be beginning. This week, Nelson Peltz declared an end to his pressure on Disney, stating that plans unveiled by the company this week have addressed his concerns. But a different fight may be brewing at Tesla as Ross Gerber, an outspoken critic of the automaker in recent months, announces his plans to run for the board. In other news, is the top spot at a retail organization becoming the hardest job to fill? Also, how to identify, listen to, and communicate with quality shareholders. And the Wall Street Journal looks at the factors behind the recent increase of black women on corporate boards and the work that is being done to grow that number even more.
February 09, 2023The SEC is getting serious on cybersecurity governance at the board level: It’s now mandating disclosure of director knowledge on the subject. But what that may disclose is that there isn’t enough. One recent analysis found that less than 9 percent of the average board has technical expertise. How do directors ensure cyber literacy in the boardroom? Analyze your readiness to govern cybersecurity with a board gap analysis. Instead of looking to a CEO or CFO to fill your next vacancy, consider a CIO or CISO. Whatever you do, don’t sweep it under the rug. Cybersecurity is an issue that’s not going anywhere. It cuts across the entire business and approaching its governance with first-hand knowledge and expertise should be a priority. In other news, the SEC also considers softening climate disclosure regulations while Shell’s board of directors are sued in a first of its kind environmental lawsuit. And which matters more, stakeholders vs shareholders? The answer, as usual, lies somewhere in the middle. Is subsidiary board services the breeding ground for the next, more diverse generation of board directors? And finally, a new product may give shareholders of large funds a say on ESG and other matters.
February 02, 2023If you want to see how activist investors can impact companies and boards, look no further than the news right now. Hindenburg Research, an activist short seller that targets companies to expose fraud and irregularities, set its sights on Adani Group, costing the Indian conglomerate tens of billions of dollars in a matter of days. Back in the U.S., Salesforce added three new board members amid continued pressure from activist investors calling for better cost control and leadership. As we gear up for proxy season, we’re sure to hear more from activists this quarter. The best defense against activist agitation? Good governance. How do you achieve that? Two words: Be Intentional. With your governance planning, with your short- and long-term strategies, and in determining what will truly create value in your organization. Model good culture and good relationships. Revisit our 2023 outlook for some advice on making intentional plans this year. In other news, practical advice on Proxy Season, and how to approach board/shareholder relations.
January 26, 2023Reduction is in the news. Google, Amazon, and Microsoft all announced reductions in force that will result in approximately 40,000 people losing their jobs. Tim Cook of Apple, Jamie Dimon of JP Morgan, and now Sundar Pinchai of Google will all receive pay cuts. Whether reductions stem from overexpansion in the past or pre-emptive concern about the future, companies are rationalizing their cost structures to be in line with the times. Boards are never more valuable to their CEOs than when rationalization needs to happen. No one else can better help define the what, why, and how of the situation. Boards can listen, advise, respectfully debate options, and draw on experience and the information at hand to help guide decisions, actions, and communication. And boards should always ask the question: Is our response in keeping with our values and culture? And then provide oversight to help ensure that the answer is yes. In other news, Elon Musk is back in court defending tweets about taking Tesla private, activist investor Elliott Management seeks board representation at Salesforce, and Google’s bad week is compounded by an antitrust suit over ad tech.
January 19, 2023This week, we salute 2023, a new year and a new opportunity for boards to have an impact. In the spotlight this week: Six actions you can take to strengthen governance, tackle the challenges of these uncertain times with confidence, and help prevent the kind of disastrous governance meltdowns we saw far too many of in 2022. In other news, Disney’s board goes on the defensive about its decision to bring back CEO Bob Iger while aiming to rebuff activist investor Nelson Peltz and his bid for a board seat. Apple agrees to audit its US labor practices at the SEC’s request, amid accusations of union busting. There are insights about ESG as a value creation strategy, how good governance can lead to better returns, and why board minutes should be treated as anything but perfunctory. Plus, learn the eight essential questions board members should ask before selecting a new chair.
January 12, 2023Strong CEOs and founders can be visionaries and effective leaders. But we’ve seen some of the effects of key-person risk play out in business headlines over the past week. At Tesla, shareholders are demanding to see a succession plan as CEO Elon Musk continues to split time between two companies. WWE founder Vince McMahon is back in the boardroom, though only weeks ago the board was investigating legal claims against him for sexual harassment. And in China, billionaire Jack Ma is ceding control of Ant Group, Co. after longtime concerns over his dominance in the organization. These are all extreme cases, but many boards work hard to achieve balance in their relationship with the CEO. The keys to success? Trust, two-way communication, alignment on the mission and vision of the company, and a commitment to strong culture and oversight by the board are all important to maintaining balance in the boardroom universe.
January 06, 2023Twitter, Tesla, and others provided food for thought and lessons in corporate governance in 2022, but no crisis hit home for consumers more than the Southwest scheduling debacle over the holidays. With thousands stranded in airports around the country, fingers pointed in all directions. While Southwest company leadership played a huge role in operational decisions (and lack thereof) that led to the meltdown, many also questioned the board’s role in preventing such a large-scale crisis. It’s no wonder crisis prevention is top of mind for many boards in 2023. Expect to hear more about it in the coming weeks.
December 22, 2022Those who don’t learn from history are doomed to repeat it. Six years ago, Wells Fargo faced condemnation for defrauding retail customers by secretly opening unauthorized deposit credit card accounts. This week, they’re back in the news for misconduct surrounding auto loans and mortgages. Our guidance for boards is the same as it was six years ago: Information, independence, oversight, and the tone at the top are all critical for boards in helping companies act ethically and avoid scandal. In other news, Elizabeth Warren calls out Tesla’s board, Twitter downvotes Elon Musk, and Epic Games ordered to pay a half billion dollars by the FTC for violating the Children’s Online Privacy Protection Act.
December 15, 2022Oversight really matters. The collapse of FTX and this week’s indictment of Sam Bankman-Fried is the latest example of what can go wrong without it. What’s the right amount of oversight and how do you achieve it? Start with the basics: Two-way communication between the board and the CEO, transparency, and honesty as non-negotiables. As always, trust, but verify. Overcommunication and collaboration are the building blocks of proper governance; access to information, benchmarks, and a regular cadence of check-ins all minimize the need to micromanage.
December 08, 2022Shareholder activism. It can take many shapes, but activist investors have one overarching motive: Create more value for shareholders, faster. Maybe activists want to diversify board composition; maybe they want more (or less) focus on climate change; or perhaps they feel that selling a piece of the business is the fast track to more value. Regardless of the strategy and the end game, one thing is certain: All public companies are potential targets. Disney is the latest company to see shareholder activists circling–more on that below. And the era of universal proxy is sure to open the door to more attempted activism. A definitive guide to shareholder activism contains some valuable information and guidance for boards that want to be prepared. Our advice? If an activist is on your doorstep, listen carefully for good ideas and points of alignment. After all, value creation is a common goal and emphasizing that shared prize may make agreeing on a strategy easier than you think.
December 01, 2022CEO succession planning is hard. Just ask Disney. Or Salesforce. Or Boardspan’s Board Performance Assessment Benchmarks, which show that across the many public, private, and nonprofit clients we serve, Management Succession Planning is the biggest challenge facing boards this year. Observers are beginning to ask how the Disney board can justify its costly about-face on supporting CEO Bob Chapek. The media reminds us that with the exit of Bret Taylor, Salesforce CEO Marc Benioff has now outlasted two hand chosen co-CEOs. Interestingly, a new study shows that companies whose boards have an executive chair, a role often filled by the former CEO, are significantly more profitable than those who don’t keep their former leaders close. Clearly the real magic comes when boards figure out how to get the valuable strategic input from a former leader, without overshadowing the newer executive.
November 17, 2022Tesla, Twitter and Space-X CEO Musk is in the news again. And again. And again. While defending the Tesla pay package that made him the world’s richest man, Musk argued that he had nothing to do with the board’s decision and approval of the $50 billion option grant. The suit has been brought by an investor who alleges that the board did not have sufficient independence from Musk to arrive at such a decision independently. While on the stand, Musk and a Tesla director suggested that Musk is looking to a future in which he is not CEO of Tesla, nor of newly acquired Twitter. Musk made another round of headlines by sending a memo to Twitter staff, suggesting that anyone not enthusiastic about “working long hours at high intensity” should sign up for a severance package instead. In other news, Amazon is the latest to announce mass layoffs, while an activist investor presses Alphabet to pare back Waymo staff. Savvy boards are focused on the SEC’s new cybersecurity disclosure requirements and avoiding the very real costs of missing the mark on ESG.
November 10, 2022Governance just keeps gaining in importance. New stats show that boards continue to diversify, with a greater percentage of women, underrepresented minorities, and first-time board members elected to public company boards than ever before. As they incorporate this new talent, boards are investing more in director onboarding and doubling down on their role as models and overseers of corporate culture. Meanwhile, Meta CEO Mark Zuckerberg, who benefits from a share structure that allows him majority control of decisions, accepts responsibility for layoffs of 13 percent or some 11,000 workers at the tech giant. Across the tech industry, lay-offs have claimed tens of thousands of jobs already this year.
November 03, 2022Boards are getting younger! For a host of reasons, boards have seen more turnover lately, with average director tenure at Russell 1000 companies now just shy of eight years. As they seek new talent, many boards are bringing on younger directors, driving the average age down each of the past three years. In other boardroom news. Boardspan’s latest Board Performance Assessment Benchmarks reveal that boards generally feel confident in their performance on table stakes issues like Ethics & Values and Fiduciary Responsibilities, even as they recognize they have not performed as well on Management Succession Planning and ESG oversight. Meanwhile, Elon Musk remains in the headlines, as he follows up his acquisition of Twitter with a spate of executive dismissals and now the dissolution of the social media company’s board of directors.
October 20, 2022Strategy. We live in a complex world - ever changing as technology, the C-Suite, and the board room all evolve. This complexity brings new expectations and conceptions of what high level governance looks like. Now more than ever, it is imperative for boards to strategize around future opportunities and risks in order to maximize talents and to elevate. In the news, a study conducted among the top 500 public U.S. companies reveals shocking data on the stark scarcity of female CEO-CFO duos. The DOJ targets directors serving on competing company boards resulting in resignations. And within the perspective of ESG, deciding where cyber security lives may not be an easy assignment. Also, how resilience in the board room can set firm practices regarding cyber governance oversight.
October 13, 2022Attention to detail. Now more than ever, boards embrace additional responsibilities and handle impactful situations. In order to deeply engage, boards must be attentive to details. Whether dealing with controversy or analyzing to elevate, these specifics are key to high-level governance. This week, recent upheaval for Hockey Canada as the CEO and entire board resign following public outcries over scandal related allegations. A Delaware judge rules the acquisition deal of Twitter must close before the end of the month to avoid a trial. In other news, definitive proposals to change ESG disclosures call upon the use of three different regulators, “The Big Three”, and your board may have to report to them all. Also, learn which areas of expertise are considered core to your board as industry lines continue to blur. And how the SEC’s proposed cybersecurity rule may impact your board’s cyber governance oversight.
October 06, 2022Cyber safety. Companies are now more vulnerable than ever, and boards continuously have this matter top of mind. With the increase of lawsuits and pending regulations, boards must remain cognizant of the risks. This week, an activist investor sues the directors of Meta (formerly Facebook), citing the prioritization of profit over public safety. The drama continues for Elon Musk’s negotiated acquisition of Twitter as the social media giant’s board approves Musk’s most recent proposal. Meanwhile, as regulatory guidance for cyber oversight and disclosure reporting unfolds, it is increasingly important for your board to define their role in active cyber governance. And the trend for senior in-house counsel provides more than legal compliance – they are charged with partnering with the board as the voice of the corporation.
September 29, 2022Inclusivity. Boards in the U.S. and Europe have made strides toward diversity in recent years, yet much more can be done to improve representation and ensure that all voices are heard. A new study shows that boards that don’t simply diversify their ranks but actively promote inclusivity of all members see measurable performance benefits. Another report underscores how Latinos, America’s second largest demographic group, are vastly underrepresented on corporate boards. In this issue, we also learn how organizations can help funnel more women into executive leadership roles that pave the way to board service, and how well-intended promises to promote DE&I initiatives can backfire. In other news, a top federal cybersecurity official calls on boards to get even more serious about cyber oversight. Also, observers show how boards are linking compensation decisions to CEO succession planning.
September 22, 2022People power. Organizations have long recognized that people, as in employees, make (or break) a successful business. Since the start of the pandemic and the Great Resignation, boards have increased their focus on workforce issues and are recruiting more HR talent to help them do so. HR execs claim 300% more public company boards seats today than they did just five years ago. Meanwhile, legal minds address the conservative attacks on corporate allegiance to ESG issues, arguing that companies can and should adopt sustainability measures in support of long-term shareholder value. In other news, a conservative activist investor pressures Apple and Disney to downgrade their ESG initiatives and stay out of politics.
September 15, 2022Succession. You’ve probably heard that the HBO show of that name won best drama at the Emmy Awards this week for its portrayal of the turmoil around the succession plans for a family-owned media dynasty. A sign of the times? With CEO exits on the rise, there has never been more focus on succession planning and the board’s role in ensuring its organization has a well-considered plan in place. Among recent management shakeups, Peloton is in the news as its co-founder, executive chairman and former long-time CEO John Foley steps down alongside other executives as current CEO Barry McCarthy radically restructures the ailing fitness company. In other news, Twitter shareholders vote to approve Elon Musk’s takeover bid, even as Musk ties to back out and a former executive at the social media company appears before the Senate Judiciary Committee to discuss his claims that Twitter has not deployed adequate security for users. Meanwhile, several articles point to the importance of true diversity at the board level as a foundation for ESG.
September 08, 2022ESG flare up. Shareholder proposals seeking to derail ESG efforts are growing more prolific and an observer says believers in science and climate risk should take the attacks seriously and counter them. Meanwhile, more than half of FTSE 100 companies now have a board-level ESG committee. In other news, Starbucks names a new CEO. Bed Bath & Beyond is faced with tragedy and evolving business operational concerns. BlackRock gets tough on over-boarded directors. And all signs point to boards getting closer to the Chief Information Security Officer, as the board’s cyber oversight responsibilities grow more significant.
September 01, 2022Expedited evolution. More and more we see evidence that investors, regulators, employees and other constituents have come to appreciate the work of the board. They aren’t shy about holding boards accountable when things go wrong—and increasingly they are interested in how to help make things go right. It’s not surprising then to see this week’s calls for boards to be more transparent about board composition strategy and update their board refreshment policies. Board governance expectations are evolving, and fast! Meanwhile, layoffs and hiring freezes are trending as companies respond to inflation and a rapidly changing market. At retail, fast food, and warehouse and delivery companies unionization is also on the rise. In other news, Tesla CEO Elon Musk’s legal team seeks a delay in the lawsuit brought by Twitter to force him to complete his acquisition of the company, citing new evidence from a whistleblower complaint about security practices, even as both sides issues subpoenas to a who’s who of the Silicon Valley elite
August 25, 2022ESG backlash? As boards embrace ESG and discuss what it means for their particular organization to appropriately address Environmental, Social and Governance concerns, some of the biggest proponents of corporate commitment to ESG initiatives are receiving a different message from legislators and regulators in energy-rich states. Several states have targeted asset managers like BlackRock that play an outsize role in focusing corporate attention on greater board diversity, lower emissions, and other ESG initiatives. Texas now bans state pension funds from working with financial firms that “boycott” fossil fuels, while Florida blocks state entities from investment strategies that value other criteria above ROI. Meanwhile, the Twitter acquisition drama continues as Tesla CEO Elon Musk’s legal team subpoenas former Twitter CEO Jack Dorsey for potential information on spam accounts, while current Twitter CEO Parag Agrawal pushes back against a whistleblower claim about security practices that could bolster Musk’s case. CEO succession planning is in the news, with stats that reveal some 49% of boards have not identified an internal successor; the good news is that the article (below) offers some good advice for ensuring your board has the information needed for successful succession planning.
August 18, 2022Gender matters. New research from Europe, where board gender quotas were implemented a decade ago in several countries, shows the widespread impact of diversity at the top. European private equity firms have been slow to join diversity efforts, but are getting on board. Meanwhile, activist investors are making their presence felt across industries, with Dan Loeb taking on Disney, hedge fund Equinox targeting mining company boards, Elliot Management urging changes at Cardinal Health and London’s Bluebell Capital Partners demanding board changes at French luxury goods holding company Richemont. Shareholders are also vocal these days and the latest tally shows a record 924 ESG-related proposals during this year’s proxy season. It’s not a bad time to read the article below that illustrates six ways board members can stay engaged and have a positive impact on the companies they serve.
August 11, 2022Learning from the data. i) Refreshing Idea: A new report shows that boards aren’t relying on policies to dictate mandatory retirements, but instead employing assessments—of overall board and committee effectiveness and individual director contributions—to rethink and shape their composition. ii) Diversity Downshift: Another report suggests that when companies struggle to achieve expected profits, boardroom diversity observably stalls., iii) Powerful Pay: To impact ESG goals, studies show European boards are tying executive pay to outcomes, an idea U.S. firms are adopting more slowly…. The numbers also tell us that industries that experienced the most difficulty retaining employees are beginning to have an easier time hiring and retaining workers.
August 04, 2022The boardroom redefined. The role of the chair, and really of the whole board, is seeing dramatic change, and a Deloitte memorandum catalogues the ways. Hint: Chairs (and boards) are more involved than ever; stakeholders expect more; climate change must be addressed; crisis management is ongoing; and more. (If you’re interested in serving as Chair someday, you’ll want to read the leading practices they suggest for becoming a board leader.) Talent, which previously got little board attention, is now a primary concern for many boards, as are the best ideas for retaining employees. Shareholders, aiming to see true DEI in action, are asking for transparency around hiring data for women and underrepresented minorities, and Nike is the latest to publicly commit to share this info. Back to the role of the chair: A shareholder lawsuit accuses Oracle of overpaying by $3 billion in a recent acquisition and observers are curious to learn more of Larry Ellison’s response that he, while Chair, was not involved in discussing the $9.3 billion acquisition.
July 28, 2022Probing scandals. WWE founder and CEO Vince McMahon exits the wrestling entertainment company as the SEC and federal prosecutors reportedly investigate $14.6 million in alleged payments to settle claims of sexual misconduct. The collapse of WorldCom, two decades ago, is dissected for lessons that can still be learned. A new survey shows the long-term lack of racial and ethnic diversity on boards has, since 2020, begun to be addressed. Meanwhile, leadership changes are in the air as Volkswagen announces its CEO is being forced out and an Instacart co-founder plans to exit his role as executive chair after the company goes public. An investor presses J&J to split its joint chair and CEO role into two.
July 21, 2022As the demands on board members continue to grow, more boards apparently see the benefits of having two leaders: A CEO and a Lead Independent in the Chair role. Fewer boards now opt for a dual CEO-Chair structure, according to a new study from the Conference Board. Meanwhile, Twitter gets the October trial date it asked for as it seeks to force Tesla CEO Elon Musk to complete his acquisition of the social media company, after a judge ruled against a delay proposed by Musk. Tesla is also in the news as ISS recommends shareholders vote against re-election for two Tesla directors who sit on the Nominating & Governance Committee. And the SEC reverses a recent policy change concerning proxy advisory firms to reduce corporate influence on proxy advice.
July 14, 2022No escaping politics. CEO advocacy of political causes, once unheard of, has become routine, with executives frequently announcing boycotts of states and nations whose laws and actions don’t align with their values. Now political activists are urging CEOs and corporations to take a stand on abortion rights, pressing them to share their plans for ensuring abortion access for all employees or calling out those who don’t immediately articulate a plan. Meanwhile, Twitter sues Elon Musk to force him to complete his $44 billion acquisition of the social media company. Gap CEO Sonia Syngal steps down and will be replaced by Executive Chairman Bob Martin. The Wall Street Journal takes readers into the world of a Fortune 500 board member and reveals how she has built her confidence and who she turns to for advice.
July 07, 2022Feeling the heat. Pressure from employees, consumers, shareholders and more is encouraging boards to invest more time and resources in climate risk oversight. The SEC’s new climate disclosure proposal is drawing a lot of attention from supporters and critics alike, and receiving record number of public comments. And ESG issues continue to gain shareholder support following a record-breaking proxy year in 2021. With the increased shareholder interest across many topics, its not surprising that some boards now explicitly seek new skill when recruiting directors: shareholder engagement. In other governance news, Tesla investors ask the SEC to investigate the company’s plan to shrink the board and retire the seat of an independent director.
June 30, 2022Tectonic shifts. Ongoing ripples of the pandemic combined with the current inflationary spiral is unleashing more disruption on multiple fronts. Activist investors continue to gain ground: taking seats on the board of Toshiba, causing a restructuring of management at Dollar Tree, and pressuring Zendesk into a sale at a price that was unthinkable just months ago. CEO turnover is on the rise, too, with changes announced at Bed Bath & Beyond, Pinterest, and Brazil’s Petrobras this week. A bright spot for stability is at Disney, where Bob Chapek retains the board’s support. Among the issues facing management and boards everywhere is remote work policies; the CEOs of both IBM and Yelp this week underscore their commitment to a new landscape that does not include everyone returning to the office.
June 23, 2022Trouble ahead? A majority of CEOs surveyed believe a recession is nearing or, in some locations, already here. The tech sector seems to concur: 95 companies in what had been a high-growth industry have laid off some 48,000 people so far this year. As the economy slows down, so too has investor support for ESG efforts, with shareholders voting down a greater percentage of sustainability-related proposals this year than last. Elon Musk dominates the news this week, as Tesla shrinks its board with the departure of Oracle founder Larry Ellison; SpaceEx fires employees who aimed to bring criticism of Musk to management; and the Twitter board recommends that shareholders vote in support of Musk’s acquisition of the social media platform.
June 16, 2022The great rethink. Succession planning has new meaning in a world forever altered by the Covid-19 pandemic. Boards that value diversity may reevaluate progress as a new study shows that white male voices continue to dominate in diverse boardrooms. Increasing stakeholder demands for transparency and progress around ESG issues have more corporations considering the relationship of corporate goals and ESG metrics. Meanwhile, in a push to attract top talent and to get ahead of state regulations, Microsoft will disclose salary ranges for open positions. And amid an uptick in public companies going private, regulators consider governance changes to increase transparency.
June 09, 2022Where business meets politics. Activist shareholders are widening their scope, from recent proposals targeting topics like diversity, pay equity, and climate change, to bring one of the most contentious political issues directly into the corporate sphere: At least three shareholder proposals are pressing major retailers to disclose the risks and costs associated with restricted access to abortion for their employees. Meanwhile, a recent study shows that women make up a quarter of executives at S&P 500 companies yet hold only 1% of company share value or about $9 billion worth, compared to the $770 billion worth of company shares held by their male counterparts. Starbucks announces its CEO search will include no internal candidates. And observers suggest that boards will need to stay focused on supply chain issues as they help guide companies through challenging times ahead.
May 26, 2022Is volatility the new normal? Boards are no longer bracing for the unprecedented – they must now navigate a landscape where turmoil is standard. Recent surveys show that the global economy slowed in May due to an array of factors including supply chain disruptions, spikes in COVID-19, geopolitical conflicts, and more, while CEOs see gloomy days ahead. Meanwhile, investor expectations continue evolving: a study finds that three out of four investors expect executive compensation to be tied to progress on ESG issues, and shareholders continue to vote against overboarded directors. In other news, Jack Dorsey steps off the Twitter board as Elon Musk says he is lining up more equity financing to complete his acquisition, possibly from Dorsey himself.
May 19, 2022Not by laws alone… California’s board diversity legislation may have been overturned, but it has already changed the landscape and we expect boards to continue their diversification efforts. After all, shareholders, consumers, stock exchanges and legislators in other states continue to demand board diversity. Meanwhile, median CEO pay at large corporations, fueled by equity awards, increased to a record $14.7 million in 2021. Intel joins the ranks of companies whose executive pay proposal earned a “No” vote; shareholder advocacy group As You Sow reports that last year, shareholders rejected 16 compensation proposals. The Moderna board faces scrutiny after several high-profile executives have come and gone in quick succession, including a newly appointed CFO who exited after just one day on the job—observers question whether the board is practicing appropriate diligence and oversight around senior hires.
May 12, 2022Reality check. Big Oil is bracing for a slew of climate-related shareholder proposals, as activists seek to challenge organizations not only around climate risk disclosure but also for not incorporating sustainability or adhering to promised objectives. Daniel Loeb continues to press Shell to split up the company, separating its renewables and liquified natural gas from its legacy fuel business. In other governance news, a study on CEO pay shows a 19% increase in 2021; about half of the companies in the study tie progress toward ESG metrics in compensation plans. And while the U.S. job market was on the up in April, the tech industry is undergoing a wave of layoffs and restructuring, as market volatility kicks in and money flows less freely.
May 05, 2022
Power in numbers. The amount of shareholder proposals concerning ESG issues continues to skyrocket, as investors express a wide range of concerns; companies are increasingly pressed to address key topics such as climate change, racial equity, and employee wellbeing, and are making changes as a result. With the leaked Supreme Court draft opinion signaling a potential overturning of abortion rights, companies can expect more pressure from shareholder activists seeking policy changes to protect women’s rights. Already Walmart, Lowe’s and TJX face shareholder proposals concerning employee access to abortion. In other governance news, a recent report finds that 43% of Fortune 500 board appointments in 2021 were first-time directors, and 45% of them were women. And Hasbro feels the heat as activist investors join forces in an ongoing proxy fight with the toy company.
April 28, 2022Beyond the law. Pressure to diversify boards remains strong, even in the absence of laws requiring it. Following the verdict that overturned one of California’s board diversity laws, shareholders are demanding more diversity on the boards of Alphabet and Wells Fargo. In the U.K., a non-governmental financial regulator is requiring boards to disclose diversity metrics and provide explanations for missing the regulator’s targets, which are not legally binding. Shareholder activists, who have successfully moved the dial on climate disclosures with their well-oiled campaigns, have so far been unable to convince Warren Buffett to provide the data they want on Berkshire Hathaway, and are launching another proposal, sure to be defeated, given Buffett’s super-voting rights. Still, new research from BlackRock finds that even a losing resolution, if it receives 30-50% of the vote, can prompt a company to consider and respond to the issues raised. And A.I. oversight is a governance topic of growing importance – is it on your boardroom agenda?
April 21, 2022Not quite there yet. While recent regulatory proposals and investor demands emphasize the need for boards to fully embrace ESG, a new survey finds that some 70% of directors don’t believe they are effectively incorporating ESG into strategy. A bright note: Mastercard announces it will now link all employee bonuses to ESG initiatives in a program that was first introduced to compensation plans for senior executives. Meanwhile, researchers studying board diversity find that, largely due to investor interest in ESG, diverse boards attract more capital. In other governance news, CalPERS is set to vote against Warren Buffet as chairman of Berkshire Hathaway, arguing that it's time for an independent chair. Meta shareholders are being asked to vote against the re-election of two board members, and instead vote to nominate two independent directors. After shareholders voiced concerns over high injury rates among workers of color, Amazon will conduct a racial equity audit. And Twitter, in response to Elon Musk’s activity, adopts a poison pill in an effort to keep the Tesla CEO at bay.
April 14, 2022Under pressure. While institutional investors continue to push on ESG concerns, many boards are still working toward concrete ESG metrics and disclosure requirements. Observers say now is the time to get on top of investor expectations and ensure your board can withstand potential scrutiny around ESG oversight. In other governance news, Elon Musk, who has decided against joining the board of Twitter and is being sued by the social media giant’s shareholders over an alleged failure to disclose his stake in a timely manner, has now offered to buy Twitter for $43 billion. And Starbucks, which has been facing a cross-country wave of unionization efforts, considers new employee benefits for non-union workers.
April 07, 2022Uncertainty. The SEC, which is increasingly attuned to cyber risk, unveils a new proposal to significantly increase disclosure requirements, including the board’s role in cybersecurity assessment and management. With proxy season approaching, a major California pension fund announces it will vote against entire slates of directors at organizations that do not have gender-diverse boards and adequate ESG objectives. Meanwhile, Elon Musk, after purchasing a large stake in Twitter, joins the social media giant’s board. Kohl’s continues to face activist investor pressure; a recent open letter to the board rails against company leadership for refusing to sell and claims the board has “eroded its credibility with shareholders.” And a judge rules that AB979, the California law requiring companies to have at least one board member from an underrepresented minority, is unconstitutional. While this notches a win for the conservative group that also seeks a repeal of California’s women on boards law, it remains to be seen whether the state will appeal. Still, as similar laws and regulations are considered elsewhere, the question remains: What does this mean for director diversity initiatives?
March 31, 2022Total embrace. If there’s one thing companies, investors, regulators and board members all have on their near-term radar, it is ESG. In a roundup of proxy season trends offered by The Conference Board, every one of the six activities identified is ESG-related. Commentary on last week’s SEC proposal on climate disclosures makes the case that attention to ESG is here to stay as a long-term feature of corporate governance. Even activist investor Carl Icahn is using the tools of his trade to tackle ESG: threatening to revamp the Kroger board in a bid to ensure better animal welfare practices and reduce the pay gap between the grocery giant’s CEO and workers. BlackRock, like other asset managers, also continues to push ESG-related issues and this year puts extra emphasis on the “G,” prioritizing board effectiveness. Meanwhile, a new study answers a long-standing governance question: What’s the optimal tenure for board members?
March 24, 2022Two words: Climate and cyber. Both are getting increasing attention in the boardroom. Climate disclosures, still voluntary for many firms, may soon be required as the SEC proposes rules that would require companies to disclose emissions and the impact climate change has on their business. At the same time, proxy advisor Glass Lewis says many boards, responding to shareholder pressure, are widening executive compensation metrics to include performance on environmental and social issues. We are also hearing from more boards looking to ensure they have appropriate climate expertise among their membership. Meanwhile, cybersecurity continues to be a hot topic, especially after President Biden’s recent suggestion that U.S. business leaders need to be prepared for the possibility of Russian cyber attacks. In this issue, we include guiding questions for boards looking to prioritize security during this time of geopolitical unrest.
March 17, 2022Ready or not… A shareholder suit accuses the board of Shell of failing to properly prepare the company for a transition to green energy in line with the Paris Climate Agreement, in the first case we’ve seen of directors being held accountable for preparing to meet net-zero milestones. Meanwhile, the Big Four accounting firms face scrutiny by the SEC, which is investigating whether their consulting and non-audit services pose conflicts of interest that would impact the integrity of their financial audits. The European Union has drafted legislation that would require public companies to appoint at least 40% women directors, while a new report shows the California women on boards law pushed the percentage of women directors from 15% to nearly 30% in just three years. As the invasion of Ukraine has prompted many businesses to pull out of Russia and/or extend support to Ukraine, we link to some guiding questions boards can ask as they consider their organization’s involvement
March 10, 2022
Troubled times. The Russian invasion of Ukraine has shifted global dynamics and economics at lightning speed. Goldman Sachs is now officially the first major Wall Street bank to announce it is exiting Russia. Moreover, coming on the heels of the pandemic and amid growing inflation, the geopolitical crisis has boards laser-focused on strategic thinking about potential repercussions for their organization. This week, we feature a few good ideas for navigating these challenges, plus a reminder to redouble the board’s focus on cybersecurity at a time when hacking is increasingly being used as both a political and financial weapon. Meanwhile, the ongoing labor shortage has companies and their boards seeking new ideas for retaining talent.
March 03, 2022
High-impact times. While all eyes are on the Russian invasion of Ukraine and its global ripple effects, boards are also focused on inflation. For many directors, this is a first time leading through inflationary times. This issue offers guidance on how boards can tackle the most critical aspects of an inflationary environment to address both short-term and long-term needs. In other governance news, public opinion and sanctions against Russia have prompted a number of board changes, with former European heads of state leaving the boards of Russian companies, as Russian oligarchs are ushered off the boards of non-Russian companies. Activision Blizzard and its directors face a shareholder suit claiming conflicts of interest in the sale to Microsoft. Tesla CEO Elon Musk and his brother are being investigated by the SEC for potentially violating insider-trading rules.
February 24, 2022
Global impact. All eyes are on Ukraine today, as Russia invades and Western nations calculate their response. The impact, economists affirm, will be felt on a global scale, in a world already grappling with inflation, supply chain issues, and other challenges. In governance news, European corporate matters have been top of mind with a recent EY survey noting European professionals find that boards are slow to integrate ESG into strategic planning, even as stakeholders clamber for companies to make greater commitments to environmental and social concerns. Stateside, some companies are considering adding a new C-suite role of Chief ESG Officer to champion the issues and keep activist investors at bay. Directors at Activision receive subpoenas as the California Department of Fair Employment and Housing seeks to understand more about the company’s workplace culture. And legendary activist investor Carl Icahn is involved in an unusual proxy battle as he agitates for better animal husbandry by McDonald’s.
February 17, 2022
Welcome to the evolving governance landscape: While 2021 featured a record amount of social- and environmental-related investor proposals, revised SEC guidelines will likely mean even more such proposals in the upcoming proxy season. Asset manager State Street unveils new guidance on board oversight of human capital management, a hot boardroom topic. In other governance news, the U.S. Chamber of Commerce is standing up for Big Tech as the behemoths face increased antitrust enforcement from the FTC. Proxy firm ISS recommends a “no” vote on Apple CEO Tim Cook’s $99 million compensation package. Kohl’s and US Foods both face continued pressure from activist investors who want to see board changes. And a study from Stanford’s Graduate School of Business finds that staggered boards, which reduce the likelihood of CEO ousters, might be beneficial for smaller technology companies.
February 10, 2022
The Great Resignation ... or the Great Upgrade? While millions have recently resigned, many aren’t truly leaving the workforce – economists at Goldman Sachs show that many are upgrading their careers instead, by leaving unsatisfying jobs and employers for better and more balanced work experiences. Boards trying to guide organizations through this complex phenomenon are adding new directors with talent management experience at record rates. Companies, too, are changing their tune on talent to stay competitive: Amazon is reportedly more than doubling its maximum base salary for corporate workers to $350,000. In other governance news, State Street’s new proxy voting guidelines take on overboarded directors and push Nom & Gov committees to evaluate director effectiveness and outside time commitments. Meanwhile, Peloton replaces CEO John Foley, overhauls its board, and cuts 2,800 jobs. Kohl’s, in an attempt to ward off activist investors, implements a poison pill strategy.
February 03, 2022Talent show. Boards are devoting more attention to talent strategy, as companies navigate the challenges of a tight labor market and seek productive interactions with increasingly vocal employees. Now, some boards are considering the addition of a talent committee. Others are moving to incorporate stakeholder metrics, such as employee safety numbers, into executive compensation plans to underscore a commitment to meeting stakeholder needs. This week, Google became the latest large company to announce an expansion in employee benefits, including an increase in paid vacation and parental leave. Meanwhile, the authors of a new paper published in the Yale Law Journal take a hard look at governance practices and determine that while the S&P has made substantial progress, smaller public companies have been much slower to adopt higher standards.
January 27, 2022Re-writing the playbook. For the first time in the Bill & Melinda Gates Foundation’s history, its board will include four independent members, added in an effort to increase independence and oversight of the $50 billion charity. Costco shareholders, despite board objections, vote for the retail giant adopt net-zero objectives, highlighting that climate change is a growing and continued concern for investors. Companies feeling the heat this week? Peloton, as investors call for the removal of CEO John Foley and a possible sale; Kohl’s, as it receives takeover offers and as hedge fund Macellum Advisors demands a board seat; and Japanese company Seven & i, whose investors are pressuring the convenience store chain to split.
January 20, 2022A sense of urgency. BlackRock CEO Larry Fink makes the case for a carbon-free future in his annual letter to portfolio companies, emphasizing that climate consciousness is necessary for businesses to be successful and remain profitable. Exxon Mobil, too, is focusing on climate change, and pledges to cut its operations to zero emissions by 2050. In other governance news, Activision Blizzard has fired or disciplined dozens of employees in an attempt to address sexual harassment and misconduct allegations. Still in the picture? CEO Bobby Kotick, who will remain with the company through its $70 billion sale to Microsoft. Credit Suisse Chairman António Horta-Osório resigns after a board investigation finds that he allegedly broke COVID-19 travel protocols. And Kohl’s faces pressure from multiple activist investors calling for a board refresh and recommending the department store giant sell itself.
January 13, 2022New year, new opportunities for good governance. Boards have a lot to think about as we begin 2022: The risks and rewards of CEOs taking a position on political issues. The pressure to take action on climate change as more businesses, governments, and consumers go green. The erosion of some corporate governance practices in the face of pandemic-related issues. The importance of establishing DEI initiatives, and following through to make meaningful impact. To help your board think through its 2022 agenda, we encourage you to read Boardspan’s annual outlook: “It’s Not Too Late To Get Ready!”In other news, State Street aims to expand board gender diversity globally. A whopping 32% of 2021 IPOs limited voting power with dual-class share structure, a high unseen since 1980.
January 06, 2022It’s an exciting time to be in the boardroom. Everyone knows the board’s job is bigger, more demanding, and far more important than ever before. Board members are embracing a larger portfolio of responsibilities and deeper engagement with an array of issues. You are listening to more constituencies, evaluating your ability to meet new challenges, bringing on new talent, considering new committees, and investing in the governance infrastructure needed to meet expanding accountabilities. Like all of us, you are letting go of ideas about “getting back to normal,” and trying to envision what’s likely to happen next. To stay a step ahead of the many risks and opportunities arising in 2022, we are highlighting these ten issues which are likely to hit your agenda.
December 23, 2021Ending on a high note: This year, more Black women were appointed to S&P 500 boards than ever before and 168 Black women now occupy 221 of S&P 500 seats. In other news, the rapidly spreading Omicron variant is presenting yet another round of challenges especially for in-person service businesses as patrons cancel plans and high numbers of workers test positive, leaving some businesses too short-staffed to open. Adding yet another pressure: shipping and logistics costs are forecast to increase dramatically in the year ahead. Meanwhile, former McDonald’s CEO Steve Easterbrook, in a landmark clawback, repays the fast-food chain $105 million after the company’s board sued, arguing that the board would not have approved his departure “without cause” had he been honest about his misconduct. And Amazon shareholders call on its board to arrange for an independent health & safety audit, citing the company’s high turnover rates and surveillance practices as reasons to investigate.
December 16, 2021Power in numbers. A group of major Facebook shareholders, bristling against the dual-class share structure and seeking governance reforms, have collectively filed eight proposals, including one for an independent chair. In a sign that workers are looking to use the shift in labor dynamics to their advantage, employees at an upstate New York Starbucks successfully unionized, and Activision Blizzard employees are now considering collective bargaining agreements. Dollar Tree and Kohl’s both face activist investors seeking to install many new directors. The Better.com board has authorized an independent investigation into the company culture after the CEO, who is now on leave, fired 900 employees over Zoom just ahead of the holidays. Meanwhile, a new report suggests that board members understand the strategic importance of addressing climate change, but many don’t yet have a solid understanding of its implications on financial performance.
December 09, 2021A new reality. As profound shifts in the market and society prompt boards to rethink their responsibilities and their composition, observers suggest the role of chair is ripe for transformation. At the largest companies today, only eight percent of board chairs are women, more than 85 percent are white, and the vast majority come from a traditional C-suite background—setting up a stark contrast with a rapidly diversifying board membership. Qualities such as agility, flexibility and a willingness to acknowledge the limits of their knowledge will be key for chairs to tackle the challenges of tomorrow. In other news, Better.com’s CEO apologizes after firing 900 employees in a mass Zoom call, an action that has led to widespread backlash, the resignation of three executives, and a delayed SPAC. Meanwhile, investor activism in Europe is heading into a “golden era,” with Britain being the biggest target. And an Activision Blizzard employee speaks out during a press conference, relaying her experience and outlining demands to address the numerous sexual harassment allegations the company currently faces.
December 02, 2021Come together, right now… As the Omicron variant unleashes yet another wave of uncertainty, boards will add value by helping management respond quickly and effectively—an outcome that is far more likely when board and management work well together. A Forbes columnist has specific suggestions for aligning the board and management immediately to tackle the latest threat. Equally important is for directors to come prepared and have the requisite expertise to help the executive team manage challenges, something a recent survey suggests may be wishful thinking. Meanwhile, Jack Dorsey announces plans to step down as Twitter CEO and off the social media giant’s board. A shareholder calls for the resignation from the Coca-Cola board of Activision Blizzard CEO Bobby Kotick, citing alleged misconduct and the various sexual harassment allegations he currently faces. And Amazon coughs up $500K after being fined for lax COVID case notification protocols; the company must now disclose a specific amount of cases to its employees.
November 18, 2021Changes in tune. Shareholders are now calling for the resignation of Activision Blizzard CEO Bobby Kotick and two long-serving board directors after a recent Wall Street Journal exposé. The piece highlights evidence alleging Kotick knew about various sexual misconduct claims and actively withheld information from the board for years. In a 4-1 vote, the SEC approves universal proxy cards which will now include all board director nominees put forward by shareholders and company management alike. Meanwhile, in an effort to remain agile and address issues in a timely manner, more boards are shifting to an ongoing and real-time board evaluation process. And ESG metrics, once seen as optional, are now a necessity for organizations to get ahead.
November 11, 2021Ultimate accountability. We’ve long said that the buck stops with the board and today’s shareholders agree, turning to the courts to hold directors accountable for alleged failures of oversight responsibilities: SolarWinds investors are suing company directors, claiming that the board failed to provide sufficient cybersecurity oversight, resulting in a massive system breach. Boeing directors agree to a $225 million settlement of a shareholder suit that claimed the board failed to provide proper safety oversight leading up to the 737 MAX crashes. Meanwhile, proxy advisor firm ISS proposes an array of voting policy changes for 2022, with a focus on climate initiatives and multi-class stock structures. Governance reforms in the U.K. are put on pause, following an outcry from executives who say the new policies are too expensive. A new survey suggests that nearly half of corporate directors think one of their fellow board members should be replaced.
November 04, 2021Getting warmer. The climate continues to be a hot topic for shareholders and corporations alike. In a win for environmentally conscious investors, the SEC revokes Trump Administration policies blocking climate change shareholder proposals. Boards are contemplating the logistics of a net zero strategy in order to meet evolving regulations, adopt climate-resilient business practices, and address concerns of increasingly vocal stakeholders. Also feeling the heat are a number of well-known companies: Facebook Inc. changed its name to Meta as it seeks to become much more than a social network amid heightened scrutiny of its social and political impact. The Zillow board eliminates the real estate company’s house-flipping service, which was losing vast sums despite the booming housing market. And Netflix employees file a complaint with the National Labor Relations Board, claiming the streaming giant retaliated against them for “speaking out.”
October 28, 2021Increased disruptions. Activist investor group Third Point announces a $500 million stake in Royal Dutch Shell, with aims to split the company in two to relieve investor tensions arising from competing strategic priorities around climate change and the traditional oil business. A union-affiliated pension fund pressures electric vehicle maker Rivian to commit to better human rights and environmental practices as it heads toward an IPO. Facebook’s Oversight Board alleges the company failed to disclose its practice of preferential treatment for popular users. Meanwhile, Netflix continues to face criticism for streaming allegedly transphobic content, highlighting the importance of corporate empathy and social awareness. And a new report declares financial resiliency, supply chain disruptions, and risks related to employees as the top three risks boards face today. Are you prepared?
October 21, 2021Moving the dial. While there’s still progress to be made, board diversity has a hit a record, with Black board representation registering a notable rise. A large number of first-time directors are diverse in a different way: younger than 50 and not yet retired. More than three-quarters of directors say they are looking to tie CEO compensation to ESG targets. A judge confirms that California will likely keep board diversity requirements in place despite continued pushback from a variety of organizations seeking to overturn the recent law. A PwC report suggests that diversity, talent management, and ESG are among the chief concerns of boards and are reshaping strategies unlike ever before, both in and out of the boardroom. Meanwhile, major executives find themselves under new scrutiny: an attorney general names Mark Zuckerberg individually, alongside Facebook, in a privacy lawsuit; and Netflix’s co-CEO acknowledges the company “has much more work to do” after initially defending a decision to stream allegedly transphobic content.
October 14, 2021This is only the beginning. While corporate governance is undergoing rapid transformation, we are only starting to see the effects. Even as board members start to see the value in diversity requirements, a review of board representation at companies catering to Hispanic consumers reveals shockingly few Hispanic board members. A massive shift in worker expectations is being felt by large employers and highlights a growing demand for board members with HR experience. Meanwhile, a Netflix co-CEO defends the decision to stream allegedly transphobic content that has sparked a backlash from employees and consumers. And a recent study leaves many asking: Are compensation incentives actually motivating oil executives to reduce emissions?
October 07, 2021Companies on the verge... Different forms of crisis are playing out at a number of companies this week: An unusual turn of events leaves Ozy Media CEO’s refuting his board’s announcement of the company’s closure and the chairman resigning, citing a lack of crisis management expertise. As Willis Towers Watson aims to bounce back from an attempted merger with Aon (shut down by the Justice Department), several major activist investors announce stakes in the multinational risk management and insurance company, and are not shy about seeking changes to improve financial results. Toshiba, also facing financial challenges and pressure from investors, promises upcoming plans for a revamped strategy. Meanwhile, a group of prominent private equity and pension fund players are joining forces to create a standard set of ESG reporting metrics for their portfolio companies.
September 30, 2021The time is now. Industries that were previously hesitant to implement Environmental, Social, and Governance standards are now working toward comprehensive strategies and greater transparency. Compensation plans, too, are starting to include ESG metrics. Climate change has become a boardroom conversation topic, and directors are grappling with ways to act in the short term while also thinking long term. And, while speaking of her own experiences, the CEO of Sundial suggests that it's time for companies to make good on their promises around diversity and investing in the Black community.
September 23, 2021Navigating uncharted waters. While societal and investor pressure mounts for companies to take action on Environmental, Social and Governance issues, this week’s news suggests that many executives lack confidence in their company’s ESG initiatives, and many general counsel remain hesitant to commit to them. An analysis of some of the largest corporations in the U.S. explores the potential power imbalances that come with unequal stock structures, and highlights ways shareholders are often left out; perfect timing for Blue Apron to signal that it will do away with its dual-class share structure. Meanwhile, Apple becomes the latest tech company to be accused of fostering a toxic and discriminatory work environment.
September 16, 2021Undergoing transformation. Companies are looking inward at their own governance structures and adapting to today’s challenges to stay up to speed. Pay for many directors stalled last year; it was the first time in a decade that many large company boards did not adjust compensation. The reason? The pandemic. The Boeing board and CEO ask for a ruling clarification after a judge permitted shareholders to sue directors over alleged lack of oversight. Meanwhile, a well-known diner chain shares their recipe for DEI success and highlights that meaningful change is not an overnight process. A study following the corporate evolutions of Microsoft, PayPal, and Hershey show us what it really takes to successfully transform an organization. And antitrust claims against Apple are dismissed in an ongoing dispute between Epic Games and two major tech giants.
September 09, 2021The changing world. Across industries and geographies, boards are at the center of dramatic shifts in corporate behavior and accountability. This week, Chevron considers carbon emissions reductions and adding a director with environmental expertise, ahead of a potential activist campaign. The board of Boeing, one of the nation’s largest companies, may be sued for alleged failures of oversight that led to two fatal plane crashes. DoorDash launches a DEI initiative that creates a measurable boost in the number of promotions of women and underrepresented minorities. And a new study shows that companies that promote a strong corporate purpose outperform their peers on financial and valuation metrics. To help your board acclimate to this era of change, see the suggestions in “What Can Boards Learn From the Pandemic?”
September 02, 2021Setting new standards. Over half of American companies plan on implementing vaccine mandates. Apple asks employees to share their vaccination status – even if they’re working from home. Facebook is set to establish an Election Policy Committee that will tackle election misinformation and political content. Regulators, too, are pushing for change; a UK authority, following in Nasdaq’s footsteps, proposes diversity targets. Meanwhile, a shareholder group intends on holding Activision Blizzard accountable for its allegedly sexist and anti-union culture. The Golden Globes prioritizes diversity with an all-new board of directors. And CEOs are increasingly taking to social media to share their unusual musings that move stock prices and have other impacts.
August 26, 2021Where the buck stops. Boards are meant to hold ultimate accountability for their organizations and are generally expected to confirm leadership, approve strategy, understand talent decisions and more. A fascinating new study suggests that board members don’t always see their role in that light, however, and many believe that they add the most value by supporting top executives. Meanwhile, the pay gap between men and women directors is making headlines, with FTSE directors in the U.K. experiencing a 40% gender pay differential. Corporations across the U.S. are issuing vaccine mandates for employees. The State of California is investigating workplace practices at some of the largest gaming companies, addressing widespread complaints of misogynistic “bro culture.”
August 19, 2021Looking long term. Boards and investors alike are shifting their strategies to align with evolving objectives. For the first time, women now fill up 30% of S&P 500 board seats after increased requirements and an investor-backed push for gender diversity. BlackRock and other investors voice their support of ESG initiatives through their votes (or lack thereof). In an effort to address high executive compensation packages, the city of San Francisco passes Measure L; businesses will be taxed if their highest-paid executives earn 100 times more than the median employee salary. Rihanna, CEO of Fenty Beauty, is officially a billionaire; emphasizing diversity and inclusion is a key component of Fenty’s strategy, one that has contributed to the company’s noteworthy success.
August 12, 2021Laying the foundation for change. In a major victory for diversity advocates, the SEC has approved Nasdaq’s proposed rule changes to require public companies listed on the exchange to include women and people of color on their boards or explain why they are not able to do so. Exxon, facing pressure from investors, is considering a net zero pledge that would require a major strategic shift. Allegations of a misogynistic culture within Activision Blizzard continue to spark outrage and prompt a bigger discussion on equity and inclusion across the gaming industry. Finally, ESG Committees are taking shape in Korea: Samsung's announcement last week was quickly followed by other Korean companies; perhaps a new trend is on the horizon?
August 05, 2021Tone at the top. Allegations of a toxic work culture are still making waves at Activision Blizzard, spurring investors to bring a securities fraud suit and the swift exit of the Blizzard Entertainment studio president. While critiques of the wealth gap and CEO-to-worker pay ratios increased during the pandemic, at least 15 boards awarded pay packages of $100 million or more for chief executives in 2020. California companies, diversifying their boards to meet new state requirements, still lag on appointing women of color. In other news, the number of women CEOs running Fortune 500 companies– 23 women, including 6 women of color–reaches a record high.
July 29, 2021News no one hoped for: As virus cases spike, Google and Apple delay office re-openings, Twitter closes its recently reopened offices, and both Google and Facebook announce a vaccine requirement for workers. Meanwhile, Activision Blizzard’s CEO apologizes and says an investigation is underway as workers walkout and the company faces a lawsuit from the state of California alleging unequal pay, sexual harassment, and fostering a “sexist culture.” ESG initiatives are gaining momentum as asset managers increasingly back each other on proxy issues concerning DEI and climate, says CalPERS, while Fidelity commits to voting against the re-election of directors who aren’t addressing those same issues. In other news, Jeff Bezos’s trip to space has some boards wondering what say they have about the risk-taking behaviors that many CEOs have a penchant for. And an observer suggests there is much to be learned from Duke Energy’s interaction with an activist investor, primarily how the company could have done it better.Beyond the news: Boardspan is genuinely excited about the new framework we developed to help boards forge a reliable path toward increasing success and adding more value. If you haven’t had a chance yet, we encourage you to spend time with The Governance Curve™ and let us know what you think.
July 22, 2021Ripple effect. ESG-conscious investors are driving change. Exxon responds to Engine No. 1’s demands with a rare external hire for CFO. BlackRock observes that leadership is more responsive to its ESG demands, even as it increasingly votes against directors who don’t support its initiatives. A new framework on corporate purpose is introduced to spur mission-driven growth. Meanwhile, the head of the Tokyo Stock Exchange defends the country’s new governance code, even as observers note that the changes have opened the door to a wave of activist investors.
July 15, 2021Glaring gaps. CEOs made almost 300 times more than their employees last year. As executive pay grows, so too does the disconnect between shareholders and compensation committees, as evidenced by a growing number of failed Say on Pay votes this proxy season. A new study suggests diverse boards are better equipped to push through difficult times, including Covid. Still, opponents of California’s board diversity laws are lobbing new legal challenges as they seek to overturn the legislation. A recent survey confirms that across the globe, the pandemic has accelerated board interest in digital solutions. And Elon Musk defends the purchase of SolarCity in court, after Tesla shareholders accuse him of brokering a deal that was personally advantageous and without proper board oversight.
July 08, 2021Higher standards for better governance. Shareholders, regulators and consumers all expect more from boards than ever before, especially when it comes to diversity, strategy, and ESG issues. The largest U.S. companies have stepped up their disclosure of board diversity data, while the S.E.C. says it may soon demand that mutual funds do the same. Activist firm Elliott Management pushes pharmaceutical company GlaxoSmithKline to refresh its strategy, its board and potentially its CEO. Law firms report a growing number of inquiries from companies needing to get abreast of ESG-related issues. Meanwhile, news of the Surfside condo board’s struggle to reach a consensus on structural repairs serves to underscore the tragedy.
July 01, 2021Big shifts in the boardroom. Board meetings may forever be changed after more than a year of remote work; a new Boardspan report shows that some 25% of boards are considering maintaining a partially virtual schedule over the long term. Board composition, too, has been transformed by the pandemic, leaving CEOs sitting on far fewer boards. And board oversight of risk expands as the SEC signals that attention to ESG matters is a must for corporate boards. Meanwhile, amid long-term criticism of insufficient oversight that may have contributed to the Max 737 crashes, Boeing adds a former pilot with commercial and military experience to its board. Toshiba’s chairman is officially voted out.
June 24, 2021Finding value in independence. Warren Buffet steps off the three-person board of the Bill & Melinda Gates Foundation, amid talk of strengthening the foundation's governance and increasing board independence. SoftBank’s Masayoshi Son says the company will prioritize governance after the collapse of several portfolio companies; already it has added four independent directors to its nine-person board. Congress has Big Tech in its sites as it considers five bills that aim to make it easier for regulators to break up businesses that wield outsize power.
June 17, 2021Tables turned? Once derided as “corporate raiders,” activist investors are more often portrayed in a positive light as they push companies to improve ESG-related performance. Engine No. 1 may have changed the game for minor shareholders with its successful strategy to secure seats on the Exxon board. Meanwhile, the investigation into board and government collusion at Toshiba continues to unfold as advisory firms call for Chairman Osamu Nagayama to step down. The European Central Bank seeks to integrate gender diversity expectations into the board approval process. And the SEC releases its much-awaited new regulations concerning a number of ESG-related issues.
June 10, 2021Seeking new strategies. Recent stats show that boards remain predominately white; a new corporate initiative aims to increase Black representation on corporate boards toward a goal of Black directors filling one in eight seats by 2028. Expected ESG policy shifts come to light with new SEC leadership. An unprecedented job market compels companies to rethink strategies for appealing to workers. An insightful look at the shareholder suit against Boeing offers valuable lessons to all directors.
June 03, 2021Historic shift. That’s how observers describe the victory of the activist investor campaign at Exxon, as new vote counts suggest that hedge fund Engine No. 1 has picked up a third seat on the oil company’s board. The hard won battle is providing lessons for all boards. Meanwhile, regulators and shareholders both find themselves frustrated in attempts to instill more leadership accountability at Tesla and Facebook. More Fortune 500 companies are led by women than ever before. And increasingly governance focuses on social issues, such as racial justice at Amazon, worker representation at Walmart, and human rights at Japan’s publicly listed companies.
May 27, 2021Changing climate? An activist investor pushing Exxon Mobil to reconcile itself to a fossil fuel-free future wins at least two seats on the company’s board. A Dutch court orders Royal Dutch Shell to drastically reduce emissions in a suit brought by an environmental group. Shareholders are pressing companies that promised greater efforts toward racial equity to audit their progress. The clamor for companies to take more responsibility for environmental and social progress is everywhere, though not every investor action is successful of course. Amazon shareholders voted down ten such resolutions yesterday, including one that would have given an Amazon worker a seat on the board.
May 20, 2021Trying times. Boards this week are grappling with everything from misconduct and discrimination to ransomware, activist investors, and more. Opposition is mounting to the reelection of two longstanding McDonald’s directors over their handling of the investigation and firing of former CEO Steve Easterbrook, who received some $56 million in severance after being ousted for having a relationship with an employee. News broke this week that former CEO Bill Gates resigned from the Microsoft board (and that of Berkshire Hathaway) in 2020 amid a board investigation into an affair he allegedly had with an employee years earlier. Meanwhile, a new report confirms that men continue to outearn women in the same role at the same company. Amazon faces a raft of new discrimination suits, while Pinterest says it is diversifying its leadership ranks in the wake of a $22.5 million discrimination suit settlement. And the news that Colonial Pipeline paid a $4.4 million ransom to free its computer system from hackers will inspire many boards to take cyber risk that much more seriously.
May 13, 2021Got a better idea? Activist investors think they do and are targeting companies across sectors, including Exxon, Box, and Duke Energy, as they seek to remake boards and strategies that suit their visions of success. Two compensation reports come out: One suggests that a number of large companies increased CEO pay even as they reduced worker pay during the pandemic; another shows that a larger percentage of women board members and executives leads to a smaller gender pay gap at nonprofits. Meanwhile, increasing ransomware attacks, such as one this week on a gas pipeline, will likely increase board focus on cybersecurity.
May 06, 2021Active investors. From executive pay to racial justice to climate risk, shareholders are making their wishes known. Initial tallies show that more than half of shareholders of both GE and AT&T rejected those companies’ CEO compensation packages. Tesla shareholders make progress in a suit alleging that the board’s approval of CEO Elon Musk’s pay package constituted a breach of fiduciary duty. Shareholder proposals concerning racial justice and equal opportunity are on the rise. ESG continues to dominate governance news, as asset manager BlackRock becomes more assertive in its support of climate-related shareholder proposals and investment firm Blackstone begins requesting its private equity portfolio companies report on ESG matters.
April 29, 2021The pandemic has sent various ripples through the economy, creating financial losses and upending strategies, nonetheless, CEO pay has continued to rise despite pushback from some shareholders and corporate governance voices. One observer considers a novel pay-saving measure: outsource the chief executive's work to AI. Meanwhile, Exxon Mobil directors are in the hot seat as the three largest American pension funds back the efforts of an activist investor, Engine No 1., to replace board members who they say lack the experience to drive the company forward. At Volkswagen, a potential change in the composition of its supervisory board is expected to expand its investment in electric. And an article in the Harvard Business Review gives board members some great ideas for playing a transformational role for the organizations they serve.
April 22, 2021Earth Day and signs of change: Some companies begin linking executive pay to climate goals. The Biden Administration makes progress on a new financial reporting framework for climate-related disclosures. Meanwhile, tech companies, long prized as generators of growth and opportunity, are now under scrutiny of governments around the world seeking to limit their considerable power. In other news, Boeing rewrites its bylaws to allow current CEO David Calhoun to remain in command as he nears the previous mandatory retirement age of 65. A record number of Latinos have been appointed to boards this year. Investors threaten to vote against Berkshire Hathaway directors over their support for an executive pay plan.
April 15, 2021ESG concerns takes center stage as major corporations mount a vocal opposition to new voting laws that many say will lead to disenfranchisement of Black and minority voters, and hundreds of business ask the Biden Administration for more and speedier action on climate change. New research underscores the value of including women in the C-suite. Observers suggest that corporate boards should expect to hear from shareholders looking for workers to be paid a "living wage." And the SEC has begun work on a standard set of rules for reporting on Environment, Social and Governance matters. Meanwhile, Box and Kohl's undergo substantial board changes while members of the Boeing board face reelection challenges. In other news a board member testifies that the chaotic condition of governance at the National Rifle Association left the door wide open to financial abuses.
April 08, 2021Conflicts of interest muddy the waters in the boardroom this week: Coinbase lays plans to go public with two of its majority shareholders (one of whom co-founded the bitcoin exchange) classified as independent directors. Investigative reporters at the Boston Globe reveal that hospital chiefs in the Boston area hold an unusual number of seats on the boards of public companies in the healthcare sector, highlighting some that have the appearance of conflict. Meanwhile, members of the free software community, including organizations like Mozilla and RedHat, are protesting a decision of the Free Software Foundation to reappoint a controversial figure who had previously stepped off the board following allegations of sexual harassment. Danone shareholders ask each directors to lay out their own strategic vision for the French food company. Carl Icahn's activist investment firm names a new CEO.
April 01, 2021Culture is a hot topic this week. Black business leaders rally corporations to take a stand against new voting laws they say will limit access to Black voters. With Meg Whitman's appointment, GM becomes the first automaker with a majority female board. Shareholders sue the Pinterest board for allegedly contributing to a "toxic" workplace culture that discriminated against women executives. WeWork, whose reportedly cultish culture and lack of oversight shaved billions off its valuation, prepares to go public via a SPAC, while Endeavor, which owns the Ultimate Fighting Championship (UFC), nominates Elon Musk to its board ahead of a potential IPO. Plus, some thoughts on cybersecurity oversight following the SolarWinds breach.
March 25, 2021Under pressure: Boards navigate scandals, a DOJ probe, activist investor demands and more. The sex trafficking scandal of financier Jeffrey Epstein continues to cast a long shadow on corporate America. After ties to Epstein had already caused their partial exits from firms they founded, this week Apollo Global Management Chairman Leon Black stepped away from the CEO role four months earlier than planned and left the board, while Leslie Wexner, founder of L Brands (owner of Victoria's Secret), announced his departure from that company's board. In other news, Visa faces an antitrust investigation into its debit card business. An activist investor group takes umbrage at Kohl's line items for corporate jets and a full time flight crew. Starbucks shareholders, signaling that they think the CEO is overpaid, vote down the company's pay proposal.
March 18, 2021Glass ceilings continue shattering this week as major corporations expand their definitions of board diversity. Citigroup has not only become the first major bank to be led by a woman (CEO Jane Fraser), but also to have the greatest percentage of women directors among global bank boards: 50 percent. JPMorgan Chase edited its bylaws to eliminate gender stereotypes, replacing “chairman” with "chair" and discontinuing the use of "he" as a substitute for "CEO," as it moves to demonstrate its commitment to diversity and inclusion. While major corporations have been slower to address racial diversity, there was a noticeable uptick in appointments of black directors in the aftermath of George Floyd’s killing. In the U.K. racial diversity on boards is rising though the C-suite is not seeing similar gains. Meanwhile, the expected increase in shareholder activism is evident with skirmishes now involving the boards of Danone, Exxon, and Kohl's.
March 11, 2021Transformational times. Signaling its willingness to entertain a business model revamp, the GameStop board formed a new strategic planning committee to be chaired by activist investor Ryan Cohen, who has been pushing for an e-commerce pivot. ESG advocates may prove unlikely champions of virtual shareholder meetings as data shows a radical reduction in the carbon footprint of meetings when held digitally rather than in person. Expectations are running high that ESG-related shareholder proposals will find more support from the S.E.C. under the Biden Administration. Meanwhile, Hawaii becomes the latest state to debate a board diversity law, while Germany enacts new legislation requiring more women on management boards, and a new report shows China has the greatest number of large companies without any women directors.
March 04, 2021Boardroom diversity continues its steady upward trajectory. Nasdaq, responding to critics, recast its board diversity proposal to be a little more lenient. A new study shows private company boards saw diversity gains last year. After four years without a black woman CEO, the Fortune 500 will soon have two, as Thasunda Brown Duckett steps into the top spot at TIAA and Rosalind Brewer takes the helm at Walgreens. At the same time, many big companies are disclosing workforce diversity data, some for the first time, as both the SEC and investors press for more transparency. Meanwhile, shareholder activism is expected to increase this year and we share some advice on how boards can prepare for the possibility.
February 25, 2021Diversity in motion. Just a few years ago, a company going public with an all-male board wouldn't have raised eyebrows, but in 2020, few would consider such a move. In fact, only one IPO debuted without any women on board. Meanwhile, big companies are making big promises around climate impact, but actual reductions to emissions remain hard to measure. The JPMorgan Chase board decides against becoming a public benefit corporation that would have aligned its interest with multiple stakeholders, after determining that the board's fiduciary duties are primarily to shareholders. New York's Museum of Modern Art is under pressure from artists to oust Leon Black from its board in the aftermath of revelations about the Apollo Global Management chairman's links to Jeffrey Epstein.
February 18, 2021Is your board fluent in climate risk? Following CEO Larry Fink's annual letter last month, BlackRock releases specific expectations for boards aiming to meet net-zero emissions by 2050. Among the guidelines: develop fluency in climate change among the whole board, rather than relying on a single director for guidance. Meanwhile, research suggests Fortune 100 boards have some distance to go to meet that goal, with only a small minority of directors considered to have any relevant ESG experience. All 12 Republicans on the Senate Banking Committee ask the SEC to reject a Nasdaq proposal to increase board diversity. New evidence is presented suggesting the Boeing board did little to oversee safety concerns during the 737 Max crisis. Amazon is sued for an alleged failure to protect warehouse workers from Covid. McDonald's is sued for allegedly discriminating against Black franchise owners. Observers expect an uptick in shareholder activism this year.
February 11, 2021Diversity in progress: A rarity among IPOs, dating app Bumble will go public led by a woman CEO and a board made up of more than 70% women. After more than a century, the U.S. Chamber of Commerce names first woman CEO, Suzanne Clark. In India, a board diversity mandate underpins a notable increase in the number of women independent directors. Meanwhile, it's looking to be a year of prominent executive transitions with Kenneth Frazier leaving Merck and Jeff Zucker departing CNN. Finally, observers expect more government regulation of ESG disclosures.
February 04, 2021Money talks and shareholders are listening: Corporate political spending has become a hot topic among investors and other stakeholders, prompting boards to consider closer oversight of political donation strategies. Google is the latest company to join the club of large U.S. corporations halting contributions to lawmakers who refused to certify election results. If you somehow missed the news: Amazon announced its CEO succession plan, as Jeff Bezos plans to hand the reins to Andy Jassy this summer and step into the executive chairman role. Oregon is the most recent state to propose a board diversity law. As cybersecurity looms ever larger on the risk landscape, Gartner predicts 40% of boards will soon have a Cybersecurity Committee.
January 28, 2021Change is in the air, and lots of it! To stay a step ahead on changes affecting boards, we encourage you to read Boardspan's 2021 Board Outlook, which offers our best thinking on where boards will be focused in the year to come. This week's news affirms our forecast: BlackRock CEO Larry Fink doubles down on sustainability, telling CEOs in his annual letter that he expects to see their plans for addressing climate risk by eliminating net greenhouse gas emissions by 2050. President Biden’s pick for the head of the SEC is seen as likely to toughen regulations on public companies. Observers note the power of Facebook’s Oversight Board as it takes up the question of whether to allow former President Donald Trump to return to the social platform, and ask whether government or private companies should be charged with such high-impact decisions.
January 25, 20212021 Outlook: 10 Must-Consider Topics For Boards This Year. Our mantra for a year of unprecedented change and ever-increasing board responsibility: Don’t be daunted, be agile!By Abby Adlerman and Kaitlin QuistgaardAgile: A good watchword for 2021. After a year filled with unimagined challenges, we are all eager for better times, a new “normal,” or at least some predictability. We're feeling optimistic, yet we can't know what's coming next. So, we offer some insights to help your board greet the future with a good read on the known challenges and ready for some unknowns. In times as dynamic as these, our best advice for boards in 2021: Be nimble. Be responsive. Above all be prepared—not for any singular event, but … for anything!
January 21, 2021Risky business. In 2020, society as a whole and corporations in particular got an up-close look at how under-appreciated risks can wreak havoc. Now research suggests that even as financial risk from ESG issues rises, many boards have yet to focus their attention on material ESG issues, in part because they lack expertise in those areas. Investors, meanwhile, are only upping the pressure on companies to take action on climate risk, diversity, and more. One place boards are putting their attention: executive compensation and how to account for goals missed in 2020 due to the Covid downturn. Apple says it will now tie bonuses to ESG targets. For those aiming to help their organizations improve outcomes around diversity, equity and inclusion, a Harvard Business Review article offers solid suggestions.
January 14, 2021Speaking up. Business leaders have launched a forceful response to last week's riot at the U.S. Capitol and related activities, with some of the largest American companies retracting funding from politicians who objected to the Electoral College certification. Organizations across all sectors announced they have ended long-standing business relationships with the Trump Organization. Social media companies weighed in, banning the President from their platforms, while Apple, Google and Amazon denied the ultra-conservative alternative social network Parler access to their services. Unsurprisingly, a recent study shows that more people trust business than they do government or the media. Meanwhile, another study suggests many boards do not have the experience required to oversee climate risk, while State Street increases the pressure on companies to improve diversity and inclusion metrics, and 2021 starts with some notable CEO musical chairs.
January 07, 2021Happy New Year from all of us at Boardspan. It's certainly been an unusual and unsettling start to the year: The riot in the Capitol, raging pandemic, and impending transition of power in Washington have set a chaotic tone with much still unknown. Still, savvy boards will be focused not only on current affairs, but on arising risks and opportunities. As an observer notes, the role of corporations has forever been changed by the pandemic and expectations that companies engage on issues previously handled by government. Corporate leaders have become overtly active in politics. After years of social activism, tech workers at Google have formed a union. Yes, we are living through interesting times... and more than ever boards need the wisdom, grit, and strategic thinking to help their organizations navigate these choppy waters, while charting the course ahead. Some of our best advice for managing crisis is captured in the final article of this issue, which we shared at the start of the pandemic and seems appropriate to revisit today. Despite the present uncertainties, we welcome a new year of opportunity for positive change and, as always, we look forward to hearing how we might help you and your board do its best work.
December 17, 2020Unpredictability: call it the theme of 2020. A massive cyberattack penetrates government agencies and corporations, with hackers co-opting the very cyberdefense tools employed by those organizations to mount their attacks. A new study reveals that despite the economic hardships suffered by many, 45 of the 50 largest U.S. companies have turned a profit during the pandemic. D&O insurers foresee rising numbers of insolvencies, cyberattacks, and class action suits on the horizon. Meanwhile, McKinsey apologies for its role in the opioid crisis, the Volkswagen board rallies behind the CEO and embraces a shift toward electric vehicles, and Exxon, bowing to activist pressure, agrees to reduce greenhouse emissions.
December 10, 2020Busy season for regulators: The Federal Trade Commission and 48 states file lawsuits accusing Facebook of illegally eliminating competition through its purchases of WhatsApp and Instagram. The suits seek to prove that the social media giant has unfairly acquired monopoly status, which some see as similar to a Justice Department suit recently brought against Google that accuses it of monopolizing search. Observers suggest a rise in ESG disclosure requirements under the incoming Biden Administration. Meanwhile, Nasqaq's proposal to require more board diversity, along with California's new board diversity law, is expected to prompt boards to look beyond "the usual suspects" and seek out fresh board talent. (See Boardspan CEO Abby Adlerman's comment on the subject in the Business Insider article below.)
December 03, 2020Climate of change. This week: Nasdaq proposes requiring companies listed on the exchange to maintain diverse boards or risk being delisted; the SEC will need to approve the rule, which is already drawing praise from the U.S. Chamber of Commerce. A similar requirement of the Toronto Stock Exchange spurs a dramatic uptick in women on boards. More than 40 major U.S. corporations collectively ask Congress and the incoming Biden Administration to seek ambitious climate solutions and to rejoin the Paris Accord. Uber, JetBlue and several other companies join Amazon's Climate Pledge, agreeing to measure and report on greenhouse gas emissions, implement decarbonization strategies, and offset any remaining emissions to become effectively carbon neutral by 2040. Investors continue pressing corporations to tie executive pay to ESG initiatives. Meanwhile, a post-pandemic forecast suggests we can expect more activist investor activity than 2020, less than 2019.
November 19, 2020Accountability continues to be front and center as more fines are levied against former Wells Fargo CEO John Stumpf for his role the bank's fake account scandal and independent board members at L Brands open a second inquiry into former CEO's Leslie H. Wexner's relationships with Jeffrey Epstein. McDonald's continues to press for a $37 million clawback from ousted CEO Steve Easterbrook. Meawnhile, observers say San Francisco’s recently passed 'Overpaid CEO Tax,' which will levy an additional tax on companies whose executive salaries far outpace employees, might harm workers rather than helping them. Key members of the business community have begun to look beyond the challenges of the presidential transition and set the tone for 2021 with a push for more economic stimulus and fewer tariffs in discussions with President-Elect Biden's team.
November 12, 2020Quick thinking. This spring SoftBank founder Masayoshi Son, watched his investment firm's share price plummet and swiftly embraced a dramatic overhaul of the firm's strategy and a remaking of its board--and already sees a radical improvement in its prospects. Pfizer met the pandemic with a new CEO, who placed a $1 billion bet on developing a Covid-19 vaccine and appears to have succeeded, a feat that may only have been accomplished with the support of a scientifically savvy board. Meanwhile, Kodak is under scrutiny after reporting that former executives received millions of dollars for stock options they had already forfeited. San Francisco voters levied a new tax on companies whose executives take home more than 100 times what a typical worker earns.
November 05, 2020Leadership is under the microscope in all arenas right now, from the White House to the corner office. Jack Dorsey, after facing scrutiny by activist investor Elliott Management, retains his role as CEO of Twitter. As Apollo Global Management CEO Leon Black tries to clear his name through a board investigation of his relationship with Jeffrey Epstein, investors allege a lack of independence in the committee leading the investigation. Business leaders of all stripes are bracing for the challenges of a winter shaped by the global pandemic, alongside the potential for a party split between the White House and Senate that would provide little predictability about the government's position on economic measures, its Covid response, and more. Meanwhile, as California's board diversity law has reshaped board composition in the state, more states consider similar legislation.
October 29, 2020Goldman Sachs says it clawed back $174 million from current and former executives, regardless of personal involvement, as it aims to recover its reputation following the global bribery scandal that will cost it some $5 billion in financial penalties. The firm's CEO and board both issued statements further explaining the response. Meanwhile, the CEOs of Twitter, Google and Facebook were grilled in a Senate hearing about their efforts to moderate online speech. And investors continue to ratchet up the pressure on companies to be transparent about climate risk, diversity and more.
October 22, 2020Tangling with the Justice Department is a common theme this week: Google faces a long anticipated antitrust suit filed by the D.O.J. and 11 states. Purdue Pharma admits that it conspired to push prescription opioids "without a legitimate medical purpose" and pays more than $8 billion to settle criminal and civil suits brought by federal prosecutors. Goldman Sachs is expected to pay nearly $3 billion, but sidestep a requirement for increased compliance oversight, as it settles a bribery investigation brought by the Department. In other news, the U.K.'s accounting regulatory body is rewriting its rules such that auditors must look for fraud in their clients' accounting. Microsoft says it will seek out diversity candidates for all roles, right up to the CEO. Lawyers offer guidance on how to tie executive pay to diversity initiatives.
October 15, 2020Coming soon to corporate America: More diversity. Whether by law, pledge or performance incentive, companies and their boards are moving toward greater racial and gender inclusiveness. In the two years since California's gender diversity law was signed, requiring public companies domiciled in the state to include at least one woman on their board, the number of all-male boards dove from 30 percent to less than 3 percent. Meanwhile, a new California law requiring public companies to include at least one underrepresented minority on their boards is being challenged in court. Starbucks, aiming for 30% of its employees to be Black, Indigenous or People of Color by 2025, says it will tie executive pay to leaders' embrace of inclusion initiatives. Legal observers note that shareholder suits are targeting individual directors of companies that publicly commit to diversity goals and then fail to keep them.
October 08, 2020The New Normal. While no one knows what the future will hold, increasingly boards are embracing the idea that it won't be a return to How Things Used to Be. Observers note that the pandemic is prompting boards to more quickly look beyond shareholder-focused governance and support the interests of multiple stakeholders. Meanwhile, Citigroup is fined $400 million for failing to correct "longstanding deficiencies." A Wall Street Journal investigation shows that shale company CEOs received dramatic pay raises even as shareholders lost billions. The Labor Department launches an investigation to determine whether Microsoft's pledge to increase Black representation in the workforce is discriminatory. JPMorgan, bowing to longstanding shareholder pressure, says it will shift away from fossil fuel investment.
October 01, 2020Board diversity is now the law in California, as the governor on Wednesday signed legislation requiring public companies to have at least one director who identifies as diverse. Meanwhile, board oversight becomes a hot topic as shareholders sue the Boeing board, citing a failure of oversight around safety issues and around the company's response to the 737 MAX crashes. Alphabet settles multiple shareholder suits about its handing of sexual harassment allegations and agrees to greater board oversight of future cases. Reports reveal early investor qualms about Nikola founder Trevor Milton, raising questions about GM's due diligence before investing $2 billion and whether the company had adequate oversight. Volkswagen continues to feel repercussions of its emissions scandal, with a top executive now on trial for wrongdoing that the company has long said was undertaken by low-level workers.
September 24, 2020Restructuring. Fall is typically a time to take stock of what has been and prepare for what will be. Amid a global pandemic, a reckoning on race, and increasing demand for ethical corporate behavior, more boards are considering the structures that will best serve them in the future. At electric truck maker Nikola, a change in chairman follows allegations of fraud and the founder's exit. At public pension fund CalPERS, the board is seeking to bolster its oversight processes following allegations of executive misconduct. The World Economic Forum finalizes its guidelines on sustainability metrics, pushing corporations one step closer to integrating standard ESG efforts into financial reporting. Meanwhile, boards everywhere are pushed to consider their diversity efforts as California moves closer to a law requiring public companies to include board members from "underrepresented communities" and Latino corporate leaders suggest their community is being overlooked in the rush to appoint more women and Black board members.
September 17, 2020"Doing well by doing good" has always been an aspirational goal, but there is more pressure than ever for organizations to take the wellbeing of people and the planet into account. Shareholder demands resulted in the exit of three top executives last week at mining company Rio Tinto after the company knowingly demolished a 45,000 year old Aboriginal sacred site in Australia. D&O insurance rates increased by around 70 percent in the U.S. and doubled in the U.K. this year, as shareholders target boards with lawsuits over issues including failures of corporate culture. Both Boeing and the FAA take Congress's blame for failures of oversight in the 737 Max crashes that led to the deaths of 346 people and billions of dollars in losses for the airline maker. Meanwhile, as the pandemic has caused bankruptcies and closures of retail businesses across the nation, Amazon announces plans to expand its workforce by 100,000 employees and Walmart unveils a drone delivery service.
September 10, 2020As Peter Thiel's big data analytics company Palantir prepares to go public, critics decry a proposed voting structure that would allow the founders to hold a commanding vote even if they sell their shares. Citigroup's Jane Fraser will become the first woman CEO of a major Wall Street Bank. Zillow and NextDoor are among a group of companies pledging to add a black director within a year. The Labor Department proposes new rules that would limit the methods for shareholder voting at some pension funds, apparently to limit ESG investment strategies. Amazon brings on a new board member, former NSA Director and Retired General Keith Alexander.
September 03, 2020Many companies issued statements supporting racial justice initiatives this summer. Now California legislators aim to raise the bar for all public companies based in the state by requiring them to have at least one director from a minority community; the bill is on the governor's desk. Meanwhile, as the McDonald's board continues to wrestle, very publicly, with its former CEO, the company faces a new challenge: a $1 billion-lawsuit alleging that it discriminated against Black franchise owners. Directors looking to stay ahead of the curve will appreciate the valuable guidance on scenario planning and cyber risk in this issue.
August 27, 2020ESG. It's not just another acronym. Environmental, Social and Governance issues are taking center stage as companies and their boards navigate rapidly shifting terrain. E: Major asset managers and climate activists alike are driving divestiture from energy and mining companies like Chevron, Exxon and Rio Tinto they claim have not properly addressed climate-related risks. S: The McDonald's board expands its investigation into misconduct that may have not been limited to that of the former CEO and may have involved the HR department. The leadership of Goodyear Tires finds itself backpedaling on a policy intended to keep politics out of the workplace after President Trump urged a boycott of the company for allegedly discouraging the wearing of Make America Great Again caps. G: Meanwhile the predominantly white, male board of the U.S. Postal Service finds its composition, as well as its support of new Postmaster General Louis DeJoy, under scrutiny. In related news, an observer points out, that this would be a good time for boards to pay increasing attention to possible reputational risks.
August 20, 2020On purpose: It’s been a year since the Business Roundtable rewrote its statement on corporate purpose for the first time in more than four decades. The association of CEOs of major public companies last year declared shareholder primacy an outdated ideal and pledged to transform business as we know it so that multiple stakeholders including employees, customers and the planet might benefit. Now voices across the business media are weighing the progress made. Spoiler alert: No consensus has been reached. Meanwhile, institutional investors are clamoring for companies to report on climate risk; CEO compensation is expected to rise to record levels despite the pandemic that has left millions out of work; and studies show that diversity initiatives have not resulted in the appointment of more black directors.
August 13, 2020Oversight. It's one of a board's primary responsibilities and an area where investors, regulators and the public at large demand increasingly accountability. This week the McDonald's board is under the microscope for lack of oversight, even as it sues former CEO Steve Easterbrook for alleged lying to coverup inappopriate relationships with employees. The board and officers of the National Rifle Association face accusations that they created a culture of noncompliance that led to theft of $64 million and that could lead to the dissolution of the non-profit. Former board members at the German automaker Audi now face fraud charges for allegedly having known about or failed to stop Volkswagen's "dieselgate" emissions scandal. Meanwhile, pledges to diversify boards are under renewed scrutiny with public patience wearing thin for organizations that fail to meet their stated ambitions.
August 06, 2020Leadership through disruption. Three CEO transitions at large U.S. companies highlight the need for innovators and competent navigators of change in the C-suite. Bonus: Clorox's new CEO boosts the number of women chief executives in the Fortune 500 to a record high. Boards, too, are being asked to look into the future and figure out how best to embrace, adapt or exploit the inevitable changes. Whether planning for post-Covid sustainability or considering the impacts of AI, boards are advised to look beyond current crises and lay the groundwork for what lies ahead. Meanwhile, Trump removes the chair and a director of the federally owned Tennessee Valley Authority, citing the utility's plan to outsource some contracts to foreign companies. Rupert Murdoch's son James walks away from the family business and the board of News Corp.
July 30, 2020Is it possible to compete with the giants of tech? That’s the question Congress aims to answer with a yearlong investigation into the business practices of Amazon, Apple, Facebook and Google that included CEO testimony on Capitol Hill this week. A new study shows that while companies and workers have been hard hit by the economic downturn, executive pay remains largely untouched. Analysis suggests there could be significant repercussions from a shareholder suit that claims Oracle’s lack of board diversity constitutes securities fraud. And as Covid continues to spread uncertainty, experts offer advice on prioritizing CEO succession planning.
July 23, 2020Diversity challenges. The Fortune 500 now includes just four Black CEOs, after Tapestry CEO Jide Zeitlin stepped down reportedly in the wake of sexual harassment allegations. At least three shareholder suits have been filed—against Qualcomm, Oracle, and Facebook—for touting diversity efforts yet failing to include Black board members and executives. And a thoughtful look at Ben & Jerry's long-term commitment to social justice issues reveals the effort required to turn good intentions into meaningful actions. Meanwhile, Tesla's high-velocity increase in share prices means CEO Elon Musk will secure another tranch of his comp package--the highest ever awarded by a board.
July 16, 2020Short term thinking or long-term planning? Amidst our health, economic and social crises, many companies are straining to find a sustainable path forward. Citing the recent crash of fossil fuel consumption, a multitude of oil & gas companies continue to file for bankruptcy. They are walking away from large scale environmental damage at abandoned well sites while paying out millions of dollars in executive compensation. Speaking of fuel, all three elements of ESG are contributing to more activist investor campaigns this year, although fewer are succeeding. Elsewhere, Amazon workers are required to show up or lose their jobs, despite working conditions that are exposing them to Covid-19. Meanwhile, AXA Investment Managers expands its director diversity requirement to Japan as well as emerging markets, while major utility First Energy links bonus pay to diversity goals.
July 09, 2020Ongoing turbulence. As the economy continues to be buffeted by the virus and related shifts in consumer behavior, executives and board members are drafting new plans to stay aloft. United Airlines says it may lay off as many as 36,000 employees as airlines acknowledge that the industry won't see a swift recovery, and Brooks Brothers becomes the latest retailer to file for bankruptcy. Experts say that companies' survival may depend as much on their long-term sustainability strategies as on managing to the moment, while new research suggests that companies that invest in ESG efforts and maintain high levels of employee satisfaction reap rewards for shareholders, too. In other news, accounting scandals at China's Luckin Coffee and Germany's Wirecard highlight the trouble with insufficient oversight. D&O insurance rates for cannabis companies rise amid a surge in lawsuits. California considers a bill requiring companies to have at least one African-American, Hispanic or Native American director.
July 02, 2020Corporate Social Responsibility takes on new meaning as hundreds of companies, including household names like Coca-Cola and Starbucks, join an advertising boycott of Facebook meant to pressure the social media giant to revise its hate-speech policies. In board diversity news this week, we learn that that S&P 500 boards have added fewer black directors this year than last, while a new study shows that the majority of directors appointed to the boards of US Federal Reserve regional banks are white (74%) and male (57%). Meanwhile, the implosion of Wirecard, in which 1.9 billion Euros disappeared from the balance sheet of the Munich-based payments processor, has inspired renewed calls to update Germany’s two-tier governance structure.
June 25, 2020The pandemic and protests, together, are reshaping priorities and possibilities for companies of all types. Many corporations are pledging to make policy changes to address racial injustice. Others are filing for bankruptcy after arranging seven-figure bonuses for CEOs—a retention measure that some will find hard to reconcile with the widespread calls to address economic inequalities. Meanwhile, the Tesla board, whose members are among the highest paid in their class, now faces a shareholder lawsuit accusing members of enriching themselves at the company’s expense. As shareholder suits of all types continues to climb, D&O insurance rates are rising.
June 18, 2020Some good news: Board diversity is improving, with a record 59 percent of S&P 500 board appointments last year going to a woman or to a man of color. Still, there are very few black board members, says former Xerox CEO Ursula Burns, who suggests quotas may be needed to drive change. Levi Strauss pledged this week to add a black director. Meanwhile, civil rights groups call for corporations to join an advertising boycott of Facebook over its failure to remove hate speech. Adidas employees ask the board to open an investigation into the company’s HR chief and her approach to handling race policies. As investors pile into ESG funds and shareholders demand greater accountability on ESG issues, boards are advised to lean in and ensure companies have well-defined ESG priorities and progress. Plus, advice for boards overseeing businesses re-openings following the shutdown.
June 11, 2020As the nation's attention shifts from the virus to the protests demanding an end to racial injustice and police brutality, many companies, executives and boards are formulating responses. Some black executives offer an emotional appeal to Corporate America to address systemic racism. Amazon stops police use of its facial recognition technology, all but demanding that Congress enact stronger regulations to prevent abuse. Estee Lauder says it will review its policies with an eye to addressing racial injustice as employees seek the removal of a board member whose political donations, they say, conflict with the company's condemnation of racism. A number of executives resign amid accusations of discrimination or racist behavior, including CrossFit CEO Greg Glassman. Meanwhile, Washington State ushers in a gender diversity law that requires public companies to include 25% women directors. Patagonia CEO Rose Marcario announces her exit. A host of ESG issues are attracting increasing shareholder and investor interest.
June 04, 2020Dear Readers, These last 10 days have been gut-wrenching in America, causing many of us to look deeply in the mirror and ask ourselves: Is this who we are? How could these tragic events happen? We are an answers-driven society, a problem-solving community, and the reprehensible issues of racial injustice that we are facing don’t fit the narrative that we’ve been telling ourselves. That narrative has been playing for way too long because we wanted to believe everything was okay. We finally are acknowledging that it’s not okay for many, especially in the Black community, and never was.
May 28, 2020There's a new recognition that anything is possible. Just a few months ago the prospect of a global pandemic and massive economic contraction was unimaginable to most, but today companies everywhere are reevaluating risk and boards are pushing themselves to prepare for managing through crises that might previously have been considered outlandish. Shareholders in companies such as Amazon, Exxon, and various financial institutions are growing ever more vocal about the need for leadership to seriously consider ESG risks such as the effects of climate change, worker health and safety, and the right for employees to express their opinions, yet such resolutions rarely pass. Walmart workers are reinvigorating their fight for a seat on the board. Some see an increased risk of boards being sued for failure of oversight, and we link to a commentary on how boards might ward off that fate. Meanwhile, Lisa Su of AMD is the first woman to top the CEO salary charts.
May 21, 2020As restrictions are eased and the delicate process of re-opening gets underway, business rules are being rewritten and boards have a powerful role to play. A good deal of guidance is on offer, but certainly top of everyone's list is health and safety. A recent survey suggests trust in companies may need to be rebuilt as employees and customers express concern that businesses will put profits before the well-being of people. ESG issues are at the forefront at companies like French yogurt maker Danone, which is rewriting its bylaws to include new protections for people and the planet. British oil company BP says it is deepening its commitment to energy transformation in the wake of the virus and its impact on oil markets. In the U.S., the government and tech companies see an opportunity to increase self-sufficiency by relocating chip manufacturing from Asia to the States. Finally, cyber insurers say they will reassess risk as companies favor long-term remote working arrangements.
May 14, 2020There's no question that business is undergoing seismic shifts right now, something felt up and down many companies, all the way to the board level. As directors take on ever more responsibility, corporations may feel the need to raise director compensation, according to a new survey. In the meantime, observers note that stratospheric CEO pay may be headed back down to Earth. Already Uber shareholders are being urged to vote against a proposed CEO pay package, as the company's workforce is cut by thousands of jobs. Meanwhile, the “work from home” policies adopted by many companies have been so successful that some high-profile firms are reconsidering the need for workers to return to their offices, portending big impacts on commercial real estate in major markets, including Wall Street.
May 07, 2020When things go wrong, there's a natural tendency to think they will soon right themselves. Sometimes, though, things get worse before they get better. BlackRock CEO Larry Fink suggested as much on a call this week, warning of many bankruptcies, increased corporate taxes and other difficulties in the wake of the shutdown. Indeed, J.Crew became the first major retailer to file for Chapter 11, with several others believed to be close behind. Meanwhile, investors are taking a keen interest in how employers are protecting workers health and safety in the face of the virus. Many boards, not surprisingly, are rethinking risk management.
April 30, 2020Board independence: Shareholders like it, but not all CEOs support it. Facebook investors have asked repeatedly to separate the chair and CEO roles and for CEO Mark Zuckerberg to adopt more accountability to the board, but reports suggest that things are trending in the opposite direction. Tesla CEO Elon Musk, who was required by the S.E.C. to give up the chair role, has decided to personally cover Tesla directors' exposure to lawsuits rather than have the company pay for D&O insurance; the company says director independence won't be compromised. Boeing's most prominent shareholder voted against re-election of the company's chairman this week, as a majority of votes favored requiring an independent chair. Meanwhile, investors are expected to take a critical stance on executive pay this year and proxy season is expected to include a greater focus on ESG. Finally, observers caution boards that doing things the way they've always been done is a leadership strategy that can weaken rather than strengthen an organization: Be innovative.
April 23, 2020Boards may be busier than ever offering guidance and oversight through this time of crisis, yet many are looking past the current moment to identify and mitigate potential future risks. Two issues that have taken on heightened emphasis in the current era are emergency CEO succession planning and emergency bylaw provisions to determine the course the board will take in the event multiple directors are unable to fulfill their duties. Some boards are also making adjustments to CEO compensation, with many chief executives taking salary cuts and receiving substantial new option packages. Meanwhile, PG&E's CEO is stepping down after just one year on the job. Altria's chairman and CEO exits after 28 years. SAP streamlined its leadership from two co-CEOs to a singular leader.
April 16, 2020Activist investor Starboard Value is challenging the boards of five companies whose share prices have fallen during the coronavirus crisis and observers expect more such activity in the weeks to come. It’s a crucial moment for boards to assess their vulnerabilities and prepare for activists, and a new report can help identify industries and dynamics that put companies at particular risk. Meanwhile, suggestions abound for how boards can prepare for the possibility that a CEO tests positive for Covid-19 or for how they can stay abreast of the most important information in a crisis. On a positive note, State Street’s “Fearless Girl” statue marks her third birthday with the news that 681 all-male boards have added at least one woman since her arrival on Wall Street.
April 09, 2020The global shift to remote work and video conference calls is giving boards plenty to think about: Not only must they manage their own needs for virtual meetings, privacy, and security, but they need to ensure their organizations have appropriate policies for remote work and sufficient cybersecurity measures in place. The sudden transition to video calls has been both a boon and a headache for Zoom, which now faces a class action suit claiming the video conferencing company failed to disclose privacy and security flaws. In other news, Airbnb's IPO is presumably postponed and the company is raising $1 billion from private-equity firms. PG&E's bankruptcy deal may not survive the sudden decline in its share price. WeWork directors are suing SoftBank after it pulled out of a promised $3 billion stock purchase. And there are good suggestions for boards seeking to stay steady in times of crisis and keep an eye on the road ahead.
April 02, 2020As business slows down all over the world, boards may find themselves busier than ever. The challenge, of course, is to simultaneously support management through today's acute problem solving while developing ideas for tomorrow's strategies and opportunities. This week, there is little news from the boardroom, but a great deal of thought-provoking commentary: Directors of public companies whose stock has been hard hit by the crisis might start preparing for likely interactions with activist investors. Boards of all types might want to consider the scrutiny and even blame they might be subjected to as people look for something or someone to hold accountable. Many directors will be looking carefully at their risk oversight policies and ensuring they are on top of everything they can be. Balancing the need for attention on the present moment and preparation for the future is something boards always strive for. Today, this dual-mode thinking is more important than ever.
March 26, 2020No board wants to think about it, but everyone should. As if we don't have enough on our minds, boards are reminded to make temporary succession plans to ensure smooth operations should a key executive need time to recover from the virus. Altria CEO Howard Willard is currently on medical leave after contracting Covid-19. Meanwhile an observer questions whether efforts to limit overboarding has depleted boards of the breadth of experience and industry-spanning connections that can be invaluable in times of crisis. In other news, former ambassador to the U.N. Nikki Haley quit the Boeing board over the company's decision to seek a federal bailout. Activist investor Carl Icahn and Occidental Petroleum settled a nearly year-long dispute, with CEO Vicki Hollub keeping her job and former CEO Stephen Chazen named board chair. WeWork board members say they will do everything they can, including taking legal action, to ensure that SoftBank makes good on a bailout agreement reached last fall after the Japanese investor suggested it might back out.
March 19, 2020Support, resilience and action in the face of adversity. As the reality of the coronavirus crisis sets in and upends everything, there is a growing consensus among business leaders that the challenges should be met with bold decisions and sacrifices. This is the time to intelligently rewrite the rules so that our collective health and wellbeing is assured. From a plea for businesses to invest in ventilator manufacturing to the offer of free videoconferencing services to K-12 schools, CEOs across all sectors are stepping up to lead. Harvard Business School professors offer multiple perspectives on how executives can use this moment to pave the way to a better future. Offering sage advice to support executives as they manage through the crisis, Boardspan CEO Abby Adlerman and Board Member Mary Cranston pen an open letter to the board community. All of these ideas are worthy of your consideration. And for those eager to hear of other news, Bill Gates steps off the boards of Microsoft and Berkshire Hathaway, while Kenneth Chenault leaves the Facebook board and takes Gates's seat at Berkshire Hathaway.
March 13, 2020Friends,Yes, we’re living in times of uncertainty with the weight of the unknown bearing down on all of us. Together we’re facing unprecedented challenges, and together we will work our way through them. As a board member, your leadership has never been more needed. In this spirit, we share our collective wisdom to help our community of board members be the beacons of leadership and support their management teams on the front lines.
March 12, 2020The buck stops with the board—at least it should if you're hoping to forestall a crisis. Wells Fargo Board Chair Elizabeth Duke and another director found themselves in the crosshairs of lawmakers for not doing enough to fix the troubled bank, and resigned just ahead of a Congressional hearing on the matter. Boeing's new CEO Dave Calhoun apologized after upbraiding his predecessor in an interview, in which he also suggested that the Boeing board's trust in the former CEO kept them from questioning the strategy that brought the planemaker to the brink of disaster. Meanwhile, Twitter appeased activist investors with the promise of a $2 billion share buyback program, and will keep Jack Dorsey as CEO. Facebook brings two new women directors on board. And as the coronavirus pandemic continues to dirsupt live shareholder meetings, some predict that virtual meetings will become the new normal.
March 05, 2020Crisis management is on many minds this week as the coronavirus puts the global economy through its paces, and boards consider their role in assessing and limiting risk. Meanwhile, activist investors are raising their voices: one aims to replace Twitter CEO Jack Dorsey and claim as many as four seats on the Twitter board, another is pressuring Barclays to fire its American CEO over his relationship to sex offender Jeffery Epstein. More CEO turnover is in the news, with both Amtrak and Harley-Davidson announcing departures from the corner office. Hawaii's legislature, following the lead of California and others, sends a bill to the state senate that would require the boards of public companies based on the islands to include at least one woman.
February 27, 2020The end of an era? Bob Iger announces a sudden exit after 15 years at Disney. Les Wexner is stepping down from L Brands after 57 years. Tamara Ingram, who headed the ad agency JWT, resigns from her post as chairman of the post-merger Wunderman Thompson in a move that has been interpreted as a sign of trouble for the world's oldest agency. Meanwhile, in California another 1,000 women directors must be added to boards this year if public companies are to avoid fines for breaking a recently passed state law. Fortunately for them, Boardspan CEO Abby Adlerman offers valuable tips on building boards that can really move the dial on board performance while addressing diversity in an interview on Bloomberg TV. In other news, Wells Fargo, which has already paid fines and lost two CEOs over the fake accounts scandal, agreed to pay another $3 billion to settle with the Department of Justice and the SEC.
February 20, 2020Leadership takes many forms. Nissan's new CEO asks for just a little patience from the board and angry shareholders alike, saying he will accept the consequences if he doesn’t succeed at making the company profitable. Elon Musk demands more regulation for all organizations using AI, including for his own company OpenAI. Multinational investment bank UBS unveils a CEO succession plan: the head of ING will step into the role later this year. PG&E's leader, meanwhile, could be replaced by the state, or the utility could simply lose its operating license if it continues to endanger lives if a proposal by California's Public Utilities Commission is taken up. Meanwhile, six trustees resigned from the Cooper Hewitt, Smithsonian Design Museum in protest of the CEO's dismissal by the Smithsonian after she was investigated for allegedly violating a conflict of interest policy when making wedding plans.
February 13, 2020Activist investors: a problem or a solution? Elliott Management has big ideas it says will improve the fate of a couple of companies in dire straits. SoftBank, reeling from losses and the WeWork debacle, has conceded that Elliott may be right about the need for buybacks and governance improvements. Coal mining company Peabody Energy, whose profits continue to spiral downward as coal usage declines, adds several new board members from Elliott who will try to turn things around. Meanwhile, the Credit Suisse board, unmoved by vocal shareholders, accepted the resignation of CEO Tidjane Thiam, who was linked to the bank's spying scandal. Nissan demands $91 million in damages from former CEO Ghosn. And small shareholders may find it tougher to file resolutions if the SEC has its way.
February 06, 2020Moving on. More high-profile CEO departures are in the works: Jeff Weiner steps aside to become executive chairman at LinkedIn. Ginni Rometty hands the reins to Arvind Krishna at IBM. The CEO of Ocean Spray Cranberries loses his job for violating the company's harassment policy. It's too early to know whether Credit Suisse CEO Tidjane Thiam will survive the spying scandal at the bank, but shareholders are rallying behind him and some suggest that Chairman Urs Rohner should back the CEO or step down himself. Also, WeWork names a new CEO: real estate veteran Sandeep Mathrani. Meanwhile, an executive at L Brands, the parent of Victoria's Secret, found herself literally locked out of her workplace after trying to alert the board to allegations of harassment.
January 30, 2020Embracing diversity. Goldman Sachs, as the world’s largest IPO underwriter, says it will no longer take public those American or European companies whose boards don't have at least one diverse director. Speaking of IPOs, as Airbnb prepares to go public (with several women directors already on its board), the company is affirming a more diverse vision of stakeholder value and committing to serve multiple constituencies including customers, communities, shareholders, and employees. Meanwhile, the fallout from Wells Fargo’s fake account scandal continues as regulators ban former CEO John Stumpf from the banking industry and fine him $17.5 million. J.Crew and Renault both get new CEOs. California considers a tax to reduce the pay gap between CEO and average worker salaries.
January 23, 2020Carbon competition? Following announcements from Amazon (to go carbon neutral by 2040) and Intel (to be carbon negative by 2030), Microsoft says it will extract more carbon from the air by 2050 than it has produced since its founding in 1975. Cisco and Autodesk, also making big strides in addressing their environmental impact, land spots among the top 5 most sustainable corporations in the world. Meanwhile Xerox is using a small stake it bought in HP to nominate 11 new directors, as part of an attempted takeover. Allegations of sexual harassment and discrimination shine a spotlight on the the Grammy Awards just before showtime, and Best Buy's board is investigating allegations that its CEO engaged in an inappropriate romantic liaison with a colleague. A new study from MIT suggests that boards looking to bring more innovation into strategy discussions would be wise to ensure there are women directors sitting at the table.
January 16, 2020Accountability is our 2020 watchword. In his annual letter to the CEOs of large companies, BlackRock CEO Larry Fink urges corporations to do more to address their environmental impact or face consequences. The world’s largest asset manager, with $7 trillion under management, has rewritten its investing policies and will begin voting against board members whose companies don’t address sustainability issues and the causes of climate change. This seems like a fitting start to a year that will see boards increasing their focus on issues like ESG, Risk and Oversight. Meanwhile, a new study sheds light on what it takes to build a better company culture, with that very question separately being put to Boeing's new CEO. Finally, in a roundup of issues shaping the current governance landscape, Boardspan CEO Abby Adlerman tells BloombergTV's audience that 2020 is the Year of Accountability. You can quote us on that.
January 09, 2020Your guide to governance issues in 2020With complexity, uncertainty, and rapid change dominating the business landscape, the expectations placed on boards are shifting, and fast. Put simply, board members are expected to do more, do it better, and take greater accountability than ever before. Boardspan’s Top 10 list calls out the issues that most boards will be tackling in 2020. Don’t be surprised if your colleagues raise these topics — and if they don’t, maybe you should.
December 19, 2019Boardroom politics. At Facebook, directors are at odds over a company policy that observers say could impact the 2020 elections. Board member Peter Thiel is advocating for the social network to continue its policy of accepting political ads without verifying the truthfulness of their claims, while other directors are pushing for changes to that policy or even to ban political ads. A Wall Street Journal exposé chronicles a number of questionable governance decisions made by the WeWork board that, it argues, led to the company's near collapse. California's law requiring public companies to include women on their boards has quickly decreased the number of all-male boards in the state, though a new study shows that startup boards are still dominated by men. Intel releases an employee salary report, showing pay by gender and race, that has been called unflattering and is increasing the pressure for other tech companies to share their pay data.
December 12, 2019Boeing takes another turn in the spotlight, as a whistleblower reveals he warned the CEO and board about safety concerns before two fatal crashes. Exxon is cleared of charges that it misled investors about the cost of climate change. Meanwhile, Harvey Weinstein and the board of his now defunct studio are poised to settle claims with dozens of women who claim he assaulted them, for $25 million. An heir-apparent to BlackRock CEO Larry Fink is ousted over a relationship with a colleague. A Nobel Prize winner joins Alphabet's board and is recognized not only for her contributions to chemistry, but for increasing female representation in the boardroom of the tech behemoth. Amazon adds two women to its 22-person senior executive team, previously made up of all men and one woman. New legislation requires corporate boards in the Netherlands to be made up of at least 30% women.
December 05, 2019Leadership. When and how leaders step away from their roles can prove as defining as any moment in the corner office. Larry Page and Sergey Brin, who founded Google more than 20 years ago, handed the reins of their Alphabet holding company to CEO Sundar Pichai this week. Observers note that Page and Brin will leave behind big new challenges like antitrust investigations and worker protests, but ultimately retain control, as Pichai will report to them as majority shareholders. Facebook CEO Mark Zuckerberg faces renewed demands from institutional investors to hand the role of chairman to an independent director. The Expedia board accepts the resignations of its CEO and CFO and puts its chairman, Barry Diller, in charge. Meanwhile, Africa leads the globe in proportion of women on boards, while a new study shows that in the U.S., companies pressured to add women directors often do so in ways that dilutes the power of women on those boards.
November 21, 2019Oversight. It’s an essential board responsibility that requires just the right touch: not overstepping and getting in management's way, nor overlooking and failing to monitor significant business issues. This week Boeing directors were accused of careless oversight in a shareholder lawsuit that aims to hold them accountable for safety issues that led to the two fatal crashes of the 737 Max jet. Great timing for a primer on board-level risk oversight. Meanwhile, Google, facing continued employee unrest, hires an anti-union consulting firm. General Motors accuses Fiat Chrysler of racketeering. Former WeWork CEO Adam Neuman's exit package is reported to include the right to appoint a board member. Amazon replaces GE as the incubator for America's CEOs.
November 14, 2019It's not exactly news that the workplace is no place for sexual relationships, but that hasn't kept executive love interests from besetting boards this week. After the McDonald’s board parted ways with CEO Steve Easterbrook for pursuing a relationship with an employee, the burger chain was named in a class-action suit alleging that sexual harassment was ingrained in the corporate culture from the top down. The Alphabet board is investigating how the company handled a series of sexual harassment claims. Meanwhile, WeWork’s chief legal officer, who is also a director of woman-focused co-working company The Wing, was named in a pregnancy discrimination lawsuit. Two new studies show that narcissistic CEOs can do long-term damage, while humble CEOs may boost market results. Finally, we are delighted to bring you an exclusive look at how AI is likely to make its way to the board room.
November 07, 2019Bad behavior comes at a cost. For SoftBank the price has been high, at Uber, which had to jettison its founder before going public, and now WeWork, where a similar, though more dramatic script, has been unfolding. CEO Masayoshi Son, whose reputation has been hit hard by the losses in both companies, says Softbank will now place tighter governance controls on companies it invests in. Facebook's privacy practices are under investigation by the State of California, which filed suit to subpoena executive emails, saying that the social media company has so far failed to provide requested documents. The McDonald's board fired CEO Steve Easterbrook for engaging in a relationship with an employee. Boeing CEO Dennis Muilenberg says he will waive tens of millions in compensation as the plane maker struggles to right itself after the two fatal 737 MAX crashes. Questions are raised, meanwhile, about overboarding by Boeing directors and the role that may have played in oversight. In other news, companies are separating CEO and chair roles at a record rate.
October 31, 2019Leadership. It's make or break. So it's not unusual for boards to ask themselves if they've got the right talent, the right incentives, the right structure for success. These questions are at the forefront this week as: Boeing's CEO faces harsh criticism in Congress following two deadly crashes. WeWork's demise threatens the notion of dual-class share structures. AT&T reworks its governance rules to hold onto its CEO. Women fail to gain the CEO spot at two athletic apparel makers that promote Girl Power. The Financial Times editorial board weighs in with its opinion on leadership, coming down solidly on the side of splitting the chair role from that of CEO. In other news, a new study by Deloitte concludes that if women continued to be elected to board at the current rate, it will be another 30 years before we see gender parity.
October 24, 2019CEO churn seems to be approaching warp speed. CEOs at Nike, Under Armor, and ServiceNow are stepping down, it was announced this week. A new study tallied a record 1,160 CEO transitions already this year. Harvard Business Review's 100 best-performing CEOs list, published this week, is already out of date. One of the most talked about exits is that of former WeWork CEO Adam Neumann, who is expected to cut all ties with the company in exchange for a buyout well in excess of $1 billion, while 4,000 WeWork employees face lay-offs and SoftBank closes in on a bail-out of the startup that only recently planned an IPO with a stratospheric $47 billion valuation. In other news, the Boeing board fired its first executive over the 737 MAX crisis as Congress intensifies its scrutiny of the company's leadership and Ralph Nader argues that the entire Boeing board needs to go.
October 17, 2019It's often said that a board's most important jobs is making sure it has the right talent in the top spot. Lately, a lot of boards are facing directly into that truism. The WeWork board, having ousted its CEO after a failed IPO attempt, is said to be awaiting competing funding proposals from SoftBank and J.P. Morgan to keep the company afloat. In the face of the ongoing Max 737 crisis, the Boeing board relieved CEO Dennis Muilenburg of his duties as Chairman, handing that role to their leader director and crisis expert David Calhoun. The Renault board removed CEO Thierry Bollore, another link to former CEO Carlos Ghosn who awaits trial in Japan, and appointed Renault's CFO, Clotilde Delbos, as interim CEO. Meanwhile, ESG issues continue to be felt in the boardroom, and Bernie Sanders weighs-in on a proposed corporate governance makeover.
October 10, 2019Complexity. There’s a lot of it to chew on this week: Directors taking the fall when companies are accused of wrongdoing. Shareholders withholding support for director re-election. Uncertainty about what to include in ESG reporting. The quandary global businesses like the N.B.A. face as U.S. stakeholders urge executives to take a public stand on social issues and the Chinese government requires respect for its own political expectations. Meanwhile, the Nissan board names a new CEO and clears a senior executive, who is expected to testify in the financial misconduct case against former CEO Carlos Ghosn, following reports that the executive also received improper payments. Some 70 companies in California have not yet complied with the new state mandate requiring at least one woman on every public company board.
October 03, 2019Executives are making headlines, and not in the ways their boards might like. Nike CEO Mark Parker is caught up in a scandal, as a report indicates he was aware of a Nike-affiliated running coach’s practice of doping athletes. Overstock.com CEO Patrick Byrne is forced out after alleging that he dated a Russian agent and is part of a “deep state” investigation, which caused the company’s D&O carrier to find him too great a risk to insure. The Credit Suisse board tries to protect its CEO after the bank is accused of hiring a spy to track the moves of a former high-level employee. The Tesla board must stand trial to defend the pay package it authorized for CEO Elon Musk. A new study suggests that charismatic CEOs actually lead to lower company valuations and higher equity costs than their less attention-getting peers. Meanwhile, Wells Fargo announces some good news on the executive front: It has, at last, named a new CEO. Women now hold a record 30% of seats on U.K. boards. Observers consider how AI might work in the board room.
September 26, 2019A turning of the tide? Several CEOs were ousted this week by boards demanding, or at least enforcing, greater accountability. WeWork’s Adam Neuman was pushed out after the office space company pulled its highly anticipated IPO. Public market investors had balked at the valuation, alleged misconduct and self-dealing by the CEO, and lack of governance controls. Juul CEO Kevin Burns stepped down from the e-cigarette maker as hundreds of cases of vaping-related lung illnesses were reported. eBay CEO Devin Wenig resigned claiming irreconcilable differences with a new board, made up in part of activist investors who have called for major strategic changes. It seems likely that we will see more not less demand for accountability. Stakeholders of many stripes are pushing boards to take their governance responsibilities seriously and others are pushing companies to be better citizens on issues like climate, health and income inequality. As one commentator put it this week, CEOs may soon gain an appreciation of the “fearless board,” one that isn't afraid to ask the hard questions and to point out potentially costly mistakes. We couldn’t agree more.
September 19, 2019Governance is serious business. WeWork delayed its IPO after critics laid bare their concerns about its proposed governance structure, which would have prevented the company’s board from fulfilling some of its key responsibilities, as well as its challenging valuation. Meanwhile, Facebook announced the governance policies for its new content oversight board, assuring that it will be independent of management and could even overrule CEO Mark Zuckerberg on content decisions. The Boeing board’s safety committee is expected to deliver a report, following the high-profile crashes that led to the grounding of the 737 MAX, that includes recommendations for organizational restructuring to emphasize safety. Lyft faces five more lawsuits citing alleged assaults by drivers and continued questions into culture and policy decisions that would affect passenger safety. Separately, investors who control nearly half of the world’s invested capital pushed governments and companies for immediate response to climate change, and150 CEOs urge the Senate to take action on gun laws.
September 12, 2019Transparency or the lack thereof is shaking things up for several boards this week. The Nissan board, which forced out the CEO after allegations of inflated pay, had apparently expected to receive a 170-page report detailing an investigation into the misdeeds of its former chair Carlos Ghosn, but got only a summary, sparking concern. Purdue Pharma, accused of knowingly promoting opioids after it knew they were being abused, reached a tentative settlement that would dissolve the company, create a new, transparent board, and cost the Sackler family $3 billion. Lyft is being sued by an investor for allegedly failing to disclose sexual assault claims made against its drivers ahead of its IPO. The boards of several prominent institutions accepted the resignation of former MIT Media Lab director Joichi Ito, after it was disclosed he had secretly continued a philanthropic relationship with accused sexual predator Jeffrey Epstein. In other news, women directors now hold 20 percent of public company board seats.
September 05, 2019Culture shifts. Once again, a U.S. corporate leader feels the need to address a social issue previously considered the domain of politicians: Walmart CEO Doug McMillon announces that the retailer (following in the footsteps of Dick’s Sporting Goods) will sharply reduce gun and ammunition sales in response to recent mass shootings. WeWork, perhaps responding to a slew of negative media reports about its all-male board, says it will bring on a woman director after completing its IPO. Google’s corporate culture finds itself under renewed scrutiny after explicit details are published of an alleged long-term affair between its then-chief legal officer (now at Alphabet) and a subordinate. And two senior executives at KPMG in the U.K., one of whom sat on the U.K. board , were displeased with how claims of workplace bullying were handled, so they started a firm to compete directly with their old workplace with an aim to reshape the deal advisory business in ways that make it more hospitable to women and minorities.
August 29, 2019CEOs in the hot seat, again. BlackRock uses their financial muscle to vote out over committed CEOs who also serve as outside board members. Meanwhile research by the Wall Street Journal exposes CEO pay as consistently underreported -- often by more than 25%. Interestingly this week has also witnessed the CEO-door revolving at a number of significant companies. Eyes will be on the board of Johnson and Johnson should they choose to respond to this week's ruling against the corporation, citing persuasive and aggressive marketing of opioids to drug makers, judged on the basis of the “public nuisance” law. Diversity on boards is still making headlines: the state of Illinois, inspired by California's farther reaching law, passed legislation requiring reporting on diversity for public company boards.
August 22, 2019There’s more to life than profits. So say CEOs of some of the largest U.S. corporations. Redefining “the purpose of a corporation” for the first time since 1978, the Business Roundtable, an association of CEOs of major public companies, said this week that shareholder primacy is an outmoded ideal, and pledged to work toward the wellbeing of multiple stakeholders, including customers, employees, and the planet. The reverberation was heard across the business press. We highlight below a few insightful responses, including a New York Times opinion piece that gives the announcement historical and political context, a legal analysis, and a rebuttal from the Council of Institutional Investors, which disagrees with the move away from shareholder primacy suggesting: “Accountability to everyone means accountability to no one.” In other news, many have expected a challenge to a California law requiring at least one woman on every public company board and now one has been filed by a conservative group. WeWork plans to go public with an all-male board and a dual-class stock structure that undercuts accepted governance structures to give the CEO (and, posthumously, his estate) more control. Also, the S.E.C. deals a blow to proxy advisor firms, requiring them to provide more data to back up their voting recommendations and suggesting it will hold them accountable for errors.
August 15, 2019M&A. What is the secret sauce? Shari Redstone would probably say persistence: after four years of negotiations, (not to mention lawsuits and the exit of former CBS CEO Les Moonves), CBS and Viacom have reunited. Researchers, however, might say perspective: when an optimistic CEO is counter-balanced by a pessimistic CFO, a company is better positioned to manage its acquisition appetite. Separately, observers suggest board oversight of data privacy will likely increase dramatically following the FTC’s settlements with Equifax and Facebook. The Fortune 500 has more female CEOs than ever, yet women still hold only 7% of those corner offices. And what to make of a new study that suggests that auditors whose thorough work reveals material weaknesses in financial reporting might be losing out on new business for doing their job too well?
August 08, 2019Corporate responsibility: how do companies decide when to act? A suggestion that Walmart and many other corporate leaders may be better positioned than lawmakers to enact gun control includes advice on following Dick’s Sporting Goods, Salesforce, and those that have taken a stand. Investors aiming to make ExxonMobil accountable for promoting a more realistic view of climate risk take a multi-pronged approach including conversations with the company, votes against the board, lawsuits and even divestiture. The board of the National Rifle Association finds itself in the cross-hairs of public attorneys who are investigating the organization’s financial conduct and non-profit status; three board members have departed over concerns about lavish spending by CEO Wayne LaPierre. Companies with women CEOs are more likely to be targeted by activist investors than those with men at the helm. Researchers see pressure intensifying on the issue of overboarding and predict companies will increasingly steer away from the practice.
August 01, 2019More women on boards: What’s the impact? One new study suggest it may lead to more women CEOs. Another study warns of women directors being stretched, since all-male boards prefer experienced women directors, resulting in them being busier than men. Meanwhile, observers note that the FTC’s $5 billion settlement with Facebook is far from the slap on the wrist some critics claim, and should be considered a warning that the agency expects companies to take privacy protections seriously. A slew of new data security laws are being introduced at the state and federal level. And a former high-profile corporate attorney pronounces that governance reforms are needed to alter what he now sees as a perverse legal obligation for companies to make money over all else.
July 25, 2019The buck stops with the board. Just ask the Federal Trade Commission. In addition to levying a $5 billion fine on Facebook, the FTC has required the company create a committee to oversee data privacy with independent directors who cannot be dismissed by CEO Mark Zuckerberg for good faith work. In another FTC settlement concerning data privacy, Equifax was required not only to pay out $700 million but for its board to take responsibility for certifying that the company is implementing and assessing security safeguards stipulated in the agreement. Meanwhile, Uber lost two directors on Wednesday: Thrive Global CEO Arianna Huffington and Benchmark Capital general partner Matt Cohler. As of this week, there are no longer any all-male boards among the S&P 500. And a new study seeking to quantify board impact on firm value finds that a single director can make a big difference to the bottom line.
July 18, 2019Progress, of sorts. Women now hold 27 percent of board seats in the S&P 500, a big leap from the 16 percent of recent years. Still, only 5 percent of the CEO roles at those same companies are held by women. Uber says it will tie executive compensation to diversity goals for the company, which will include a special focus on diversity in managerial roles. Meanwhile, an SEC commissioner voiced concerns that advocacy efforts to increase female representation on boards could lead to unqualified women becoming directors, (a perspective that Boardspan finds fallible given the high caliber of female board members we continue to see and a call-out never made about men). In other news, researchers, noting the high costs of poor succession planning, pinpoint some of the most common mistakes boards make in choosing new leaders and offer suggestions to prevent such missteps.
July 11, 2019Be strategic! Yes, everyone wants a strategic board, but it’s not always clear how to create one. This week Deloitte outlines seven steps to build a board’s capacity for providing meaningful strategy and an observer offers a related perspective on how to cultivate the kind of board-CEO relationship that can promote strategic discussion. Meanwhile, a new CEO report shows women are still losing out on top jobs to men, while the male-dominated real estate industry is making room for substantial numbers of women directors. Korn Ferry reflects on the increasing accountability—and lawsuits—directors face as they seek to balance the protection of shareholder value with the needs of vocal communities, employees, and other stakeholders affected by corporate decisions.
June 27, 2019The future is now. It's no longer enough for boards to oversee current policies and strategies; increasingly, say new studies and pundits, they need to have a sixth sense about what the future holds. Directors say the potential impact of disruptive business models and technologies, including AI, are even more significant than five years ago, while becoming harder for companies—and boards—to prepare for. Sustainability is also becoming essential board business and not all board members know how to approach it. Meanwhile, Nissan shareholders successfully elect new independent directors while sharply rebuking the chairman of Renault for what they consider a betrayal of the Japanese automaker. The New York State Comptroller issues a warning to Facebook that the state retirement fund he manages, which holds $1 billion in Facebook stock, will vote against the company’s directors if the social media giant fails to bring in an independent chairman to balance the influence of founder and CEO Mark Zuckerberg. Google workers protest policies they say are unfavorable to the LGBQT+ community by urging the board of San Francisco’s Pride Parade to exclude the search giant, a sponsor, from this weekend’s parade.
June 20, 2019Emphasis on ethics: A new study shows ethics is an increasing focus for compliance teams and boards. Separately, research now underscores that when workers feel that company values align with their personal values—allowing them to be “authentic” and themselves at work-- the risk of unethical behavior is diminished. Turns out that ethical cultures have something of a trickle-down effect! For concrete steps your board can take, see the Boardspan Library article below, “How Boards Can Get in Front of Ethical Lapses.” Meanwhile, PG&E’s recently refreshed board faces some skepticism from the California Public Utilities Commission, which wants more proof that its directors have the requisite expertise to turn around the bankrupt utility company. Alphabet shareholders this week went into the annual meeting with 13 proposals, including one which argued for breaking up the tech giant. A coalition of 650 CEOs from companies like Vimeo and Morgan Stanley are committing their boards and executives to creating and implementing diversity plans at large companies.
June 13, 2019Will foreign pressure reshape governance in Japan? French automaker Renault is pushing for more representation on Nissan's board committees, causing a rift that could undermine the Japanese company's new governance structure. Nissan and financial firm Nomura Holdings are both under attack for their allegedly lax oversight by global governance group ISS, which is advocating against the reappointment of the companies' CEOs. Japanese firms are also increasingly bowing to foreign activist investors and their demands for board seats and other governance changes. Meanwhile, Wells Fargo's search for a new CEO has apparently led to nothing but rejection from leading banking executives; the latest rumors suggest that interim chief Allen Parker may be given the role. Gretchen Carlson, a former Miss America (and former Fox News host), who helped remove the swimsuit competition from the pageant, is stepping down as chairwoman, following a backlash against changes at the organization. More than a dozen NRA board members, all of whom serve in an unpaid capacity, have been exposed for taking payments from the association. And in Illinois, a bill aimed at diversifying corporate boards passes but only after deleting language that would have required minority representation.
June 06, 2019The shareholders are restless. Facebook reveals that 68 percent of independent shareholders voted to strip CEO Mark Zuckerberg of his role as chairman. Concerns about the social network's leadership and its accountability may be real, but the vote was largely symbolic since Zuckerberg controls the majority of voting shares; another proposal attempted to eliminate that advantage, too, but was likewise out-voted by the CEO and his supporters. Among eight failed proposals was one championed by conservative groups that would have mandated political diversity on Facebook’s board. Meanwhile, a study reveals the power of digitally savvy directors to positively influence revenue growth at large companies—as long as there are 3 or more on the board. Ironically, BlackRock, which has been a prominent champion of diversity and independence on boards, is being sued by the hedge fund Saba Capital for allegedly blocking outsiders from board seats. Plus, in the name of diversity: The 150-year-old YWCA Greater Cincinnati welcomes its first male directors to the board.
May 30, 2019Exec pay keeps making waves: A new survey reveals that average CEO compensation is growing at almost twice the rate as average worker pay. Tesla boss Elon Musk tops the list with a $2.3 billion package. Also record-setting was the turnover rate for CEOs, which hit an all-time high in 2018, thanks to both planned and forced exits, with the latter mainly due to ethical lapses, financial performance or board struggles. Meanwhile, Facebook investors are bringing a bevy of shareholder proposals to this week's meeting, designed to limit Mark Zuckerberg's power over the company or to break it up. There are remarkably few women in the C-suite and boardrooms of the 10 largest companies going public this year. A proposed $44 million settlement meant to address lawsuits against the Weinstein Co. by accusers, creditors, and lawyers could come undone as some of the women who have accused Harvey Weinstein of sexual misconduct have signaled they won't agree to terms. And the latest governance finger-pointing is directed at Boeing, whose board is now facing intense scrutiny.
May 23, 2019General Motors and CBS are charting new territory as some of the first Fortune 500 boards to include more women directors than men. The Nike board faces a re-opened shareholder suit claiming the board knew about but didn’t address sexual harassment claims. McDonald’s this week was hit with 25 new sexual harassment charges that cite misconduct at restaurants across 20 cities. Meanwhile, hourly workers at Walmart pinned their hopes on presidential candidate Bernie Sanders, who is advocating for them to gain a seat on the board. Sander's rival Kamala Harris proposes fines for large companies who pay women less than their male colleagues. And several observers take a closer look at CEO pay practices and the concerns they are raising among employees, consumers, and investors.
May 16, 2019Rule followers: Shareholders are filing more proposals targeting social and environmental issues they want companies to address—doubling the percentage of climate change-related proposals filed at non-energy sector companies in the past five years. But SEC rules categorize many of these shareholder demands as unreasonable, finding that rather than targeting high-level governance issues, they amount to micro-management of company business. Some suggest it's time the agency update its rules to clarify what types of social and environmental shareholder proposals are appropriate. Meanwhile, Facebook is said to be nearing a deal with the FTC that would require the social media company to submit to 20 years of oversight and place privacy policing in the hands of its board. At a time when many companies have been derided for inflated CEO pay packages, Wells Fargo’s search for a CEO is apparently slowed by limits on what the bank can offer a new executive.
May 09, 2019Warren Buffett set off shock waves this week with his assertion that corporate board member are overpaid and under-performing when it comes to independent decision-making. For a sense of what he might consider reasonable pay, note that Berkshire Hathaway board members are paid less than $7,500 annually. Others argued that rising director pay is justified, given the increasing demands on directors. A novel demand arose this week when a judge ordered the PG&E board to visit the scene of a devastating fire which the utility says was likely caused by its equipment. The Boeing board revealed it had not discussed safety when considering plans for a fast-to-market 737 Max jet. In other news, the FTC apparently seeks governance changes at Facebook, while lawmakers want the FTC to hold corporate officers personally liable for the social media company’s privacy violations.
May 02, 2019Moving on: For nearly two decades former Google CEO Eric Schmidt has sat on the company's board, but he will step off the Alphabet board next month, as will Diane Greene, Google’s former head of cloud computing. Rising CEO pay packages, many now in the double-digit- and even triple-digit-millions, continue to elicit scrutiny, and calls by professional investors for the SEC to require corporations to explain their methods for setting executive pay. The Boeing board faces questions about its risk management practices, but shareholders are unable to secure a split of chair and CEO roles at the aircraft maker. Facebook’s lapses in privacy protection lead to a lawsuit against the company’s board members and talk that the FTC seeks to hold CEO Mark Zuckerberg personally accountable for the data leaks. Plus board news from Tesla, the NRA, Bayer, and more.
April 25, 2019Vroom. Women now make up a majority of the board at General Motors—a symbolic turning point for the traditionally male-dominated auto industry. This shift comes as the overall size of the GM board shrinks from 13 to 11 with the retirement of two male directors. Another automaker trims its board this week, also: Tesla will go from 11 to seven directors—only two of the remaining group are women. A new study shows that low board turnover is a real contributor to the lack of diversity in the boardroom—with the average director staying in the job for about a decade. A critic calls out the Disney board for approving a plan that pays the CEO more than 1,000 times what the average worker makers—Walt Disney’s grandniece Abigail Disney says that’s “insane.” The CBS board calls off its CEO search for now, extending Joseph Ianniello’s interim CEO status through the year.
April 18, 2019It’s proxy season and executive pay is top of mind: CEO pay continues to rise and stock-based compensation is growing as a percentage of total packages. A revealing report shows at least 13 CEOs make 1,000 times more than the average worker at their companies, with many execs on the list hail from brands well known to consumers—Disney, Starbucks, and Chipotle to name a few. Meanwhile, observers suggest investors need transparency into how pay and performance are actually linked. Another report finds that pay practices involving restricted shares are boosting exec annual salaries by up to 25 percent at some financial and real estate firms where dividends are large. In other news, mutual fund giant Vanguard is taking aim against over-boarded directors and promises to vote against the election of directors who would sit on more than four boards. Amazon employees throw their weight behind a shareholder proposal demanding the company take action to mitigate its environmental impact. The Boeing board, quiet since the company's aircraft have been implicated in two fatal crashes, is stepping up to investigate safety policies.
April 11, 2019As Artificial Intelligence comes to life, ethical considerations are front and center for many boards. Boeing, under increasing pressure to explain why pilots apparently struggled to overrule automatic controls before the crash of two Max 737 jets, creates a new board committee to review design and safety standards. Amazon shareholders win SEC approval to have a say in whether the company can sell facial-recognition software to governments. Google pulled the plug on a brand new A.I. ethics board after employees loudly criticized its choice of board members, including representatives of organizations that deny climate change or promote military use of drones. Helpfully, commentators are already offering perspectives on what boards need to think about when it comes to AI. Meanwhile, PG&E gets a new CEO and board, Illinois advances a bill that would require corporations to add women and African Americans to their boards, and members of the Sackler family, accused of profiting from the opioid epidemic, are leaving the boards of prominent non-profits.
April 04, 2019Troubling times for many boards. The Purdue Pharma board, accused of plotting to illegally increase sales of prescription painkillers, denies the charges. Google’s just-named AI ethics board is coming apart as critics take aim at the credentials and politics of its members. PG&E, as it remakes its board, gets a talking-to from California Governor Gavin Newsom for choosing directors without experience in managing utilities. The Wells Fargo board finds itself without a CEO or apparently a succession plan to replace him. Meanwhile, the push to include workers on corporate boards continues, with Walmart employees arguing for a voice in the retailer’s decision making.
March 28, 2019Meet your new board colleague, an algorithm. A VC firm is the first to give a board vote to an A.I. program — and pundits have quickly piled on with opinions about how this might play out. Or, as one A.I. enthusiast might put it, What could possibly go right? The suggestion that the times they are a changin’ is also at the heart of Board 3.0, a proposal to remake corporate boards with more involved, informed directors who have the market credibility to assuage activist investors and shift the dynamic of situations like the one at Bed, Bath & Beyond, where the entire 12-person board could be replaced at the insistence of three investors who collectively hold a 5 percent stake in the company. Meanwhile, some boards are being asked to consider whether political persuasion shouldn’t be a diversity criteria, ensuring boards don’t lean totally liberal or conservative. On many fronts, it looks like a brave new world for governance.
March 21, 2019CEO pay is back in the news this week as companies facing serious challenges, including Boeing and Wells Fargo, report hefty raises for chief executives. Some observers ask whether stock plans that incentivize healthcare CEOs to grow share prices contradict the notion of patient-centered care, while others ponder the possible response to boards that approved sizable CEO raises despite negative shareholder returns. And if you are pondering a new board recruit, note a new study that reveals that companies whose boards have at least three digitally savvy directors show significantly higher revenue growth.
March 14, 2019Though we usually associate it with a sense of uncertainty and peril, “crisis” literally means a moment of decisive change. It’s certainly what boards need to be ready for. A partial roundup of this week’s crises: Boeing faces global fears that the 737 Max 8, the best-selling airliner ever, which is currently banned from flight in most countries, may be fatally flawed. Several investment firms found themselves making fast management changes after a number of executives were charged with bribery and other illegal efforts to gain admission for their children into colleges. Facebook became the subject of a criminal investigation into the user data-sharing arrangements it made with other tech companies.… It’s easy to get swept up in all the hair-raising news, but we have a better idea: Use your time to prepare for the unexpected. Really! We suggest you start with the seven tips in Is Your Board Ready to Manage Through a Crisis? (which we shared last week and are sharing again because we believe it’s a timely and valuable read).
March 07, 2019This week we take a break from our usual programming to bring you a Boardspan Special Report on Managing Through a Crisis. It's only March but already this year boards of all stripes have found themselves managing events like the sudden loss of a CEO, bankruptcy, an activist campaign or the fallout from executive misconduct. So, we gathered insights from a number of public company directors and governance experts and distilled their suggestions into a resource for all who recognize the importance of expecting the unexpected!
February 28, 2019What’s a board to do? That’s the question many are asking in the wake of Tesla CEO Elon Musk’s latest market-moving Tweets, which defy restrictions the SEC placed on his social media habits. But it’s not just the Tesla board observers wonder about—what about board members (at Facebook and other companies) who don’t have voting power or financial levers to rein in misbehaving CEOs? Wynn Resorts, whose board allegedly looked away when the company’s founder and former CEO was accused of sexual misconduct, is now subject to the largest fine ever levied by the Nevada Gaming Commission. Meanwhile, an Apple shareholder, concerned about Silicon Valley’s liberal-leaning politics, seeks disclosure of board members’ political ideologies. The PG&E board approved cutting $130 million in employee bonuses in the wake of its bankruptcy. And Indra Nooyi joins the Amazon board, bringing the total number of women to 5 out of 11.
February 21, 2019What could asset managers, employees, environmentalists and governments have in common? They are all vying to influence governance at major corporations! Sometimes, they’re successful, as evidenced by coal company Glencore bowing to investor demands that it limit fossil fuel output. Meanwhile, a hedge fund has nominated five new directors at Bristol-Myers Squibb. Nissan is backing away from a governance structure that would have entitled the new chairman of Renault to also lead the Japanese automaker’s board. A Google investor is backing employees who want a seat on the company’s board. With activists emerging from every corner, savvy boards, argues a post on the Harvard Law School Forum on Corporate Governance, will take a proactive approach, expecting activist engagement and learning to balance the role of shareholder representative and management advisor.
February 14, 2019Corporate structures, ownership and governance are something of a hot topic this week! As Lyft prepares to go public, its founders reportedly aim for a voting structure that ensures their control (regardless of performance or ownership)—even as the S&P 500 and others have moved to block companies with such nontraditional structures. Lawyers and governance experts from many spheres are issuing public pronouncements about the challenges arising from prevalent models of shareholder-centered governance. Studies look, too, at whether ESG or diversity policies are beneficial for corporations or society. Meanwhile, PG&E promises to overhaul its board before a May meeting. REI’s CEO steps down after failing to inform his board about an affair with an industry colleague. The board of Citgo, an oil refiner and US-based subsidiary of Venezuela’s state-run oil producer, looks likely to be reshaped as global politics roil the company.
February 07, 2019Shareholders make their voices heard in the boardroom this week. Hedge fund Starboard Value installs its chief executive as the chairman of pizza chain Papa John’s. An investor group wins support from the BP board to increase climate-related disclosures. An activist investor gets the ear of drugmaker Allergan with its demand to split the chair and CEO roles. Meanwhile, Starbucks COO Rosalind Brewer joins the board of Amazon. A report shows women now hold 30% of board seats in Australia’s top 200 companies, but a critical analysis suggests that a handful of women sitting on multiple boards may undermine the picture of diversity painted by this news. The Intel board names the company’s next CEO and the Nissan board apparently plans to dismiss former CEO Carlos Ghosn from the board at a special meeting in April. Plus our own Boardspan board member Mary Cranston, who has been a director of seven public companies, offers some sage advice on ensuring healthy board dynamics in The Three Attributes of Wise Boards.
January 31, 2019Call it a green rush. For months we’ve noticed executives and former politicians flocking to the boards of cannabis companies (including several more this week), suggesting a gold rush is on. This week former Autodesk and Yahoo CEO Carol Bartz, upon joining a cannabis company board, compares the field to the early days of technology—vast opportunities and, to her mind, the chance to have a positive impact on people’s lives. And various cannabis company board members appear at Davos. Meanwhile, the PG&E board draws scrutiny as the utility heads into bankruptcy. The SEC investigates Nissan's pay policies. Intel’s lack of succession planning is showing. CEO confidence plummets.
January 24, 2019A breakout year for ESG? Taking environmental, social and governance factors into account has always made good business sense and suddenly the decades-old investment concept is in vogue as a corporate strategy. BlackRock CEO Larry Fink says in his annual letter to CEOs that people expect companies today to help solve social and environmental problems and that only by aligning around a meaningful social purpose can a company expect to profit. Ahead of that letter, a group of BlackRock shareholders called out the investment management firm for not doing more to address climate change. Amazon shareholders demand that the company halt sales of a facial recognition technology that critics argue may violate privacy and civil rights and could abused by repressive governments. Meanwhile, tech companies increased lobbying efforts to stave off regulatory efforts some legislators believe are needed to protect personal privacy, reliable sources of information and more. Also, a new study shows that when companies are required to report gender pay discrepancies, not only are the imbalances addressed more quickly, but more women are hired and more women are promoted into leadership. Lots to ponder, but if you're short for time, skip right to this week’s must read: Boardspan CEO Abby Adlerman's interview with KKR Co-CEO George Roberts offers insights on governance, crises and a board member's greatest advantage: being well informed.
January 17, 2019Spot on. State Street, alongside many others including Boardspan in our top ten hot topics of 2019, recognizes that oversight of corporate culture is a board priority for the new year. In a letter to public companies the investment firm urges boards to take a proactive role in this area and offers a framework for doing so. Meanwhile, the Alphabet board faces a shareholder lawsuit for its role in the alleged cover-up of sexual harassment claims made against senior executives. The board of privately held WeWork is taken to task by the media for apparently allowing the CEO to profit from leasing property he owns to the company. The board of Purdue Pharma, maker of the pain reliever Oxycontin, is sued by Massachusetts’s attorney general for its role in the opiate epidemic with new allegations suggesting that members of the Sackler family, the majority owners, pushed aggressive sales tactics even after there was evidence that the drug was being abused. Taken together, it does look like company culture will play a prominent role in business again this year. On another note: the government shutdown may cause extra headaches for boards if the short-staffed SEC is unable to review offbeat shareholder proposals that companies would like to see dismissed.
January 10, 2019Important vs. Urgent. It’s not always easy to make time for the critical but non-time-sensitive issues, and yet that’s exactly what high-value boards will do as they map out their plans for 2019. Boardspan has created a Top 10 list of hot topics you’ll want to consider as you draw up your agendas. A new Harvard Business School survey of large company boards finds that technology & innovation, arguably among the most important opportunities and threats across all industries, is not considered a top concern by most directors. Another study finds that even as large company boards grow more diverse, C-suites remain heavily dominated by white men. A helpful report from Harvard Business Review suggests a new way of thinking about the critical issues of privacy and security that forward-thinking board members will want to consider. Lots to ponder as you contemplate what is too important to be set aside --even when the next urgent issue arises.
December 20, 2018Scrutiny. It could be the Word of The Year. The biggest woes of corporate governance this year have been brought to the forefront by people or organizations scrutinizing situations that troubled them, practically begging for a deeper dive. As the Wall Street Journal reveals about Carlos Ghosn's fall from his role atop Renault and Nissan to a Tokyo jail cell, his lavish lifestyle led executives wary of his counter culture attitude to begin secretly investigating their CEO. The scrutiny of reporters on the #MeToo beat dethroned Les Moonves at CBS, where this week the board confirmed that it is justified in firing the former CEO without severance. Now shareholders are scrutinizing how Amazon’s business practices affect and are affected by climate change. Civil rights groups are scrutinizing Facebook's governance structure, as fresh accounts surface of alleged privacy lapses. And the list goes on. Word to the wise: As a board member, you can use scrutiny to your benefit by proactively examining unusual situations and addressing puzzling findings before they become problematic.
December 13, 2018Naughty or nice, activist investors continue to make their presence felt. They invested an astonishing $74 billion in the year that ended in September, mostly in large companies that they hope to make more profitable, often by reshaping boards and, with them, strategic decision making. This week’s news shows the trend continues with an American hedge fund taking a $1 billion stake in France’s Pernod Ricard and looking for changes to the board, and other major shareholders signaling they want to see change at Yelp and Cars.com. Tesla CEO Elon Musk is back in the news, saying in a 60 Minutes interview that it’s unrealistic to expect the largest shareholder to defer to the chairman of the board and that he does not respect the SEC. He later clarified his views on Twitter, claiming that Tesla will retire the role of chairman in three years. Legal experts offers some insights into the legal implications of a CEO making pronouncements by Tweet. Another legal team offers some helpful info on what to expect in the 2019 proxy season. And the word is in: Women have the most success gaining board seats where quotas are imposed by law.
December 06, 2018Compliant or complicit? That is the question. At least that's what many a boardroom pundit is asking this week. A draft report into claims of sexual misconduct by former CEO Leslie Moonves suggests that some directors knew of his alleged abuse and failed to alert other board members as required by the duty of loyalty. Governance experts say directors at Nissan knew, or should have known through their review of financial filings, about the irregularities in compensation reporting that have landed its CEO and chief of staff in a Tokyo jail. A shareholder suit against the Lululemon board claims directors should have been aware of and addressed the culture of harassment that took place during the ousted CEO's tenure. Meanwhile, the Facebook board signals its support of COO Sheryl Sandberg’s probe into George Soros and his financial interest in the company. Also, the Wall Street Journal dissects the decision by the board of Dick’s Sporting Goods to rewrite its gun sales policies in the wake of mass shootings, choosing to do what it thought was the right thing, regardless of legal requirements or financial consequences.
November 29, 2018Oversight. The word can, of course, refer to the all-important governance function of ensuring that the executive team is properly carrying out its responsibilities, and yet it can also refer to a lapse or mistake or neglect of something. When a board doesn’t live up to the first definition, it usually ends up defending accusations that it has engaged in the second. The Nissan board is in that situation, following the arrest of its now-deposed chairman, Renault CEO Carlos Ghosn, who is accused of financial improprieties that observers say would not have been possible if the board had been doing its job. Oversight, (the governance function), would be the best form of damage control for Facebook, suggests one observer, who advises CEO Mark Zuckerberg to “submit to governance” and let the board assume the role of his boss, as a way to right the beleaguered social media company. And oversight is presumably what activist investors wanted at Campbell Soup, where they have won the right to install two board members and participate in the election of a new CEO. In other news, as “ESG” programs move from “nice to have” to “must have” in the eyes of many, Google employees, once again, aim to persuade the leadership team to place more value on the “Social” aspects of business; on Wednesday hundreds of employees signed a letter protesting a deal that would bring a censored version of the search engine to China.
November 15, 2018Regulators are making their presence felt: Wells Fargo receives a rebuke from the Office of the Comptroller that sidelines a top executive. Tesla responds to SEC demands and names a new chair to provide oversight of CEO Elon Musk. The SEC warns public companies that a cybersecurity failure may be considered a violation of rules governing internal accounting controls. And a different type of cybersecurity risk seems to be on the horizon: realistic-looking video of a CEO saying whatever a forger wants them to. Meanwhile, the New York Times takes a deep investigative dive into executive decision-making at Facebook and suggests that information flow to the board is not always as fluid as directors might like. Finally, some 17 percent of S&P 500 CEO’s hired from outside are gone within three years—could better succession planning help?
November 08, 2018Politics. They’re on everyone’s mind, including many a vocal CEO. A recent Stanford University survey on how CEO activism shapes public perceptions suggests that taking a public stand yields decidedly mixed results. The fallout from the #MeToo movement continues to require board attention on many levels: (i) pension fund managers are increasing their due diligence around harassment reporting; while (ii) executive compensation agreements are being rewritten to explicitly include harassment as cause for termination. Decisions facing the CBS board since former CEO Les Moonves’s dismissal over harassment accusations may delay it from naming a new CEO for months. Meanwhile, just in time for boards conducting their annual performance evaluations, Corporate Board Member publishes suggestions for avoiding common assessment mistakes, courtesy of Boardspan CEO Abby Adlerman.
November 01, 2018Harassment. It’s a topic that is clearly not going away. The New York Times reported last week that three former Google executives had been protected by the company after it had concluded they had engaged in sexual misconduct—one executive allegedly walked away with a $90 million package. The critical query of “What did the board know?" has been making the rounds, along with bitter complaints by employees, some of whom plan a walkout today (Thursday). Meanwhile, some 250 people, so far, have been interviewed as part of ongoing investigations into the culture at CBS, where several top executives including CEO Les Moonves were ousted for alleged misconduct. Fortunately, new approaches to harassment prevention continue to be explored. Tesla’s board faces a shareholder lawsuit accusing it of covering for Elon Musk and his troublesome tweeting. CEO Mark Zuckerberg is summoned to appear before UK and Canadian parliamentary committees, which seek information on Facebook's data collection and sharing policies. Plus, we've gathered some great insights here for boards wondering how to guide their CEOs in this era of corporate activism or how to ensure diversity throughout an organization.
October 25, 2018Deep breath. After a long, steady stream of crises, the boardroom is relatively calm this week. It's a perfect opportunity to step back and contemplate what a board needs to do its job well and to prepare for the challenges that may be lurking around the next bend. On cue, Warren Buffet, Mary Barra, Jamie Dimon, and others who delivered their Commonsense Principles of Corporate Governance two years ago have issued an update. A new risk framework is proposed to help boards make informed decisions that consider the potential downside (and upside) of changes in a fast-moving world. A new study helps boards understand the impact of compensating CEOs with stock. Ellen Pao, writing in Wired, challenges the rationale of founders' rights, which can leave powerful public companies devoid of standard governance mechanisms. Meanwhile, New York’s Attorney General files suit against Exxon-Mobile claiming the company engaged in a long-standing scheme to deceive investors by downplaying the risks posed by climate change. The CBS board, grappling with the ouster of former CEO Les Moonves and subsequent resignation of several board members, loses its interim chairman.
October 19, 2018Executives as diplomats. Prominent corporate leaders this week find their business relationships, ethics, and reputations mixed up with a political crisis that only underscores how complex and dynamic global business culture has become. The disappearance and alleged murder of Saudi journalist and dissident Jamal Khashoggi on the eve of a high-profile Saudi business conference, and as the board composition of a major new Saudi initiative was announced, makes evident the diplomacy now expected of top leadership. Many executives have backed out of the conference and off the board, but given the billions of dollars of Saudi investments in U.S. businesses, this topic is likely to dominate board conversations for some time. Meanwhile, a number of public pension fund managers issued a call for Mark Zuckerberg to relinquish the chairman role at Facebook. Heirs of the original Campbell’s Soup family are complicating the plans of a hedge fund looking to reseat the board. Research shows that older, larger companies are making great strides toward gender diversity on boards—while fresh-faced startups are not. Plus, Boardspan CEO Abby Adlerman offers her perspective on the Chair-CEO role in a Reuters article on Citigroup CEO Mike Corbat.
October 11, 2018Busy boards. The Tesla board is rumored to favor James Murdoch, outgoing CEO of 21st Century Fox, son of media mogul Rupert Murdoch and an independent director at Tesla, to serve as its new Chairman. It’s a high profile role and whoever fills it surely will be looked upon to curtail CEO Elon Musk’s habit of speaking his mind on Twitter and more. (See the Reuters article below for a comment on just that theme by Boardspan's own CEO Abby Adlerman.) The Uber board has evolved, says CEO Dara Khosrowshahi, who suggests that the ride-hailing company’s high-profile board battles are a thing of the past. The GE board’s ouster of CEO John Flannery in favor of independent director Larry Culp apparently has other chief executives questioning the intentions of some who sit on their boards. Activist investors are making waves by buying big stakes in Starbucks, Campbell Soup, and others— and a new report suggests even more activity is on the horizon. And the beat goes on.
October 04, 2018Coming soon to boardrooms: More women. At least, that’s what a new law signed last weekend by California Governor Jerry Brown aims to ensure. Critics have been quick to point out various flaws in the legislation, and it will be interesting to see which organizations will sue and take on a very public fight to protect the perpetuation of all-male boards. Investors, too, are demanding greater female representation on boards: State Street this week said it has already voted against 500 nominating committee chairs on all-male boards and warns others that have not heeded its calls for change that more "no" votes are yet to come. Meanwhile, the SEC will require Tesla CEO Elon Musk give up his role as chairman of the electric carmaker as punishment for his inappropriate tweeting; a New York Times report on how Musk’s deal with the government fell apart and came back together only underscores how much influence he carries with the board. The Times’ pursuit of another story—how non-profit medical center executives profit from their appointments to for-profit healthcare boards—has resulted in some major shakeups at New York’s Memorial Sloan Kettering Cancer Center. Meanwhile, embattled retailer J.C. Penney names former Joann Stores CEO Jill Soltau as CEO.
September 27, 2018The era of accountability. Just about everywhere you look, cultural shifts and demands for greater corporate responsibility are remaking boards and rewriting governance standards. The CBS board, still reeling from the forced departure of CEO and chairman Les Moonves amid sexual harassment allegations, learns its lead independent and one other director are stepping down unexpectedly, even as the company names a new interim chairman. Shareholders again attack Mark Zuckerberg’s dual role as CEO and chairman of Facebook in the wake of the overnight resignation of Instagram’s CEO and CTO. The board of gun maker American Outdoor Brands, having lost its battle against a shareholder proposal, is required to produce a safety report. Michigan State University’s board of trustees is the focus of protests by students and others concerned that the trustees did not do enough to protect students from former sports team doctor and convicted sexual abuser Larry Nasser. In other news, the Merck board tears up its age-limit policy to keep CEO Kenneth Frazier on as CEO. England’s Labour Party would require workers representatives on all boards. A study of shareholder activism in the U.K. shows that companies with more female directors are less likely to be targeted. And a U.S. law firm suggests that given the increased public attention paid to sexual harassment, corporate culture, gender pay gaps, and diversity, boards should see it's time to be proactive not reactive on these issues. Hear, hear.
September 20, 2018Taking it to the Boards… Shareholders have been more active than ever in 2018 and are winning more concessions. Cases in point: Both Symantec and Qualcomm say they will add new directors at the behest of investors. The California state pension fund, which manages $360 billion in assets, has voted against 43% of executive pay packages and says its tactic of voting against Nom & Gov Chairs of all-male boards is beginning to persuade executives of the need to include women directors. ISS is currently weighing the possibility of recommending ‘No' votes against directors whose boards don’t include women. Meanwhile, in the news: The Justice Department has opened an investigation into Tesla CEO Elon Musk’s tweets about going private. Wells Fargo is rumored to be looking for a new CEO. Women now make up 30% of directors at large UK companies. And … observers question whether the Saleforce board will come to rue Marc Benioff’s purchase of Time, and why the CBS board will suffer no consequences despite its responsibility for company culture.
September 13, 2018Information is powerful—if you have access to it and trust its source. That “if” plays a crucial role in various boardroom dramas unfolding this week. Theories are circulating as to why the CBS board, which apparently learned months ago of sexual harassment allegations against CEO Les Moonves, did not act until this week to negotiate his departure and remake the board. Other theories are in the air about why a Goldman Sachs executive’s call to a whistleblower line was not reported to the bank's board. Meanwhle, Facebook directors are being sued for allegedly putting the interests of CEO Mark Zuckerburg over shareholders. Jack Ma announced that his upcoming retirement from Alibaba comes after 10 years of succession planning to ensure the company’s enduring viability. The U.S. Olympic Committee elects Susanne Lyons as its new Chair, while underscoring their emphasis on keeping athletes safe.
September 06, 2018Better qualified. Studies of gender diversity quotas for boards in Europe show that female directors appointed after quotas took effect were not less qualified than their male peers—in fact they were more likely to have professional degrees and certifications than their predecessors. Nevertheless, debate rages on about the California law that will require companies to include at least one woman director in 2019 and two or more in 2021, if signed into law by Governor Jerry Brown. Meanwhile, a prominent director steps off the board of the company that owns MoviePass, with claims that management has actively bypassed the board on decisions that require board approval. Theranos, once valued at $1 billion, is being dissolved, leaving investors with hundreds of millions of dollars in losses. The board of USA Gymnastics accepted the CEO’s resignation and has appointed a management committee to run the organization as it seeks a new leader. CBS looks to settle with the Redstone family ahead of a court date.
August 30, 2018Step by step. California legislators moved a little closer on Wednesday to requiring public companies based in the state to include women directors. At Boardspan, we think that’s a good thing—to understand why, see “Say Yes To Quotas!” (below). Meanwhile, a new study looks into the real costs of unethical leadership, and Ellen Pao, perhaps best known for pursuing a gender discrimination lawsuit against Kleiner Perkins, writes on the need for CEOs and boards to embrace a more ethical approach to leadership in the social media space. Harassment issues continue to make the news, as the Barnes & Noble board says that former CEO Demos Parneros was fired for misconduct. CBS shareholders file a suit against the company for not making public the allegations against CEO Les Moonves. And the governance crisis ignited by harassment allegations at Wynn Resorts yields five lessons boards can learn from.
August 23, 2018Does corporate governance fulfill its mission? As Senator Elizabeth Warren and President Trump propose radically different reforms to governance regulations, observers take up the overarching question of what governance could and should be. The House of Representatives is considering new governance norms of their own with a bill that would prohibit legislators from sitting on corporate boards. Meanwhile, the battle for control of pizza maker Papa John’s continues, with the founder and board pitted against one another in an intensifying and very public fight. The Tesla board is criticized for failing to rein in CEO Elon Musk. And a new study of hedge funds sounds a warning to boards approached by activists: demands for cost-cutting don't often yield the favorable results sought. While the responsibilities and challenges facing boards are growing, the number of people seeking these roles continues to grow, too. We are often asked how to pursue a board opportunity—see our Boardspan Library article below for three easy steps you can take to help you land a seat.
August 16, 2018Diversity in leadership, a perennial topic in business media, gets plenty of buzz this week. Erika Hayes James, dean of Emory University's Goizueta Business School, joins the SurveyMonkey board, bringing the software company's board to gender parity. California moves one step closer to a quota system, which would require more female representation on boards, and critics make noise. Reports of the decreasing number of women CEOs of large companies continues to reverberate after Pepsi CEO Indra Nooyi's resignation announcement last week -- and Boardspan CEO Abby Adlerman discusses how boards can reverse the trend. Meanwhile, the Tesla board found itself defending CEO Elon Musk's assertion that the carmaker has been pursuing privatization; it named a special committee to evaluate the options, even as the SEC reportedly subpoenaed the company for information about Musk's tweets. A congressman's arrest over insider trading charges is inspiring a closer look at whether legislators should sit on corporate boards. At least one pundit is asking why Les Moonves hasn't stepped down at CBS and whether his alleged misconduct will be overshadowed by other revelations from CBS's legal battle with Viacom. Read on for all the details.
August 09, 2018Where are the women? Opinions abound as to why the Fortune 500 C-suite, which peaked at 32 women CEOs last year, is not diversifying more rapidly. When Indra Nooyi leaves Pepsi later this year, only 24 women will sit atop Fortune 500 firms. Perhaps the defense industry has something to teach others, as three of its largest companies will soon have women chief executives. In other news, Tesla’s board issued a statement suggesting that CEO Elon Musk’s remarks about taking the carmaker private were not just idle tweeting; nevertheless, experts expect the S.E.C. will investigate his market-moving comments. Salesforce has a new CEO—make that a co-CEO, as Keith Block joins Marc Benioff in a dual CEO-ship. The CBS board has taken charge of three investigations into sexual harassment and workplace culture at the media company. Rep. Chris Collins (R-New York) is arrested for insider trading, accused of passing along information he learned as a board member to family members who traded the stock ahead of news that sent the company’s shares sliding.
August 02, 2018Complicated times. The CBS board, in the midst of a lawsuit likely to determine the company's chance of remaining independent, must now consider whether longtime CEO Leslie Moonves will continue to lead the media company in the face of allegations of sexual harassment. For now Moonves, who denies any wrongdoing, remains in charge. Separately, Moonves and other CBS executives are accused of destroying evidence related to the battle for control of the company. Meanwhile, Mike Cagney is back in the money: The former CEO of SoFi received financial backing from two venture capitalists who sat on the SoFi board when Cagney was ousted following an investigation that revealed he was having an extramarital affair with a coworker, though he had told the board he was not. Papa John’s founder, who was forced to resign his role as chairman after reports he made a racial slur, is now suing the company for communications between board members related to the decision to oust him. The board and management of Univision are embroiled in a dramatic feud. And in other news, Land O'Lakes announces new leadership, bringing the number of women CEOs in the Fortune 500 to 25.
July 26, 2018CEO turnover. It’s happening more often and with less predictability than ever before. This week a Canadian pipeline company lost its CEO amid a board investigation. Lululemon presented its new CEO, several months after the apparel maker’s former chief executive stepped down following allegations of misconduct. The CEOs of Fannie Mae and Gilead Sciences announced their departures. We learned that Fiat Chrysler’s CEO died unexpectedly following surgery. Boards that haven't mapped out a leadership path for the future will want to check out the Wall Street Journal article on the importance of succession planning for catastrophic events and learn about the real costs of not having a strong succession plan in this article from the Boardspan Library. Organizations that have recently been through a CEO change might take a closer look at the three actions Harvard Business Review suggests boards can take to help new CEOs address their leadership development gaps. In other news, the board of Papa John’s put in place a “poison pill” to prevent the company’s founder from regaining control. And the median pay to corporate directors hit $300,000.
July 19, 2018Second thoughts: Papa John's founder resigned as board chair, but now thinks he made a mistake by doing so, saying the board pressured him to step down before it had conducted an investigation into his alleged use of the"n-word."; It turns out that (Papa) John Schnatter was also in talks with Wendy's about a possible merger at the time. Texas Instruments chair and former CEO Rich Templeton is back in the corner office just months after announcing his retirement; he returns to the job after newly promoted CEO Brian Crutcher resigned over an apparent violation of the company's code of conduct. Meanwhile, if you were wondering whether the GE board could have done more to prevent the company's downturn, you'll be interested in an analysis in Harvard Business Review that suggests there were three big problems with the board that might have made a difference.
July 12, 2018#MeToo hasn't been dominating headlines of late, but the movement’s impact continues to be felt in the boardroom. This week the Miss America pageant’s board is in upheaval after new chair Gretchen Carlson, whose accusations of sexual harassment ended the career of Fox News chair Roger Ailes, pushed to end the swimsuit competition. Lawyers say executive compensation agreements are being rewritten to include clawbacks for harassment-related resignations and other measures designed to deter bad behavior. In other news, shareholders voted a Bed, Bath & Beyond director off the board as a protest of the executive compensation plan. McKesson shareholders are targeting an audit committee member to protest what they see as the company's failure to mitigate the risks of distributing opioids. And Dow Chemical settles with the SEC after a three-year investigation into the reporting of executive perks--a move seen by some observers as an SEC warning to all. Amid it all, one thing is clear: The pressure on boards to prevent crises of misconduct, accounting, and much more, while providing sound strategic advice is changing the expectations for board service. Read Boardspan CEO Abby Adlerman's latest article for insights you can use on governance in this new era.
June 28, 2018How to achieve more diverse boards? Let us count the ways: California considers a gender quota system. New York City's Comptroller requests companies be more transparent with their diversity stats—and gets a measurable response. Real estate investment trusts, presumably responding to public pressure, elect women directors in record numbers. --All of this may be good news for the organizations affected, as a new analysis suggests that companies with more female directors are less likely to be targeted by activist investors. Meanwhile, GE is revamping its business and its board. Increasingly, technology company directors don't hear shareholder complaints... because they are skipping annual meetings. An analysis by a couple of Canadian professors shows that a stronger board can mean less CEO pay. Plus a series of Q&As with prominent board members in Forbes offers some interesting insights.
June 21, 2018Let’s face it – being a CEO is not for the faint of heart. One day you’re on top of the world and the next day you feel squashed like a bug. And guess who has the ultimate accountability to make things right, better yet help preempt the problems? The board, of course! As Volkswagen’s supervisors struggled to find their footing, Theranos’ woes continue to get daily press and even state university regents lose their way, boards need to help find true north with and for their CEOs. The Wall Street Journal suggests we should humanize our leaders just a little bit more. And as we go to press, we’re watching the news of Intel’s CEO resignation over an employee fraternization matter. All that and much more in today’s Director’s Domain…happy summer solstice to all.
June 07, 2018The shareholders are restless. In the past week, annual meetings at Facebook, Google, and Tesla have been scenes of protest, complaint, and shareholder proposals—evidencing a growing frustration not only with governance issues, but with the power tech companies have to influence outcomes for other businesses, consumers, and citizens. Activist investors demand that pharmaceutical company Allergan split the chair from the CEO’s role. Meanwhile, Starbucks announces that its chairman Howard Schultz is leaving the board but retaining the right to sit in on meetings; pundits suggest the coffee company founder will seek political office. The U.K. Department for Business, Energy & Industrial Strategy releases comments from U.K. executives attempting to justify the lack of women directors, and let’s just say, they seem to say more about the commenters than about women directors. And, if it wasn’t already apparent, Forbes points out that a shift in public perceptions is leading more people to view boards of directors as responsible when companies experience ethical lapses.
May 31, 2018Crisis management. In an era where consumers, employees, shareholders, regulators and the media are more attentive and vocal than ever, crises can grow quickly. And, the latest evidence suggests, regaining trust after a crisis is more expensive than ever. Just ask Facebook, Uber, or Wells Fargo. Fortunately, there are steps a board can take to be ready for bad news and traits a board can look for, and help cultivate, in its CEO to prepare them to lead through crisis. Read on for articles about both. It probably wouldn’t hurt to read this week’s primer on note-taking in the board room, too, so you know where your own scribbles could end up. As for this week’s crises: U.S.C. loses its president amid a sexual abuse scandal, a whistleblower accuses former Infosys directors of wrongdoing, and the boardroom battle for control of CBS returns to court. Despite the calamitous times, CEOs are feeling more optimistic than they have in years… Hmmm, sounds like a good time to prep for the unknown.
May 24, 2018Women CEOs, who last year held only 32 spots in the Fortune 500, continue to decline in number and are now down to 24. Some blame industry challenges for last week's sudden retirement of Denise Morrison from Campbell's Soup as well as the departure of Mondelez’s Irene Rosenfeld last summer. Regardless of reason, experts suggest that boards have not done enough to fill their pipelines with women who could take the helm. Meanwhile, one of the few African American men to lead a large company, Lowe’s new CEO Marvin Ellison, will be contending with activist investor Bill Ackman, who revealed a $1 billion stake in the retailer. The Amazon board, which recently acknowledged the need to include diversity candidates in future board recruitments, is taken to task for its current composition. Wynn Resorts shareholders voted down its executive pay plan. Facebook’s new director may escape a shareholder vote. USA Gymnastics remakes its board. And so much more.
May 17, 2018Boards that don’t live up to the expectations of shareholders and employees are getting an earful this week. Tesla is hearing from shareholders and proxy firms unhappy with what they see as a lack of independence on the board and too much power in the hands of Chair and CEO Elon Musk. A similar scenario playing out at Facebook has shareholders likening the company’s governance structure to 'a dictatorship' and proxy advisors withholding support for the reelection of CEO Mark Zuckerberg as Chair. Amazon, after initially rejecting a shareholder proposal on the topic, reversed course and adopted a board diversity policy after it had garnered employee support. Meanwhile, Shari Redstone and CBS are engaged in a high-profile battle, each trying to outmaneuver the other for control of the CBS board, and therefore decision-making power to decide whether to pursue a potential merger with Viacom; a judge has ordered both sides to refrain from further moves until he issues a ruling—expected today.
May 10, 2018Activism of all stripes is making headlines this week. Employees at Amazon are challenging the company’s stance on board diversity after Amazon opposed a shareholder proposal that would require it to formally consider diversity candidates. Shareholders of gun maker Sturm, Ruger & Co. won the firm's agreement to publicly report the actions it is taking to prevent gun violence. Investors in Telecom Italia defeated Vivendi in a shareholder vote, winning control of the board. Tesla shareholders proposed a change in directors that would leave CEO Elon Musk’s brother without a seat. And that's just some of the change demanded by activists! Meanwhile, new research shows that while all new CEOs generally engender short-term inefficiencies, over the long term outsiders tend to boost productivity more than those promoted from within. Another study shows the median salary of women CEOs of S&P500 firms bests that of men by nearly $2 million. And Netflix is upheld as an example of a new, more transparent era of board information. Changes, big and small, are shifting the landscape for boards.
May 03, 2018Just do it. Women at Nike took the company’s mantra to heart this spring, hurdling over the human resources department to create their own internal report on harassment and discrimination in the workplace. At least six top executives are leaving in the wake of the report and onlookers are now asking what the board could have done differently to recognize and disrupt a culture allegedly unfriendly to women. Meanwhile, What’sApp founder Jan Koum, who has sat on the Facebook board since selling his company to the social media giant in 2014, is apparently resigning over the company’s data privacy practices. Xerox’s chief executive and its chairman are both stepping down, as activist investor Carl Icahn appears to be winning the battle to keep the company from being acquired by Fuji. Saudi Aramco, the world’s largest oil company, appoints its first female director—an unexpected event in Saudi Arabia, where laws prevent women from making many of their own decisions. Goldman Sachs is called out for failing to improve the gender balance of its board. And proposals to increase the gender diversity of Canadian companies seem to be gaining ground.
April 26, 2018Fallout from the Wells Fargo scandals continues, with the bank now forced to give the Office of the Comptroller of the Currency the right to make changes to its executive ranks and board of directors. Of course, the board has undergone plenty of change since wrongdoing at the bank first became public, and now boasts five women on a 12-person board, including the first woman chair of a major U.S. financial company. Change may be in the offing for long-time board members at Wynn Resorts now, as Elaine Wynn, the casino company's largest shareholder, rallies investors to vote against cronies of her ex-husband Steve Wynn. In news you can use: Corporate Secretary weighs in with advice for preparing your company for the possibility of sexual harassment claims. The Wall Street Journal offers a terrific view into Southwest Airlines’ crisis management practices following last week’s deadly engine blowout. Finally, Strategy+Business suggests that if you sit on a board and are concerned about the CEO’s performance, don’t wait too long for “proof” that things aren't going well. Your willingness to appropriately address concerns early could be just what’s needed to avert disaster.
April 19, 2018How's this for a refreshing idea: almost half of directors appointed to the boards of S&P 500 companies last year were novice board members, and of those, the majority were women or minority candidates! In other news, the data mismanagement scandal that led Facebook CEO Mark Zuckerberg to testify before Congress last week has become, this week, a rallying cry for institutional investors demanding governance changes at the social media giant. Several firms are speaking out about what they see as a need for greater board diversity and independence, a separation of the chair and CEO roles, a new risk oversight committee, and more. Meanwhile the sexual harassment scandal that led to the resignation of Steve Wynn as CEO of Wynn Resorts is responsible for ushering in a self-described “new era” at the casino company, which yesterday announced the appointment of three women to its male-dominated board. Even so, most boards are not talking about harassment, a recent poll finds, as directors believe it’s not a problem at their companies. It will be interesting to see if the increasing numbers of newly appointed women and minority candidates agree...
April 12, 2018How to improve corporate governance? Not surprisingly (given the sway corporations have over economic, political, and environmental issues), this question is getting a lot of attention. Senator Tammy Baldwin suggests giving workers, who are directly affected by governance decisions, a say in who sits on the board, even as researchers study how machine learning could help companies build better boards. The MIT Sloan Management Review suggests that a modern board of directors must ensure not just that the company is pursuing its mission, but that it does so with concern for all stakeholders, not just those who have a financial interest in the company. And Venture Beat boasts a piece about the need for boards of AI companies to tackle ethics head on. These conversations are taking place amid the backdrop of data scandals, like those at Facebook and Equifax, as well as rising concerns about how humans will fare in a world of artificial intelligence. Much is at stake and yes, absolutely, this is an important question to be asking.
April 05, 2018In light of massive personal data breaches at Facebook, some are asking if Mark Zuckerberg is the right person to oversee the social media giant. New York City comptroller Scott Stringer, with the city’s billion-dollar stake in Facebook as leverage, is calling for Zuckerberg to step down as chairman. Zuckerberg says that despite mounting troubles the board has not asked for his resignation. An opinion piece in the Wall Street Journal suggests that Facebook’s governance structure poses difficulties for directors who might challenge Zuckerberg's ability to lead or oversee the company. Down the road at Google, more than 3,000 employees have signed a letter protesting that company’s involvement with a Pentagon project that uses artificial intelligence to increase the accuracy of lethal drone strikes. Recently, former CEO and chairman Eric Schmidt suggested that his seat on a Pentagon advisory board will keep the country safer. Separately, a study shows that younger board members bring many of the same skills as their elder counterparts, and may pull ahead of the pack on strategy.
March 29, 2018Another week, another disappointing board diversity statistic. Make that two: 1) Men outnumber women in leadership roles on all board committees by more than four to one. 2) The Federal Reserve Board's leadership is currently 80 percent male and 87 percent white. Meanwhile, the board of the Humane Society is under attack from some of its largest donors. Facebook directors face a shareholder suit accusing them of breach of fiduciary duty in the exposure of 50 million people’s personal data. Japan is rewriting its governance code. And a couple of business professors opine on why many CEOs are taking the lead as social activists. Also, if you are curious what its like to be in the room when BlackRock meets with board members to discuss policies affecting company culture and diversity, etc., you’ll find a pretty detailed list of the kinds of questions they ask below. Perhaps such conversations will eventually lead to some more encouraging diversity stats!
March 22, 2018For the past five days, Facebook was top of the news following the revelation that lax protocols allowed the data of 50 million Facebook users to be illicitly shared with British data company Cambridge Analytics—news which caused the share price to plummet dramatically. Much was made of the fact that Chairman & CEO Mark Zuckerberg did not immediately address the situation publicly, though on Wednesday he offered an apology and laid out plans for shoring up the company's data privacy practices. Meanwhile, the Cambridge Analytica board immediately suspended its CEO after an undercover report showed him purportedly promoting unethical practices. In other news, CEO pay is now at its highest in history. Asset manager BlackRock is pushing boards to make progress on diversity, culture and compensation structure. New data shows that shareholder proposals now target environmental and social concerns more than governance issues. Some 82 percent of companies worldwide assign climate risk oversight to their boards. And more women are laying claim to the COO role.
March 15, 2018It’s hardly news that CEO salaries have grown handsomely in recent years. Still, with new SEC rules requiring companies to explicitly state the difference between the chief executive and median worker salaries, outsize salaries are turning heads, as media outlets point fingers at company after company stating sizable pay differentials. Our first thought: Armed with all this data, it wouldn’t be surprising to see shareholders take aim at big pay packages. Indeed, Disney shareholders this week voted for the first time ever against a proposed pay plan for CEO Bob Iger. In other news, Goldman Sachs makes public its succession plan for the top job. The SEC charges Theranos CEO Elizabeth Holmes with committing massive fraud and separately charges a former Equifax executive with insider trading based on his early knowledge of the firm’s cyberbreach. The Wynn Resorts board is sued by the State of Oregon and two directors signal their departures. On another subject: For those curious about director liability in light of recent cases of corporate misconduct, we found timely insights in this post by two legal scholars at Berkeley Law. It is a synopsis of their paper, The Hidden Power of Compliance, which examines “four mega scandals: the General Motors ignition switch failure, the Washington Mutual collapse during the financial crisis, the security breach in Yahoo, and Wells Fargo’s fake accounts fiasco. While legal and compliance personnel are at the heart of the inquiry in all cases, their interaction with the board in each setting is different, changing the liability outcome.”
March 08, 2018A governance guide for the #MeToo era: A group of pension funds that together manage more than $3.5 trillion in assets issues a report on sexual harassment and the risks it poses to corporations, with some fairly specific recommendations for boards and an extensive list of governance questions for investors to ask boards. Meanwhile, asset managers come under attack for rubber-stamping exorbitant CEO pay packages, even as the largest comp plan in history gets a nod of approval. The Nordstrom board rejects the family’s $8.4 billion bid to take the company private. And Broadcom’s proposed takeover of Qualcomm could be derailed by a U.S. government body concerned that a merger may negatively affect the country’s technological competitiveness and even its national security.
March 01, 2018General Electric announced a radical board shakeup—more than half of its 18 directors will exit, three new directors will join, and the overall size will shrink to a more manageable 12-person board. Three of the four longest serving board members, all women, are out, leading to women occupying only 17% of the seats. Meanwhile, a report by Nordic bank Nordea suggests companies with more women leaders produce more stable returns. But in countries where quotas have ensured more women on boards, The Economist tells us, there has not been an increase in women executives. And as gender-pay-ratio disclosure becomes mandatory in the UK, Barclays shows how much less women earn, primarily because they are excluded from senior management roles. Plus, the New York Times reveals the details of how an all-woman leadership team failed to take over the Weinstein Co.
February 22, 2018The fallout from alleged sexual misconduct rattles corporate America and increases pressure on boards again this week. Ford executive Raj Nair admits to inappropriate behavior and steps down. Guess Inc. cofounder and chairman Paul Marciano takes a leave amid allegations of sexual harassment. Thomas Schumacher, the leader of Disney’s theatrical division, whose production of “Frozen” opens on Broadway today is accused of lewd behavior. The board of Wynn Resorts announces that former CEO Steve Wynn is not eligible for a reported severance package of $330 million. And a lawsuit against the Weinstein Co. prompts the board to fire the COO and complicates a potential sale of the company that had promised to remake the board as a woman-only entity. These cases and the many others that have arisen in recent months have cost corporate America money, share price, employees, and reputations, and are leading boards to take very seriously their responsibility to prevent misconduct and ensure a safe workplace. Commenters suggest that while more diverse boards are one step in the right direction, seating women and people of color on boards, alone, cannot combat entrenched cultural issues. Instead, experts suggest a 5-step approach boards should take to ensure appropriate disincentives for bad behavior are in place. In other news, the CEO of Gap Inc is out after failing to boost profits. Slack builds its board, driving speculation it is preparing for an IPO. And activist investor Nelson Peltz takes his seat on the Proctor & Gamble board.
February 15, 2018Will boards of directors save the world? If you think that question sounds far-fetched, the latest news out of the nation’s business schools might make you think again. A professor at Harvard Business School suggests that companies are adopting corporate social responsibility (CSR) policies more readily than ever before, in part because customers, shareholders, and employees recognize the need to address major issues like wealth inequality and climate change and are losing confidence that government will do so. Researchers at Northwestern's Kellogg School of Management studying companies whose executive comp plans include specific CSR benchmarks found that setting such targets led to significant progress on social and environmental goals and gains in long-term value. ISS, meanwhile, notes that shareholders are pressing more companies to disclose business risks related to climate change. In other news, Chipotle gets a new CEO; Xerox shareholders balk at Fuji deal; the board of the U.S. Hispanic Chamber of Commerce parts with its CEO amid allegations of improprieties; and a new report shows that women have made real gains in those C-suite roles that don't typically lead to the CEO job.
February 08, 2018Let this sink in: “We simply expect much more of boards of directors than ever before.” So said incoming Federal Reserve Chairman Jerome Powell in August. This week, Powell and outgoing Fed Chair Janet Yellen underscored that message as the Fed announced it is restricting Wells Fargo from growing its business until it addresses its governance shortcomings. The regulators also unofficially but unambiguously forced out four directors who had been on the bank’s board as its multiple scandals unfolded. Former Treasury Secretary Lawrence Summers jumped right in to ask why the Fed didn’t name names—and made a case for the public shaming of board members who fail in their duty as watchdogs. Others echoed the sentiment, and commentators suggested the action against Wells Fargo’s board should be seen as a warning shot over the bow of all corporate boardrooms, especially banks. Critics took aim, too, at the Wynn Resorts board which some suggest was filled with cronies of CEO Steve Wynn and failed to provide adequate oversight; Wynn stepped down this week amid allegations of sexual harassment. Canadian active wear company Lululemon also lost its CEO to unnamed behavioral issues presumed to concern employee relations. And Sheryl Sandberg’s LeanIn.org finds that the spate of CEO dismissals in the #MeToo era is scaring some men from mentoring women colleagues, even as women contend with a narrower path than men to the C-suite and, as yet another study points out, the boardroom.
February 01, 2018From hush money to zero tolerance... When it comes to boards addressing sexual harassment, time is moving at light speed. Less than four months since the Harvey Weinstein scandal broke and the #MeToo movement launched, the perceived responsibility of the board has been radically altered according to a Hastings Law professor and a Rutgers University historian. Quiet settlements to resolve accusations of sexual misconduct are now likely to be seen as a breach of board duty, they say, while firing without severance (after careful investigation) is becoming the new normal. So, where does that leave the Wynn Resorts board, accused of approving payments to settle sexual misconduct claims, overpaying the CEO, and other acts of poor governance? Now, facing investigations and potential lawsuits for alleged breach of fiduciary responsibility and failure to fulfill its duty of CEO oversight. Meanwhile, new studies show that women-led startups land only 2% of venture funding, and that women still lag men in startup hires. A more promising report shows that the most diverse companies are the most innovative—with diversity measured in terms of gender, race, age, and more. And that makes a nice segue for this news: Airbnb, like Facebook last week, is also welcoming former American Express CEO Kenneth Chenault to its board. With the addition of their first black director, the vacation rental company pledges that, next, it will add its first woman director.
January 25, 2018Pay for performance. The concept was stretched mightily this week by Tesla, which announced that CEO Elon Musk will either hit a series of wildly ambitious targets and be paid so handsomely some say he will become the richest man in the world, or he will not earn a dime for his efforts at the electric car maker. Pundits immediately labeled it a publicity stunt, analytical minds began parsing just what it would take to hit the end goal of $650 billion, and at least one commentator argues that the precise targets could persuade Musk to obsess over short-term results at certain junctures. Meanwhile, women CEOs are more likely to experience a different kind of targeting—finding themselves in the crosshairs of activist investors; a new study shows women CEOs are more likely to be on the receiving end of activist incursions than their male counterparts. In a different study, McKinsey updates its oft-quoted 2015 report and reaffirms that (racially and gender) diverse executive teams correlate with better financial results. And notably, Facebook adds its first non-white board member.
January 18, 2018Note to Boards: Shareholders are looking for companies to make real strides on social and environmental issues. The CEO of investment management firm BlackRock wrote a letter to companies that his firm invests in, saying BlackRock expects them to show how they are contributing to society. Wells Fargo has set up a new advisory council, headed by its board chair, to hear from stakeholders about their environmental and social concerns. The Harvard Business Review suggests “the worlds of activism and impact investing are converging much more swiftly than most people realize — and this union holds enormous promise for those who wish to see the creation of capital markets that support sustainable economic development.” Meanwhile, another convergence—that of media and technology—is pushing Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey off the Disney board. In recognizing the conflicts with Disney's evolving business that these directors increasingly face, neither will stand for reelection in early March. Critics are calling on Disney to take the opportunity to diversify its predominantly white board. Separately, Britain’s requirement that companies report the gender pay gap has resulted in some disappointing statistics: Men out-earn women in all fields. Shareholders will raise their voices about that, no doubt.
January 11, 2018No doubt about it, more is being asked of boards. Shareholders are pressing the Facebook board to initiate a risk committee to address concerns about “fake news” and social media addiction. Investors are demanding that the Apple board address issues surrounding alleged physical and mental harm the company’s products may do to children. Employees are winning more expensive class action suits against companies that don’t treat them fairly, which in turn will put more pressure on boards to oversee HR policies and workplace compliance issues. Plus, rapid changes in technology are requiring some board members to go all-out to stay on top of the latest innovations—in some cases traveling as far as China on board “field trips” designed to expand their tech knowledge. It’s a lot to manage, and yet these many make-or-break issues cannot squeeze strategy out of the board conversation. In fact, Harvard Business Review suggests a new era of breathtaking innovation will demand that corporations commit to bigger picture thinking and greater, long-term risk taking. We think the best way to handle the increased pressure is by devoting a little more time to preparing, so you can spend less time to reacting. To get started, see Boardspan's special report: “The 2018 Boardroom: 7 Issues That Shouldn’t Take You By Surprise.”
January 04, 2018It may be a new year, but sweeping changes set in motion in 2017 will continue to shape boardroom dynamics. Among the trend stories worth noting: More corporate directors are being held personally responsible for their companies’ misdeeds. More CEOs are being fired, or not hired, by boards unwilling to overlook allegations of inappropriate behavior. More CEOs are concerned that cyberattacks and disruptive technologies pose real threats to their success. And more mergers than at any point in history means the playing field for all businesses are being redefined. Meanwhile, Netflix and Goldman Sachs were among the first to respond to the new tax code by making changes to executive compensation. Uber is adding six new board members. Erich Schmidt is stepping down as Alphabet’s executive chairman, while Tim Cook is stepping up as the first CEO (that we know of) whose board will not permit its CEO to fly commercial. And in the latest sexual harassment scandal, executives and board members of the Miss America Organization resigned after allegedly exchanging disparaging emails about contestants; several former Miss America winners will now join the board, including Gretchen Carlson, who received a $20 million settlement after accusing then-CEO of Fox News Roger Ailes of sexual harassment. Whew. Welcome to the new year!
December 21, 2017As 2017 comes to a close, we look back at the prominent boardroom trends of the year to see where we’ve been and prepare for where we might be heading. It’s been a rollicking year for boards, with pressure building on all sides from activist investors, the media, institutional shareholders, and all who are concerned about sexual harassment in the workplace. We culled six prevailing topics from the year’s board news—all of which may be harbingers of the challenges we expect boards to see in 2018.
December 14, 2017Amid frequent hacks, leaks, and other costly security breaches, boards are seen as increasingly responsible for ensuring companies are doing everything they can to address cybersecurity issues. They are also being asked to justify excessive executive pay packages. New reports show that the gender pay gap is widest at the top. The Exxon Mobil board is bowing to investor pressure and agreeing to publish data showing business risks associated with climate change. The Xerox board has come under attack by activist investor Carl Icahn, who suggests the company is headed for disaster and needs a quick turnabout. And new statistics show that the handful of large companies with women-majority boards tend to outperform their peers. Meanwhile, a thoughtful piece in the New York Times examines the Etsy board’s decision to oust its CEO earlier this year and asks whether the social idealism that was intrinsic to that company’s culture could ever be compatible with the mandates of public markets.
December 07, 2017Harassment remains a bold news item for boards. Members of the Weinstein Co. board are named in a class action suit alleging that they covered up a pattern of sexual abuse by Harvey Weinstein. Venture capitalist Shervin Pishevar, cofounder of Sherpa Capital and also of Virgin Hyperloop One, steps down from various board and company roles amid allegations of harassment. An investment group urges the Amazon board to improve gender diversity among its senior management and to explain why former executive Roy Price was not fired for two years after sexual harassment reports were filed. And investment group Pax World Management suggests that when boards focus on gender diversity, equal pay, and fostering a culture that doesn’t tolerate harassment, their companies outperform those who don’t. Meanwhile, fat-cat boards beware: In the new year, shareholder services firm ISS says it will begin calling out board members who approve director pay packages that are out of step with rivals.
November 30, 2017When sexual harassment scandals rocked private unicorn companies Uber and SoFi, sending their CEOs to the sidelines, people asked, “Where was the board?” A report from news site The Information tries to answer that question and suggests that the boards of some of the nation’s largest private companies have focused more on preserving insiders' power than on establishing governance standards. When fake-accounts and improper-sales scandals rocked Wells Fargo, sending its CEO into retirement, people also asked, “Where was the board?” The bank responded by refreshing much of the board, announcing this week that three more new directors will join in the new year. Meanwhile, a review of director pay shows a number of board members now earn more than a half million dollars annually for their service. And an article in Harvard Business Review suggests that many companies are not doing what they could to ensure a strong pipeline for the C-suite, which is having the dual effect of slowing the careers of top talent while forcing many to look outside the company for chief executives. Surely that’s a situation worth addressing.
November 16, 2017Diversity is a hot topic this week: Money manager State Street reinforced its call for gender diversity in the boardroom, putting Canadian and Japanese companies on notice that it will vote against nominating committee chairs of any boards that do not have women directors. Apple, whose board has resisted pleas to create a diversity policy for hiring, released its diversity statistics, showing that its worldwide management team is 71 percent male. Meanwhile, studies show that hiring and promoting more women will reduce sexual harassment in the workplace more effectively than training programs and reporting systems designed to solve the problem. In other news: Uber’s board sets aside its differences to do a deal, estimated to be worth $10 billion, with Softbank. General Electric cuts six of its 18 board seats. Nelson Peltz may still get a seat on the Proctor & Gamble board. Venture capitalist Steve Jurvetson resigns from his firm and takes a leave of absence from the boards of Tesla and SpaceX as he faces allegations of sexual harassment. And Gretchen Morgenstern of the New York Times suggests that a judge’s decision to let a suit against Wells Fargo go forward is a not-so-subtle message to directors to take their responsibilities seriously, since being one of many bad decision makers is not a ticket to immunity. We will not publish Director's Domain next week. We hope you enjoy the Thanksgiving holiday.
November 09, 2017Cultural upheaval. Every day new revelations arise concerning sexual misconduct, gender discrimination, lack of minority representation—and more often than not, boards find themselves at the center of the storm. NPR (National Public Radio) and Israeli media company Keshet have both been roiled by sexual harassment allegations. Palo Alto Networks’s reluctance to release diversity stats has prompted investigative journalists to dig in. Uber is being sued for alleged systemic bias against women in performance evaluations. Cultural expectations for organizations are shifting rapidly—and savvy boards are at the forefront. While directors can not guarantee that an executive (or employee) won’t make bad decisions, the tone they set—which questions they ask, which incentives they approve, which ideals they promote—definitely influences behavior. We encourage you to read and share the recommendations offered by Boardspan’s own board: “Harassment Not Tolerated: 6 Questions Every Board Should Ask.” Also, don't miss the Harvard Business Review piece on how to build a pipeline for more women CEOs. In the spirit of boards continuing to hone their skills, ADP wins the battle to keep activists off its board, with an important lesson—learn what directors can do to minimize distracting, expensive proxy battles.
November 02, 2017Senators investigating Russian interference in the U.S. elections grilled the general counsels of Facebook, Google, and Twitter this week, while criticizing the companies for not sending their chief executives to discuss actions that may have had a sizable impact on voting in the last presidential election. Facebook CEO Mark Zuckerberg was instead paying a visit to China's Presdient Xi Jinping, along with Apple CEO Tim Cook and Blackstone Group CEO Stephen Schwarzman. Meanwhile Uber's former CEO Travis Kalanick presses for the continued control of several board seats--a point of friction that could jeopardize an investment of as much as $10 billion in the company. Samsung bolsters its highly profitable business with a new leadership structure. Also, this week brought a couple of great reads on leadership: The New York Times reports on the common qualities of CEOs and the Harvard Business Review reveals how to develop "a strategic executive voice." Enjoy!
October 26, 2017Board news continues to be dominated by sexual harassment, with The Weinstein Company board facing a lawsuit for its alleged knowledge of and failure to stop Harvey Weinstein’s “repeated acts of sexual misconduct.” Noted venture capitalist Steve Jurvetson, who sits on the boards of Tesla and SpaceX among others, has also been accused of sexual harassment and is under investigation by his firm. Discouragingly, a recent survey reveals that few boards ever discuss the topic of sexual harassment nor feel that it is an issue they need to address. A report in Harvard Business Review suggests that few women are promoted into the C-suite (and therefore onto boards) not because they act differently than men or have fewer interactions with decision makers, as is often suggested, but simply because of gender bias. Meanwhile, one commentator suggests that though boards currently act as if business strategy is removed from issues like immigration, climate change, or how women are treated in the workplace—boards are increasingly feeling the pressure to address social concerns. For those who prefer to be proactive rather than reactive, we recommend having boardroom conversations that ensure you are doing what you can to protect everyone at your organization from sexual harassment and its consequences. Read on and see "In Case You Missed It" for specific ideas.
October 19, 2017With the Weinstein Co. and 21st Century Fox boards facing scrutiny this week for allegations that their top executives routinely engaged in sexual harassment and abuse, it’s a good time to ask: What can the board do to detect and prevent workplace harassment? We have answers, thanks to a special post by the members of Boardspan’s own board of directors. (See below.) Meanwhile, Facebook promises it will soon add a person of color to its all-white board. A new report by PwC identifies six trends in the boardroom including an ongoing split in perceptions about diversity, with women directors more convinced than men of its value; the report also reveals that boards show less concern about climate change than do investors. Director pay is up 20 percent in the past five years. Read on, too, for stories about the State of California demanding more change on Wells Fargo’s board, and about the managing director of an investment fund being forced to step off several boards after espousing racist views in his newsletter.
October 12, 2017With every corporate crisis comes the question: “Where was the board?” The words seemed to form on observers’ lips even as allegations of sexual harassment stretching back decades were made against Weinstein Company co-founder Harvey Weinstein. The film production company’s board members, all of whom are male and half of whom resigned following the reports, pleaded ignorance. At least one columnist is suggesting that boards—notably those of the Weinstein Company, Fox News, and Uber, all of which have suffered major damage as a result of alleged sexual harassment—have a responsibility to address sexual harassment as a governance issue. In other news, a judge ruled that directors at Wells Fargo can be held personally liable for the company's egregious sales abuses. Activist investor Nelson Peltz is challenging the results of a shareholder vote which Procter & Gamble says did not win him a board seat. But his firm, Trian, did land a seat at GE, where the CFO and two vice chairs announced their departures a week after former CEO Jeff Immelt vacated the chair's seat three months earlier than expected. And, as Harvard Business Review this week takes a look at how some CEOs are promoting more boardroom diversity, McKinsey & Company’s 2017 Women in the Workforce report shows women are not making strong gains anywhere in the corporate world and especially not in the C-suite, which is a frequent precursor to the boardroom.
October 06, 2017Values are only valuable to the degree they are embraced. So, at a time when too many corporations are accused of failing to safeguard the best interests of their customers, employees, and shareholders, boards are increasingly looked upon to monitor a company’s commitment to their values. In the same week that the former CEO of Equifax and current CEO of Wells Fargo appeared before Congress following failures at each company to protect their customers, a blue-ribbon commission suggests that boards should formalize their role as monitors of company culture. This attention to values is perhaps all the more important in an era in which CEOs are speaking out more readily on political issues, and shareholders are increasingly holding companies accountable for enacting responsible social policies. Meanwhile, Uber, whose founding CEO was ousted over issues of company culture, saw its board grow by two last week, after former CEO Travis Kalanick filled two seats unbeknownst to other board members; this week, the board met and put new structures in place to limit his power, while agreeing to take on billions more in investment. Of note, GE’s Jeff Immelt has retired his chair seat earlier than expected and is free to pursue new opportunities.
September 29, 2017Clearly, boards today face bigger challenges and more public attention than ever before. Just consider a few items from this week's news: At Equifax, the board not only said goodbye to its chairman and CEO Richard Smith and began a search for his replacement, but it is diving into an investigation of the data breach that exposed the personal information of 140 million or more people, as Congress conducts its own investigations. At Facebook, CEO Mark Zuckerberg and his board withdrew a class reclassification proposal in the face of a shareholder lawsuit and a Congressional inquiry into the company’s dissemination of “fake news;” the new classes of stock would have enabled Zuckerberg to maintain control of the social media behemoth while selling his shares. At Procter & Gamble - one of the many companies dealing with activist incursions - the fight to keep Nelson Peltz off the board has led the activist investor to launch a full-on persuasion campaign, with the former CEO and directors of Heinz, as well as shareholder advisory firm Glass Lewis, now pleading Peltz’s case in the media. On a positive note, Salesforce CEO Marc Benioff was recognized for his role in closing the gender pay gap at the company, at a cost of $6 million (and an undoubtedly huge savings in potential lawsuits and PR headaches had he not chosen to do so). In other news, a new report suggests that when sitting CEOs take on outside board appointments, they tend to be handsomely compensated and their own companies tend to perform well—but the companies on whose boards they sit do not always enjoy similar success. All of which would suggest that it's a good time for boards to apply some basic risk management principles to the board itself: Step back and consider whether you have the right people, processes, and priorities in place today to deal with whatever comes your way tomorrow.
September 21, 2017The Equifax breach, which exposed millions of people’s personal data, has not only prompted federal investigations, but also soul-searching about what other companies should do to prevent similar disasters. Board and information security experts alike say its time to take a fresh look at the board’s role in monitoring cyber risks and to establish best practices for comprehensive security oversight. If you read the business ethics article from Harvard Business Review below, you will likely conclude that, regardless of how much formal responsibility directors have for cyber oversight, the health of every organization requires them to take it seriously and Do The Right Thing. In other news, it’s been a big week for board appointments, with new directors welcomed at Intel, Microsoft, eBay, Twitter, and Hampton Creek, among many others. What a good moment to read up on the new trend in mentoring: assigning novice directors a more experienced Board Buddy to guide them. Also, Procter & Gamble analyzes the long-term impact of Nelson Peltz’s tenure on corporate boards. The results are eye-opening.
September 14, 2017Another week, another board facing the fall-out of a tech company’s alleged culture of sexual harassment. Times two. Media reports suggest that board members at Social Finance, a fintech startup valued at $4 billion, had been informed about accusations of sexual harassment and also of financial misrepresentations to investors long before CEO Mike Cagney offered to resign on Sunday. The New York Times presented a blunt assessment: “Companies like SoFi show how boards are incentivized to prioritize cash flow and growth over governance, said David F. Larcker, a professor at Stanford University’s Graduate School of Business who specializes in corporate governance.” Apparently a culture of sexism and workplace hostilities led the board to fire LiveOps CEO Keith Leimbach this week, as well. Both cases, which have a striking similarity to the summer's events at Uber, underscore the real costs to a company, its employees, and its investors when a company's culture takes a backseat to its growth. Melinda Gates offered up her opinion on sexism in tech this week, which we might summarize as: It’s good we’re finally talking about it, since that is the first step to changing it—and the place to start that change is with venture capital. Kudos to Gates for not just naming the problem, but working toward a solution! And, now might be a good time to have a look at the latest from the Boardspan Library: “Six Ways to Promote a Healthy Company Culture," which provides a roadmap for boards that want to assess company culture. If it wasn't obvious before, it's certainly crystal clear today that culture is an indicator of value and the board owes it to all constituents to make oversight of the company culture a priority.
September 07, 2017Taking the long view: Investment firm Vanguard, with more than $4.4 trillion in assets under management, issued a letter to directors of public companies this week, pressing them to address governance issues like board diversity and the risks of climate change. The Vanguard letter underscores the firm’s belief that a company’s approach to board composition and climate risks both have an outsized impact on long-term value. Meanwhile, the Wells Fargo board comes under more pressure with the California Treasurer calling for the removal of one director and a banking industry group joining Senator Elizabeth Warren’s call for the whole board to be dissolved and reconstituted. Criticism rained down on the Uber board for leaking so many of its closed-door conversations to the media, while the Expedia board was lauded for its succession planning, after promoting an insider into the CEO role just days after its previous chief jumped to Uber. And a new KPMG report shows how boards are attempting to keep their companies one step ahead of policy changes, amid continued uncertainty about which policies the Trump administration will promote.
August 31, 2017Uber continues to dominate the news: It names an unexpected candidate for CEO, signals it’s ready to talk about an IPO, and learns that it is under investigation by the Justice Department. The fight over board seats between two of its biggest shareholders is moved from court to arbitration. Plus, high-level scuttlebutt suggests that after Jeff Immelt withdrew his candidacy, the board was unwilling to meet Meg Whitman’s conditions for leading the company, and had but one choice left: incoming CEO Dara Khosrowshahi. At least one shareholder thinks the board itself could use a new leader and is advocating for an independent chair. Now that’s an idea! This might also be a good time to read the 14 Rules for Managing Your Board, (below). Meanwhile, Disney adds GM chief Mary Barra to its high-powered board. New studies show the impact of activist investors on board composition—Hint: Diversity is not top of their mind. And one commentator suggests that venture capitalists may sit on too many boards to provide the oversight and strategic thinking that could propel those companies to greater success.
August 24, 2017Boardroom battles. They’re never good news and this week they continue to roil both ride-hailng company Uber and Indian IT firm Infosys, taking a toll on the market value of both companies. At Uber, the board’s composition and loyalties are being tested by lawsuits and unwelcome surprises, even as the company continues its search for a new CEO. Earlier in the week, the rumor mill had pegged GE chairman Jeff Immelt for the chief role at Uber, but by Wednesday the Wall Street Journal was reporting that Hewlett Packward Enterprise CEO Meg Whitman is back in the board's sights and that a decision is expected in the next two weeks. At Infosys, the board and founders have been locked in a months-long power struggle that prompted the CEO to resign last week, while shaving some $4.5 billion off the company’s value. Meanwhile, the boards of Chevron, Johnson Controls, and GoDaddy are preparing for CEO transitions, and paycheck processing firm ADP rebuffs activist investor Bill Ackman in his bid to reshape the board. Now seems an apt time to read "Conflicts In the Boardroom" (see below) and perhaps take to heart its advice to train board members in dealing with emotions and personalities, as well as governance and regulatory issues.
August 17, 2017Politics landed in corporate boardrooms this week, with a thud. On Monday, Merck CEO Kenneth Frazier, after talks with board members, resigned from one of President Trump’s business advisory groups to “take a stand against intolerance and extremism.” The CEOs of Intel and Under Armour soon announced their resignations from the president's council on manufacturing, too, after the president blamed “many sides” for the white supremacist violence in Charlottesville, Virginia. A comment posted Tuesday night on a New York Times article about the resignations caught our eye: “I'd imagine there are plenty of emergency board meetings going on right now with the actors deciding what to do.” It does seem “Ed from Silicon Valley" was on to something: By midday Wednesday, several more CEOs had publicly departed the presidential council, as civil rights activists pressured others. Then the members of Trump’s Strategic and Policy Forum—a separate group of high-profile executives headed by Blackstone Group CEO Steven Schwarzman—disbanded rather than find its members pressured to decide, individually, whether to stand by the president. As commentators remark, the political tensions in the country mark a new challenge for corporate leadership…. Meanwhile, Uber's directors appears to be locked in a battle for control of the company, and are firing off lawsuits, accusatory letters, and, allegedly, attempts to oust fellow directors. Wells Fargo announced that three of its longest tenured directors, including its chairman, will step down—and Betsy Duke will become the first woman board chair of a major bank. Plus, a new study of CEO pay suggests that smart bets on technological innovation tend to pay off handsomely for executives.
August 10, 2017Company culture. It’s a hot topic, as executives and pundits of all stripes weigh in on Google’s decision to fire an employee for posting a memo that questioned women’s inherent ability to be engineers. It’s also at the root of recent crises at Uber, whose CEO was fired after the company was accused of fostering chronic sexual harassment and discrimination, and at Wells Fargo, where experts say that a spate of scandals can no longer be written off as rogue behavior by one department or a few managers. When cultures cause crises, they become a problem for the board to address—and critics like to ask “Where was the board?” So, today we ask a more helpful question: "What can a director do to ensure a healthy culture is being nurtured?" Below are some answers, and here are a few hints: If you aren’t already, start evaluating the organization’s culture, character and values just as you would the financials. And get the right internal controls in place, including risk management and corporate governance, as well as executive compensation plans that favor good behavior. Then, you can carry on with the week’s news about activist investors, why directors leave boards, and how leaders can train themselves to be more agile thinkers.
August 03, 2017There is one place that no board wants to find itself: At the center of the story. Nevertheless, a week after rumors flew fast and furious about the various CEO candidates approached by the Uber board (to replace a leadership mired in accusations of sexual harassment and discrimination), the board itself landed in the spotlight. Various reports suggest that infighting and power struggles have upended the recruiting process and, perhaps, knocked out of the running the women being considered. As if on cue, its competitor Lyft announced a powerful addition to its board -- former Obama administration senior advisor Valerie Jarrett joins as the company's first independent director.... Big news for champions of women in leadership: A new study shows that, yes, women-run companies (where women are either CEO or board chair) do indeed outperform the market. And in somewhat less encouraging news, results from a large survey suggest that many directors find their boards are not performing as well as they could, and face special difficulty in these areas: Trust, Regard for Other Directors, and Communication. To remedy the issue, experts suggest director assessments to pinpoint issues, followed by board education to address them. We concur!
July 27, 2017Vote loudly and carry a big stick? That could be an adage of institutional investors lately, as more shareholders engage in board-level activism. State Street reported this week that it is making good on its promise to pressure boards to diversify—voting against the reelection of 400 boards that have no women directors. Massachusetts's $66 billion state pension fund voted against 69 percent of director elections this year, taking a stand against boards that don’t include women and people of color. And the International Brotherhood of Teamsters, which has been a longtime shareholder of drug distributor McKesson, was successful in rallying shareholders to vote against an executive pay plan, as a protest against the company’s alleged involvement in the opioid crisis. Perhaps not surprisingly, critics are calling for an end to voting rights for index funds and other so-called passive investors. Meanwhile, Hewlett Packard Enterprise CEO Meg Whitman steps off the HP board while rumors also circle that she’s under consideration for the role of chief executive at Uber. Google CEO Sundar Pichai steps onto the Alphabet board. And the Chicago Tribune has dug deep to help us understand the case of the mysteriously missing Hampton Creek board. All in all, a fascinating week for board watchers.
July 20, 2017Board diversity stats remain dismal. Women hold less than 20% of board seats in the Fortune 1000. Nearly half the companies that went public last year did not have a single woman director. And, as reported last week, men are more likely than women to get a seat without prior board experience…. But the good news is that change is on the horizon! Powerful investment managers like BlackRock are using their clout to champion the idea that diverse boards make better business decisions—and using their votes to challenge boards that fail to diversify. And companies that know these benefits are starting to lead by example. Next-generation real estate brokerage Redfin, asserting that early-stage board composition can have an outsize influence on company culture, has rallied an influential group--including four venture firms and Boardspan to commit to greater diversity in early-stage startup boards. We are excited to be part of this movement to strengthen boards. Read below for the details of the #DiverseFromTheStart campaign and for this week's other board news: activist investor Nelson Peltz's friendly outreach to Proctor & Gamble, Tesla's new board members, Hampton Creek's vanishing directors, the new breed of "digital directors"
July 13, 2017Coming off a midweek holiday, board news is a bit thin this go-round with people away on vacation (or focused on politics).Yet, there are still dramas like the courtroom accusation that Martin Shkreli, when he was CEO of drug maker Retrophin, refused to obey his board’s directions and lied to its chairman. There is speculation about the Uber board’s search for a new CEO. And there are vocal shareholders questioning executive pay packages at Burberry. Nonetheless, this general lull in the action could be a boon to directors who take this time to dig into difficult issues, such as how to tackle risk oversight in light of increasingly prevalent cyberattacks. We feature two important stories on that theme this week: One suggests no business is immune from damage by hackers and that companies need to reconsider not just security but response to attacks. Another proposes that the entire Internet could be shutdown at some point and companies with a strong digital presence should plan now for such a possibility. Not exactly beach reading, but … taking cyber risk seriously could be just the thing to keep you relaxed all year round.
July 06, 2017Do the right thing. That is the message institutional shareholders increasingly are sending to boards by voting against directors who are slow to embrace governance reforms like board diversity or corporate social responsibility. Not surprisingly, some of those “right things” are translating into positive company results: A new study shows that greater board independence, separation of CEO and Chair roles, and other governance shifts have an impact on the bottom line. Meanwhile, the insistence of activist investors to achieve better results faster is prompting boards to remove CEOs from large, established companies at a rapid clip. With these added pressures on boards, cybersecurity oversight seems to have taken a backseat in the boardroom—but at an average cost of $4 million per breach, can a board afford not to take it seriously? Do the right thing, indeed!
June 29, 2017Another week, another firestorm thanks to a spectacular lack of decent behavior. Silicon Valley venture firm Binary Capital has been asked to exit the boards of several startups after six women came forward to accuse partner Justin Caldbeck (lead investor in GrubHub and TaskRabbit) of making inappropriate sexual advances. Knowing that a female CEO had him removed from her board years ago for unacceptable behavior makes the situation even more troubling. Meanwhile, Uber watchers accuse its board of looking the other way while the company’s leadership engaged in unethical and illegal behaviors: commentators say the board forced out CEO Travis Kalanick not because they cared about the company’s many alleged improprieties but because they worried about their investment value. And the allegations against Uber piled on with court documents claiming the board knew that the company was receiving stolen technology, and other sources reporting that Kalanick’s parting shot was to force Benchmark’s Bill Gurley off the board. Whew, that’s a lot of boardroom drama! To add insult to injury, another disappointing study was just released showing that men still have an easier time than women getting their first board seat. Now might be the time to take a deep breath and focus on how core values in the boardroom affect a company’s profitability, (see our featured article from the Boardspan Library). Executives and board members alike need to recognize that values will always have an impact. Act with integrity – or count on disaster.
June 22, 2017Summer and the livin’ is BUSY. Especially for the Uber board, which had already begun a much-talked-about search for a COO and a CFO, and now, following a shareholder revolt that ousted founder Travis Kalanick, is looking for a CEO as well. Sounds daunting. Plus the Uber board must now onboard two new directors, (Wan Ling Martello’s appointment was announced last week and David Trujillo's seat at that table was revealed this week), while considering shareholder demands to add additional independent directors. Meanwhile, the latest research shows that “fewer than 30% of organizations are able to find the right C-suite leaders” and Harvard Business Review suggests that often the trouble stems from a bad cultural fit. That news only underscores the complexity facing Uber’s board, which must pull together an all-new executive team that can not only deliver on the promise of a high-valuation company, but simultaneously lead a cultural turnaround. In other news… the Fortune 500 has seen its percentage of women directors dip to 28 percent, the first downturn in nearly a decade. What to think? Well, there's probably never been a better time to read Redfin's article in the Boardspan Library: How to Triple the Number of Women Appointed to Boards in Three Years! (Linked below.)
June 15, 2017Leadership issues dominate the boardroom this week. First up, Uber: A seven-hour Sunday board meeting to discuss the results of former U.S. Attorney General Eric Holder’s investigation into the company’s culture and policies precipitated a leave of absence for the CEO, the exit of another senior executive, and the appointment of a second woman director. Then, at an Uber employee meeting where the news was announced on Tuesday, board member David Bonderman made an inappropriate comment about women in the boardroom that led to his resignation later in the day. Given that Holder’s recommendations include changes to the board and management structures, we expect more news from Uber in the weeks to come… Next came a handful of big CEO exits, with Marissa Mayer saying her goodbyes at Yahoo as the acquisition by Verizon was completed, Jeffrey Immelt announcing his retirement from GE sooner than many had expected, and Sheri McCoy reportedly leaving Avon amid pressure from an activist… It is a great time to give some thought to leadership—what it means, how to do it well, and whether the very nature of it is changing along with our changing world. See the Strategy+Business article below to consider a new view on the type of leadership most likely to make a difference today.
June 08, 2017We hope you enjoyed the past couple of weeks of specialized content… and now back to our regularly scheduled program of scintillating board news: Shareholders are commanding a good deal of attention both in victories, such as requiring Exxon to report on the impact that climate change has on its business, and in failings, such as being unsuccessful in getting GM to move to two classes of stock or getting the Tesla board to accept annual elections. We note a trend of evolving investor interests, and our lead story highlights activist investors shifting focus beyond the board and straight to the C-suite. In addition, a Bloomberg columnist’s piece addresses hedge fund managers and other activist investors who claim to have the answers: How right are they? Thus, you may want to pay attention to our featured Boardspan Library story on how to ensure confidence in a CEO. And speaking of being active, both tennis champ Serena Williams and swimmer Michael Phelps picked up technology company board seats this week.
June 01, 2017(SPECIAL EDITION) If you read last week’s Director’s Domain, you might have noticed a brief break in our regular programming…just to be provocative. As you think about the three essential responsibilities for boards – Strategy, Performance and Governance – you may be wondering how you put them in play in your boardroom. Our best advice sits in the Boardspan Library. We curate board-specific content from thought leaders such as Deloitte, KPMG, Strategy&, McKinsey, BCG, Harvard, Stanford, MIT, and scores of others. They’re yours for the taking. Sign up now for a free Boardspan account and you will not only have access to a wealth of relevant information, you can save articles to your own personal library and share them with colleagues. Here’s a head start with some of our favorite articles.
May 25, 2017(SPECIAL EDITION) Today’s boards operate amid the pressures of ever-increasing business complexity, technological disruptions, fluid regulatory environments, shareholder activism, cybersecurity threats, and more. Through these choppy seas, a board is charged with keeping the ship pointed toward success in both the short and long term, while scouting risks and opportunities, steering the organization to respond appropriately. It’s a lot to navigate, and yet—that’s the job, mates! How, then, does one do it well? Not surprisingly, success in the boardroom begins with alignment around clarity of purpose. For a board to thrive, its members need to understand their mission and know exactly what is (and is not) in the board’s mandate. The three essential activities of all boards are Strategy, Performance, and Governance. While every productive board will, of course, interpret and enact these activities as they see fit, it helps to have a common understanding of the tasks themselves.
May 18, 2017Not if—but when… Cyber attacks, like last week’s global ransomware episode, are becoming common enough that no company can guarantee immunity. Increasingly, boards are held accountable and must ensure that policies and practices are in place to prevent egregious hacks. One CTO and Board Advisor makes the case for boards to not only educate themselves about “security hygiene” and cyber disaster planning, but also discuss with management the risks inherent in decisions like managing costs by deferring software upgrades. On a different matter of deferring decisions, with every year that passes, Disney CEO Robert Iger gets closer to retirement and the board seems to get farther from a succession plan. Also intriguing, major shareholders of Occidental Petroleum won a vote—against the board’s recommendation—to require the oil company to report on the business impacts of climate change. And more CEOs are being ousted for unethical behavior—why?
May 11, 2017What makes a board successful? Differing opinions on that topic are roiling boardrooms this week, as shareholders signal their displeasure with the board composition at many companies. Repercussions include mounting pressure to unseat the chairman of Canadian plane- and train-maker Bombardier and to reshape the board at shopping-mall operator Taubman Centers. The mere threat of shareholder activism prodded Whole Foods to announce it will replace half of its board this year, while Pandora announces a voluntarily board restructuring as it prepares itself for sale. Two Wells Fargo directors, who scored razor thin margins of support in last month’s re-election vote, also plan to step down, though only as a result of the bank’s age limits for board members. In the context of so much change, the question ‘What makes a board successful?’ deserves serious contemplation. You may want to look at the qualifications currently in vogue among large-company boards (see the Harvard Law School study immediately below) and consider the suggestions put forth by McKinsey in “Making Boards Work”, the culminating article in this week's newsletter
May 04, 2017Ousted. It seems to be the word of the week as the CEOs of Etsy, Molina Healthcare, and money manager AllianceBernstein were all asked by their boards to step down. In all three cases, falling revenues precipitated the ousters and at Etsy the board appears to have been responding to pressure by activist investors. The president of the conservative think tank Heritage Foundation, former senator Jim DeMint, was also giving his walking papers, along with some blame for shifting the foundation’s focus from the formulation of intellectual and academic political arguments to political activism. For boards and executives who don’t want to find themselves at such odds, there’s no time like the present to revisit an organization’s strategy, ensure that the board and chief executive are truly aligned, and that the CEO has the feedback he or she needs to course correct if necessary…. In other news, the boards of BlackRock and Urban Outfitters are both drawing criticism for the long tenure of some of their members. And Mylan disclosed that, even amid financial controversy, such as the drugmaker experienced in 2016, its chairman was one of the best paid.
April 27, 2017What’s a CEO worth? Well, from the standpoint of company success, a lot. So it’s no wonder that directors devote serious time and energy to finding and retaining the right person for the top spot. Unfortunately, a new study suggests that boards are often not taking the right qualities into account when evaluating potential, or current, executives. (Suggested reading below: “What Boards Need to Know to Choose a Successful CEO.”) Regardless of how they are chosen—and sometimes even regardless of how successful they are—CEOs keep seeing their salaries race upward. Witness Yahoo CEO Marissa Mayer’s $200 million total take-home pay for five bumpy years and IBM CEO Gina Rommety’s new $50 million salary. The commentary on whether today’s CEOs are worth all that they’re paid makes for fascinating reading… And in other news: All the members of the beleaguered Wells Fargo board were re-elected, some by such a small number of shareholder votes that observers expect to see director turnover at the bank soon.
April 20, 2017Today the board of 21st Century Fox is schedule to meet, and the Fox network’s long-time star and cash-cow Bill O’Reilly surely will be on the agenda. O’Reilly’s departure from the network was announced yesterday, following reports that the TV personality had been accused by at least five women of harassment, spurring advertisers to leave the show in droves. One can only speculate what the male dominated 13-person board conversations might be in the midst of this turmoil. On another gender (in)sensitive note, others are speculating whether Wells Fargo's board appropriately and fairly doled out the consequences to its top two executives in its recent scandal. And on the more optimistic side of gender conversations, the CEO and CTO of Redfin (the online real estate company) suggest in a new article in the Boardspan Library, that it may be easier—and more valuable—than many have imagined to get more women into the boardroom.
April 14, 2017Tone at the top: Defining and demonstrating a company's values and culture is one of the most important responsibilities of the executive team and board of directors. So, when companies make major mistakes, as United Airlines did this week and as Wells Fargo did in recent years, customers, partners, shareholders and observers all swivel their heads toward the corner office and boardroom. One of the best commentaries on this comes from the Los Angeles Times, where columnist Michael Hiltzik suggests that if the leadership at United and Wells Fargo had created a culture of employee empowerment, they would not be fighting PR fires or paying fines for bad behavior. A Boardspan Library article from the Kellogg School of Management at Northwestern University points to research showing that companies whose employees perceive the firm to be ethical perform better financially. It makes sense that setting the right tone spares headaches and makes for greater success, but one hopes that boards and executives will promote values-based, ethical corporate cultures because it's just the right thing to do.
April 06, 2017Moving the dial. Slowly but surely, women are making their way onto larger company boards, yet as they do, some observers note that surprisingly few are in the influential chair seats for executive, compensation, strategy or audit committees. Meanwhile, board member Arianna Huffington is again in the spotlight for her outspoken support of Uber CEO Travis Kalanick and her attempts to resolve widespread claims of a sexist culture at the company. At Snap, Inc., however, the lone woman on the board is likely in the same situation as her male colleagues: pondering what leverage the board has in a case where the founders have retained 90 percent of voting rights in the now public company. And, given the ongoing concerns about cybersecurity in all facets of life, you may want to learn about some common myths that, if not debunked, could undermine your company's ability to protect itself.
March 23, 2017When boards at the 100 largest companies in the U.S. set CEO pay last year, a few cut salaries, but many more increased executive pay, sending median salaries for some of the best paid people in the land up nearly 7 percent—to $11.5 million. Now institutional investors including CalPERS want to know how those salaries compare with what rank-and-file workers take home. The investors have sent a letter to the S.E.C. asking the Trump administration to push through an Obama administration rule that would require public companies to disclose the pay gap between CEOs and workers. And in other news: investment firm BlackRock, which manages more than $5 trillion in assets, is pressing for more board diversity of all kinds--expertise, experience gender, race, age. The firm will surely be interested in a study out this week showing that boards are heavily dominated by a single age group.
March 16, 2017Reporters and critics have a lot to say about an SEC disclosure made by Yahoo on Monday stating that CEO Marissa Mayer will leave with a golden parachute of $23 million, after failing in her bid to turn the company around. The noise is even louder around the revelation that her successor, current Yahoo director and former IAC chief executive Thomas McInerney, will be paid double Mayer's salary for what some consider a less-demanding job. Meanwhile, the chairman of the British supermarket chain Tesco suggested the days are numbered for white men on boards of directors—even as Boardspan CEO Abby Adlerman sheds light on why some male-dominated boards are reluctant to respond to calls to change their composition.
March 10, 2017Women directors: Where are they? Financial services firm State Street wants to know. In an impressive display of shareholder activism, the world’s third largest investment firm with $2.47 trillion in assets is demanding that companies it invests in have at least one woman director. It promises a vote against the reelection of those board members responsible for nominating new members, should they fail to bring a woman on the board. Meanwhile the one female director at Uber, Arianna Huffington, is publicly defending CEO Travis Kalanick, as the company reels from a slew of scandals. And the institutional investors in Wells Fargo are considering withholding their votes from board members who might have moved faster to contain last year’s fake accounts scandal. Word to the wise: Shareholders are watching!
March 02, 2017“Culture starts at the top.” The adage, which applies to management and boards alike, is something the boards of Uber, Wells Fargo, and others are likely grappling with this week. Commentators are prodding Uber’s board to probe into allegations that the car-service company has fostered a culture of sexual harassment and to consider whether CEO Travis Kalanick, who was recently caught on video disparaging an Uber driver, is the right man to lead the $69 billion company. Wells Fargo’s board meanwhile slashed bonuses for the whole executive team to “reinforce accountability of the company's leadership” following last year’s sales scandal, in which more than 2 million fake accounts were created by employees trying to reach mandated quotas. Certainly allegations of widespread unethical and/or illegal behavior should prompt a board to hold executives accountable and to press for meaningful cultural change. Even better would be for boards to take a proactive stance regarding culture and accountability—and avoid the scandals all together! Some basic suggestions to help any board get in front of these issues: Commit to transparency; pursue rumors or complaints until the board is satisfied it knows the truth; refresh directors frequently enough to avoid cronyism and complacency; and regularly undertake assessments of both CEO and board. It wouldn't hurt to meditate on that old adage, either, and assure yourself that the board is setting the tone you want others to follow.
February 23, 2017Big, bold shareholder activism. That’s what we’re talking about, as some of the nation’s most engaged shareholders disclose interests in major companies. Nelson Peltz targets P&G, with a $3.5 billion stake in the packaged goods firm. Carl Icahn steps in to ask for more changes at Bristol-Myers Squibb, which already this week bowed to demands from Jana Partners. Starboard Value takes a 6.6% stake in Tribune Media and signals its intent to shake things up. And that’s just the big players! One way to get ahead of this curve, and possibly forestall an outsider from making demands of your board, is to bring in more “activist directors” now. Most importantly, don’t let the drama swirling around shareholder activism keep your board from one of its most important and least understood tasks: Addressing cybersecurity threats. These are costly mistakes and the board should do all it can to avoid them.
February 17, 2017Another week of intrigue in the boardroom: Snapchat clarifies the compensation of the only woman sitting on its board, suggesting that the company will, in fact, pay her more than the previously stated 10 percent of what her male colleagues make. Fortune 500 boards report that they have welcomed more black women to their ranks in recent years, but have not increased the percentage of black men sitting on those boards. And, as the Volkswagen board denies new allegations that its members were warned ahead of the U.S. government’s probe into the automaker’s falsified emissions tests, Germany amends its corporate governance code to require companies and their directors to conduct business ethically and take responsibility for their behavior.
February 09, 2017The year of activism? So far in 2017, American citizens have taken to the streets and corporate shareholders have taken up proxy fights with a vengeance. Autodesk, Buffalo Wild Wings, Perrigo, and Cognizant have all been in activist shareholders’ crosshairs this week. Mark Zuckerberg, too, is getting a little heat from shareholders looking for him to abdicate the chairman role at Facebook. Meanwhile, there is a lot of talk about a new report showing that, after initially driving hard to achieve greater diversity and bringing more women into the boardroom, the United States has fallen behind much of the developing world. Will we see would-be women directors taking to the streets? Unlikely. But we wouldn’t be surprised to see some creative form of board diversity “activism” on the horizon.
February 02, 2017ExxonMobil adds an atmospheric scientist to its board? Yes, you read that right. Some critics are crying ‘too little too late,’ but the Union of Concerned Scientists gives the oil company a thumbs up for appointing a climate scientist as a director. Meanwhile, a new activist investor-defense group at Lazard is using big data to help companies spot potentially vocal shareholders before they raise their voices. And boards looking to help their CEOs succeed (and thereby give activists no grounds for complaining) are turning to a timeless tactic: More and better feedback!
January 26, 2017Wells Fargo is back in the news, with press reports alleging that early investigations into the bank’s cross-selling debacle were tainted: employees were apparently tipped off to internal inspections, giving them time to cover up illegal maneuvers before inspectors arrived. Also the bank now says it has found evidence that some employees who came forward to report the illegal activities were fired. Not a pretty picture. For some time now the culture at the bank and the role of the board in preempting bad behavior has been called into question. Today, Boardspan releases its own analysis of the responsibilities and challenges of board membership in this special report Leadership Matters: What Boards Can Learn from the Wells Fargo Calamity.
January 19, 2017Ch-ch-ch-ch-changes. On the eve of the presidential inauguration, the news is thick with reports about the new administration: Incoming Transportation Secretary Elaine Chao will apparently continue receiving substantial compensation from Wells Fargo related to her prior role as a director at the bank. General James Mattis has reportedly left his board seat at Theranos to prepare for his new role as Defense Secretary. And President-elect Donald Trump’s lack of board service is examined—would he have a better sense of conflict of interest if he had ever sat on a public company board? Meanwhile, boards across the country are looking at expected changes to the economy, regulations, and more and wondering what’s in store for them. To answer this question and more, we’ve just released Boardspan’s Guide to 2017: 8 Key Issues Boards Face This Year, which we link to below. Please have a read and pass it on to colleagues who would benefit from knowing what to expect in the boardroom. We look forward to keeping you up-to-date and ready for what 2017 holds, all year long.
January 12, 2017We talk frequently about the increasing pressure boards feel, as everyone from regulators to shareholders holds directors accountable for a company’s actions. This week, we see that consumers, too, can take aim at boards for behaviors they don’t agree with. Witness the boycott called against L.L. Bean after one of its board members was reported to have contributed to the Trump campaign. There's not much directors can do about increased scrutiny, besides ensuring we act with integrity and consider decisions carefully, knowing they might be perceived differently by others. As Harvard Business Review suggests, we can all get better at identifying ethical decisions and perhaps seeing the potential consequences before we make a move. Meanwhile, Yahoo announced this week that many directors—including CEO Marissa Mayer— will be leaving the company’s board once the deal with Verizon closes. And a dispiriting new report shows that at many companies, “diverse directors,” i.e. women and people of color, are paid less than their white, male counterparts.
January 05, 2017Happy New Year! Prognosticators have been busy chronicling what to expect in 2017. Their best guesses include more corporate scandals, more cyber attacks, and less regulation all around. One might also assume that individual directors will be appointed to fewer seats, as both ISS and Glass Lewis have placed new focus on the issue of directors “overboarding.” Meanwhile, some new board appointments have garnered attention, including former DuPont CEO Ellen Kullman’s election to the Goldman Sachs board, and the announcement that former Genetech CEO Ian Clark will begin serving on three biopharmaceutical company boards. There is also talk of a handful of young, female technology entrepreneurs becoming sought after as directors for larger company boards. While it's likely terrific for those invited and the boards they serve, we still have a long way to go before women are included as a rule, not an exception, given that only 20 percent of large company board seats are currently filled by women. Here’s wishing you a successful 2017! Let us know how Boardspan can help turn your board aspirations into reality this year.
December 22, 2016It's a quiet time in the board room -- the lull before the storm of regulatory changes and strategy updates as organizations sort out what the new year and new players could bring? Two of this week's articles reflect opinions about what a Trump administration might mean for board rules and Dodd-Frank regulations. Another examines how those companies with directors likely to take part in the new administration are already faring well. Meanwhile, research shows that the number one skill that innovative CEOs have in common is their ability to manage risk. That seems like an important competency to hone in the year to come. See the piece from our archives, below, to learn more.
December 08, 2016Transition time. Next year is shaping up to be one of big changes: Starbucks will try an unconventional CEO transition with Howard Schultz handing off the chief role to his number two, but staying on as chairman and in a new operational role. Theranos will remake its board with fewer politicians. Chipotle, too, looks likely to shake up its boardroom. Meanwhile, a new Stanford University survey of corporate boards reveals common issues today’s directors face, plus some suggestions for solving them. And this week’s newsletter is filled with good advice for your new year: How to plan a CEO transition; how to think about governance for subsidiaries of larger firms; and how to be a more effective leader. We hope you find it valuable.
December 01, 2016Chief among a board's responsibilities, some say, is the hiring—and potential firing—of the CEO. We know there's a lot more to governance than that! But there's no doubt that having the right person in the top job is important. Harvard Business Review makes the case this week that there is a much a board can do to help a new CEO get up to speed and be effective in her role; after all, great coaching can turn a decent player into a stand out. And John Graham, a professor at Duke University's Fuqua School of Business, argues in the Wall Street Journal that even the stand-out players should be evaluated periodically; you need to know when they would benefit from more coaching or need to be cut from the team. And we've included a story from the archives about how to hire the right CEO when you need to. Our takeway? Yes, the board needs to be highly attuned not only to who is sitting in the CEO's seat, but whether and/or how it can help improve the quality of the CEO's performance. Sounds like a great topic to consider as you begin to size up the new year.
November 17, 2016When employees share their concerns or whistleblowers make noise, it doesn't hurt to listen. Yesterday, the Wall Street Journal published an intimate look into the experience of the man who apparently went public with his concerns that blood-testing company Theranos was fudging its research. The employee in question landed the job through his connection to Theranos director and former Secretary of State George Shultz, who happens to be the man's grandfather. (It's quite a read.) And this week several major shareholders said they are looking for changes to the Wells Fargo board in the wake of the false-accounts scandal that cost the company its CEO—a scandal that some say was first revealed to the board by whistleblowers five years ago. Meanwhile, a new study shows that the quotas some European countries have put in place to ensure gender diversity on boards has resulted not only in more female directors, but an overall positive experience for directors and more professionalism in the recruiting process.
November 03, 2016While the boardroom is fairly quiet this week, there are a few things that caught our attention. For starters, we look at how much directors are paying themselves—the median salary for directors of S&P 500 companies is about a quarter of a million dollars a year, with some earning into the millions, presumably for a job very well done. Next, we are back to Wells Fargo, which is hoping to avoid litigation by settling yet another accusation of wrongdoing—this time for overcharging mortgage holders for home appraisals the bank required of those who had defaulted on loans. Meanwhile, commentators offer some advice to the bank’s board about refreshing the company culture, even as a group of senators questions why KPMG, the bank’s long-time auditor, didn’t discover signs of malfeasance. We find some rich insights on how a board can help grow a sustainable business that activists will leave alone, as well as advice from one of the best-known activist investors, Nelson Peltz. And, since we can’t help but think that now is a great moment to step back and think about the board’s role in creating responsible corporate cultures, this week we highlight “Business Ethics Begin in the Boardroom” from the Boardspan Library.
October 27, 2016Great expectations. We all have them for boards. Just count the ways critics suggest Wells Fargo’s board of directors could have done better: by acting when they first got wind of the scam; by limiting the CEO’s participation in outside boards; by fostering more turnover of board directors; by separating the role of CEO and chairman; by hiring an outsider as CEO… and so the list of failed expectations goes on. We also hoped for more from Facebook’s handling of its high-profile, Trump-supporting member—read the Wired piece below excoriating Mark Zuckerberg for suggesting that Peter Thiel’s board membership is a nod to diversity. It is hardly surprising to learn that board members themselves feel pressured by expectations—a new survey shows that 60 percent of global directors feel expectations are higher than what they can reasonably deliver. And activist investor Nelson Peltz, bemoaning the Information Age, says it’s harder to meet the expectations of being a good director when you’re inundated just before a board meeting with email and last-minute documents. So, what’s a director to do? Well, avoid complacency, get ahead of the issues affecting your board, stay informed, speak up, and use the best governance tools available to ensure that your board is as effective and efficient as possible. It may not be easy to meet today’s high expectations, but, surely, you don’t want to embrace the alternative.
October 20, 2016Boards under scrutiny: Even as former Wells Fargo CEO John Stumpf vacated his board seats at Target and Chevron in the wake of the “cross-selling” scandal that cost him his job, the California Department of Justice yesterday announced it is conducting a criminal investigation of Wells Fargo, seeking evidence of identity theft when the bank opened millions of accounts without customer’s permission. Critics suggest that 1) the board should have noticed the evidence of wrongdoing earlier; 2) it should have split the CEO and chair roles—pairing Stumpf with a strong overseer; and 3) at a minimum, it should have sent strong signals that it valued propriety above profits. Congresswoman Maxine Waters is now questioning whether the Wells Fargo board, even today, is supportive of real structural and cultural change since it appointed as its new CEO Tim Sloane, a 29-year Wells Fargo veteran. Meanwhile at Facebook, CEO and chair Mark Zuckerberg apparently received enough negative feedback that he felt obliged to defend much-maligned board member Peter Thiel after Thiel’s $1.25 million donation to the Trump campaign. Any board facing criticism might consider what it needs to do to ensure the public’s trust—one thing that no successful business can be without.
October 13, 2016It’s a woolly week in the board room with Wells Fargo CEO John Stumpf stepping down amid scandal and calls for Stumpf to also step off the Target board, where he is a director. Heeding the criticism of Congress as well as shareholders, the Wells Fargo board takes this opportunity to split the chair and chief executive roles. One wonders if the Wells Fargo and Target boards would benefit from reading the article (from the Boardspan archives) on the board’s role in reputation management. It could be required reading, too, for those boards the Wall Street Journal discovers have "independent" directors who double as paid lobbyists. Meanwhile, the under-representation of women in the boardroom continues to spark fury in some corners, but a new PwC study suggests that a majority of male directors are just fine with the status quo, thank you very much. We link to the full report, which addresses not just gender, but issues like unprepared board members, the role of activist investors and more.
October 06, 2016Lest you think that debates are for the politically minded only, one can only imagine what conversations are going on across many a boardroom this week. With Twitter’s board deciding its future – and it may not be entirely up to them – and Wells Fargo playing “whack-a-mole,” there’s some tough talk at the board table this week we surmise. Speaking of tough talk, see what the activist investors are voicing opinions about this week: woes at Samsung in one case and the need for more women in the boardroom in another case. You go, girl. And batting clean up this week, a broad range of views on compensation from top to bottom, from the US and the UK. With compensation season just ahead of us, we can’t resist the temptation to go deep into the archives and share an opinion that feels like it was written yesterday.
September 29, 2016Shortly before this week’s newsletter arrives in your in-box, Wells Fargo CEO John Stumpf will appear before the House of Representatives Financial Services Committee, at a hearing entitled, “Holding Wall Street Accountable: Investigating Wells Fargo’s Opening of Unauthorized Customer Accounts.” It’s anyone’s guess what to expect, but already this week the Wells Fargo board, bowing to public pressure, clawed back $41 million of Stumpf’s pay and brought in outside investigators to determine who knew what when in the “massive scam” now roiling the bank, while the State of California suspended a key business relationship with Wells. We wonder what "the tone at the top" of Wells Fargo has been and include two articles about corporate culture in the Archives below, for your perusal. Meanwhile, the Twitter board seems to be shopping the company, the Lands’ End board has parted ways with its CEO, and tech giants Amazon, Facebook, Google, IBM, and Microsoft have come together to launch a non-profit Partnership on Artificial Intelligence to Benefit People and Society. The alliance's board is tasked with formulating best practices for a field potentially rife with moral and ethical issues, the resolution of which could affect us all.
September 22, 2016Culture clash. Led by the fiery prosecutorial instincts of Senator Elizabeth Warren (D-Mass), a former Harvard law professor, the Senate Banking Committee took Wells Fargo CEO John Stumpf to task this week for his accountability in the bank’s “cross-selling” strategy, which resulted in some 2 million false accounts being created in the names of Wells Fargo customers. Stumpf, in turn, leaned on his board, stating that it was not up to him as Chairman and CEO, but to the bank’s other directors to decide whether executives who oversaw the tainted division should be fired or financially rewarded for their service. (If you didn’t catch this real-life political drama as it unfolded in the Senate chambers, it’s worth watching.) Criticism of the Wells board is rolling in and it’s not hard to imagine there will be a lot more conversation about the board’s responsibility for protecting consumer and shareholder interests, as well as following through on the company’s stated mission of building a culture of accountability. For a thoughtful take on the significant role board culture plays in a corporation, be sure to read “The Anatomy of Board Culture” from our archives. And then, consider the news that GM now has as many women on its board as men—and hasn’t even tooted its own horn about this milestone.
September 15, 2016Lots of changes in the boardroom this week! From public radio organization NPR to meal-delivery service Munchery, and from new streaming video platform IndieFlix to the social justice minded W.K. Kellogg Foundation, organizations everywhere are adding new directors to their boards. Korean electronics company Samsung formally nominated to the board Lee Jae Yong, the son of its chairman—who is struggling with failing health—to aid the company as it faces one of its most dire challenges: a plummeting stock price brought on by a faulty battery nightmare in its newest smartphone. We are keeping an eye on two evolving stories: new pressure on Wells Fargo to split the Chair-CEO role and how to replace two departing board members at digital note-taking service Evernote. To add some context to all of this activity, we highlight an insightful story from the archives: "How Much Board Turnover is Best?" It draws upon data to suggest that "companies that replaced three or four directors over a three-year period outperformed their peers, suggesting an optimal amount of turnover." In other words, all of this change is likely to have a positive result!
September 08, 2016Change is hard--especially when it's someone else's idea. But when it's clearly due, "resistance is futile" (we say, outing our inner Trekkie.) So goes the news in the boardroom this week: investors in Mylan and Chipotle are complaining, as they point fingers at the boards for the companies' shortcomings and demand changes in board composition. Meanwhile, the Twitter board is reportedly meeting today to discuss whether to pursue a buyer or some other remedy for the troubled social media company. Plus, American and United Continental Airlines have settled some kind of executive poaching/CEO succession planning skirmish, with a long-time American Airlines exec moving into a top slot at United Continental, and both companies aiming to spin the move as a victory. Exciting times for those boards, no doubt.
September 01, 2016How boards think and “feel” about issues makes a difference: The board of Mylan, critics say, should have demanded that the company curb its price increases to keep the EpiPen affordable—and to spare the firm the media bloodbath of recent days. Others are wondering if the board of the Tronc media company is wise to continue rebuffing the acquisitive advances of Gannett. And new research suggests that boards packed with industry experts may actually have a harder time making the best future-looking strategic decisions. This and the latest news on women in the boardroom, “undesirable” CEOs, and the Uber-Alphabet boardroom breakup in
August 25, 2016The end of summer. And the end of a gripping season of board drama at Viacom, as CEO Philippe Dauman is forced out (with a widely criticized $72 million settlement package), while the Redstone family wins the privilege of a board makeover. Never fear… a new and fascinating board drama begins airing in its stead, as an activist investor (and Carl Icahn protégé) looks to replace the entire board of the Williams gas pipeline company, months after half the board resigned following a failure to oust the CEO. Follow these storylines, plus news on employee pay raises, the board’s role in managing cyber risks, and the preponderance of Republicans on boards in
August 18, 2016The latest news to get diversity advocates riled up? A study showing that companies with women in the CEO seat are more likely to be targeted by activist investors. The latest news to, perhaps, energize them? A report from the Wall Street Journal suggesting that some companies are aggressively recruiting female directors, sometimes narrowing the field to just women candidates. For a pragmatic discussion about diversity—why it matters and how your board might reasonably achieve it—take a look at the Conference Board article, “How Much Difference Does ‘Difference’ Make.” Get it all in
August 11, 2016Establishing appropriate executive pay is a pain point for a lot of boards: What’s the right package? What’s the right process for determining it? Some of the biggest names in tech are now “disrupting” the common practice of linking pay to performance, potentially opening the door to a new era of compensation practices. Meanwhile, a Texas A&M study questions whether boards can be effective monitors of executive performance. And, speaking of effectiveness, you might improve yours by better understanding your leadership style.
August 04, 2016Disappointed. How else to feel when reading that the latest research reveals that women and minority corporate directors make less than their fellow directors serving on the same boards? Rather than letting discouragement set in, though, why not focus on what you can do to make a difference? You might start by reading MIT Sloan Management Review’s ideas for promoting greater diversity in the boardroom. Meanwhile, critics of the “Commonsense Principles of Corporate Governance,” (issued last week by a group of prominent corporate leaders), say the guidelines need to go farther to ensure that non-executive directors have a larger role in engaging shareholders, that boards take seriously their responsibility for enterprise risk management, and that director tenure and age limits become commonplace.
July 28, 2016How common is common sense? This week, the governance narrative turns to a discussion that should not be very contentious; however when the definitions of “common” and “sense” are in the eye of the beholder, controversy abounds. Are VC’s paying enough attention, are government leaders paying too much attention, are corporate board members paying the right level of attention? All that, and a board paying its CEO to create the right “tone at the top” while another board fires its CEO for missing the numbers. Lots of opinions this week: from Sacramento to Washington, New York to London, Philadelphia to Stockholm. So we ask, where is the common in common sense?
July 21, 2016Board politics. While power moves within the board room are hardly novel, the phrase is taking on new meaning as politicians, including Hillary Clinton, Donald Trump, and Britain's Theresa May weigh in on governance issues like board composition and executive compensation. Meanwhile, Facebook finds itself, again, defending the rights of its provocative director Peter Thiel to take actions that don't represent the views of the board, this time as he takes the stage at the Republican National Convention in support of Trump... If this campaign season is giving you—and your CEO—a little agita, you may want to read on to understand how anxiety impacts a CEO's decision making and learn how the board might work with an anxious executive to ensure the best outcomes.
July 14, 2016Tumultuous times: Nearly half the directors at pipeline giant Williams Co. resign when a move to oust the CEO is blocked. The entire board of digital privacy nonprofit The Tor Project is refreshed by its new executive director, whose predecessor resigned amid accusations of sexual abuse. The $12 billion Hersey Trust sees its third trustee resign as the Trust confronts demands for governance reform from Pennsylvania’s Attorney General. The all-volunteer board of the defunct nonprofit Architecture for Humanity faces a $3 million lawsuit for financial mismanagement. And not surprisingly, the implosion of blood-testing company Theranos inspires new levels of scrutiny of the sometimes lax governance practices of Silicon Valley’s venture capital-fueled startups. It sounds like time to focus on doing what's right—see below for "Integrity is Free"—and to take note of the bright spots, including the increasing diversity on prominent boards such as Intel, Accenture, GoPro, and …Boardspan!
July 07, 2016Silicon Valley dominates this week’s board news: With the retirement last week of Nike founder and chairman Phil Knight, Apple CEO Tim Cook steps up as lead independent director of the Nike board—and critics immediately begin asking if Apple can afford for its leader to have any competing priorities. Yahoo CEO Marissa Mayer also hears from nay-sayers, with more than 100 million shareholder votes against her re-election to the company’s board last week. And Twitter announces its latest addition to the board is former Facebook CTO Bret Taylor. Meanwhile, the story of how Google board member Diane Greene became an executive at the company makes for a good read.
June 23, 2016Sensational times in the boardroom. Volkwagen's board is accused of knowing more than previously believed about "Dieselgate." The Viacom board has been pretty well deconstructed and remade in just one week's time, with continuing repercussions. And Lululemon's board has been rumored to have a "ghost" in its midst. Meanwhile, Tom Monahan, the CEO of CEB, argues in Harvard Business Review that boards, in their necessary effort to mitigate risk, might miss out on some opportunities to add strategic value—and he has some suggestions for doing better, including being a bit more daring.
June 16, 2016Long-standing issues dominate the thoughtful discussion taking place in the boardroom this week: Despite much-publicized goals and efforts to increase the percentage of women directors, the numbers aren’t moving, according to the latest Catalyst report (via Bloomberg). The debate continues on board tenure—is familiarity with the business more valuable than fresh insight and lack of cronyism? A new study from NYU’s Stern School of Business suggests long terms are not likely to be better. And Boardspan CEO Abby Adlerman suggests a simple model for Boards to best collaborate with Management.
June 09, 2016An activist board?! The business press is brimming with tales of activist investors reshaping companies to be more profitable, and also with advice columns pushing boards to be more strategic. But it’s rare to find stories that shed light on just how a strategy-focused board can reshape a company. This week’s Bloomberg Business article about the Microsoft board offers a rare glimpse of an experienced group of directors pushing a company to make strategic and life-assuring changes. Facebook’s board, meanwhile, shows it is serious about succession planning. And a new study shows that a "nice CEO" may not be the one you want.
June 02, 2016Interesting behavior abounds. There are calls for Paypal founder and Facebook director Peter Thiel to resign from the board of the social media giant; Facebook is becoming a powerful media player and is a business partner of Gawker Media, the gossip site Thiel is purportedly trying to sue out of existence. The Viacom board is fighting against the presumed wishes of its largest shareholder and former chief, Sumner Redstone, in an intensifying battle for control of the media empire. The former chief of Valeant Pharmaceuticals, who stepped down amid a massive scandal that cost the company billions, gets a $9 million severance package, while the Theranos founder whose company is under federal investigation for various alleged infractions sees her presumed wealth in the company plummet to zero. And Uber offers up a board seat to its newest investor: a Saudi fund that has made the largest-ever investment by a single investor in a private company: $3.5 billion! For all the news and some fascinating stories on corruption-promoting cultures, CEO pay, and women directors,
May 26, 2016Power plays. Exxon Mobil shareholders demand greater influence over the company’s climate change policies and win a vote to allow minority shareholders to nominate board candidates—eco-director to come?… Viacom is roiled, as 92-year-old chairman emeritus Sumner Redstone strips his long-time protégé and CEO Philippe Dauman of his seat on the family trust that will ultimately control the company… The Google/Alphabet board is accused of supporting the company’s alleged use of Android as a “Trojan Horse” to advance anti-competitive practices for other services the company offers... With so many throwing their weight around the boardroom, you would be forgiven for missing the news of a host of interesting board appointments in our Seat at the Table department. It's a packed list this week.
May 19, 2016Stepping up to the challenge. The remaking of the Twitter board, which has been on CEO Jack Dorsey’s to-do list since he rejoined the company last year, is happening. This week, saw the introduction of a fourth new director: BET CEO and chair Debra Lee, now Twitter’s first African-American board member, not to mention a media-savvy CEO and former general counsel — a welcome addition to a board that has been faulted for leaning too male and too white. Still, there is much more that can be done to increase boardroom diversity, as this week’s news, once again, points out.
May 12, 2016Executives behaving badly. Unfortunately, it’s nothing new, but it can have a devastating effect on a company and put a board under unenviable scrutiny. A new Stanford Business School report, “Scoundrels in the C-suite,” notes that “media coverage of CEO misconduct is significant,” with some incidents garnering hundreds of mentions in the press—and lots of pressure on boards to make things right and to explain how “this” could have happened on their watch. For a timely example, look no further than this week’s news that the high-profile board of the LendingClub fired its CEO after an internal review showed that the firm had sold $22 million in loans to an investor without the loans meeting that investor’s requirements. The media coverage has been fast and furious, with some commentators suggesting that the board acted appropriately by taking immediate action and others suggesting that if the board had done a proper job of monitoring the company, this never would have happened. Right on cue, a Harvard Business Review article argues that we put too much stock in boards’ abilities to oversee complex companies and that “monitoring” is actually an unrealistic expectation. Lots of big ideas to chew on this week!
May 05, 2016A relatively quiet week in the boardroom gives directors a chance to focus on some of the more important, if less urgent, matters that must be attended to. Supporting management in creating and sticking to a long-term strategic vision is paramount for a board to prevent “short-termism” from derailing more productive initiatives, notes Forbes. Setting expectations for good corporate behavior is a value-enhancing virtue — not just an item on the compliance checklist — that gives companies an edge in managing risk, suggests Harvard Business Review. HBR also encourages celebrating a team's resilience by taking the unusual step of publicly acknowledging an organization’s failures, not just its victories. And as long as we’re reflecting on best practices for success, don't miss the Boardspan Blog post from our archives featuring CEO Abby Adlerman’s advice for getting yourself on a board.
April 28, 2016Shape shifting. It’s nothing new to find hedge funds using their investment muscle to reshape boards and thereby companies, but Starboard Value is really showing us how it’s done: just yesterday the fund picked up four seats on the Yahoo board and more at chipmaker Marvell Technologies. Meanwhile, the $300 billion pension fund CalPERS is using its substantial might to ensure that corporations are taking climate change seriously by requiring companies it invests in to appoint directors with expertise in climate change risk management strategies. Though public scrutiny has already shifted the board structure of beleaguered blood-testing company Theranos, onlookers are now trying to dissect just how the $9 billion company, and its board, got into such hot water. And in an effort to up its EQ, ride-sharing unicorn Uber welcomes the first woman to its board: online media powerhouse Arianna Huffington. All this and much more in this week’s Director’s Domain.
April 21, 2016Once upon a time, boardrooms had a reputation for being cloaked in secrecy. No more. These days a lot of interested parties are paying a good deal of attention to boards and placing high expectations on them to maximize shareholder value, diversify their ranks and more. This week federal agencies are putting pressure on the boards of eight of the country’s biggest banks to get their “playbooks” in order and show their preparedness for responding to potential crises. Investors are turning up the heat on Berkshire Hathway, Coca-Cola and other companies with long-tenured board members to turn over some seats and refresh their boards. Another batch of investors has pushed United to reshape its board and is pressing Yahoo to speed its movement toward a sale. Meanwhile, the insistence on change that is being felt in the boardroom is not sweeping the C-suite in the same manner: the percentage of new women CEOs named in 2015 was the lowest in years.
April 14, 2016Clearly spring, the season of renewal, is upon us. This week, Twitter and McDonald’s took it upon themselves to drive major changes in their boardrooms, while Chipotle, United Continental and Depomed got an earful from activist investors demanding large-scale director turnover. But the big news is at Theranos, which earlier in the week announced an illustrious new medical advisory board, but is now smack in the middle of a crisis that no advisory or governing board can help with: The possible closure of its labs and banning of its founder to work in the field. The Wall Street Journal reports that federal health regulators are threatening to revoke the company’s licenses and ban CEO Elizabeth Holmes from the blood-testing business for two years, after that the company allegedly failed to address major problems in its testing facilities.
April 07, 2016Best laid plans… Disney’s once-celebrated succession planning comes unraveled this week, as the presumed heir to the executive suite prepares to high-tail it out of the Magic Kingdom. As the board rethinks its approach to CEO Robert Iger's retirement (scheduled for 2018), onlookers are engaging in wild speculation about who might fill the top spot and in some serious reflection on the cost companies pay for failing to adequately plan for succession. Across the pond, British firms find the mandate to put women on boards is creating a new wrinkle: fewer women in operating roles. And Valeant Pharmaceuticals offers an unfortunate lesson in what really happens when you reward CEOs for high share prices. —It's a great week for observing the very real impact boards of directors can have on the organizations they serve.
March 31, 2016The pressure is on. Of course, if you're an executive or director at Yahoo, you've been feeling it for some time. Still, the call late last week to replace the entire board seems to have upped the intensity and prompted directors to move more quickly toward a possible sale of the company. For an educated guess about how Yahoo’s high-stakes battle with activist investor Starboard Value might turn out, check out the Quartz piece detailing Starboard’s previous campaigns and their results. Avon and American Apparel are also going through big board changes, and new questions arise about whether the presence of women directors has a measurable impact on performance. On a softer note, a nonprofit serving the homeless rewards the efforts of a very young man to make a difference in the lives of the poor ... with a board seat.
March 24, 2016Entering Bizarro World: Valeant Pharmaceuticals, reeling for months amid accusations of financial misconduct, this week loses its CEO, gains a new director in activist investor Bill Ackman, and finds that its former CFO, who has been implicated in its troubles, refuses to leave the board. Meanwhile a board-approved comp plan requiring officers to maintain large stock holdings has cost current Valeant CFO more than $4 million. At United Airlines, activists continue to wage a proxy battle for six board seats, even as the stock price soars. And, in news that seems a good deal saner, Salesforce carries on building a powerful board with the addition of a prominent former European tech regulator.
March 17, 2016Great judgment. It's a requirement for any decent board member, but all the more so for directors of companies engaged in battles with activist investors—especially as the battles seem to be growing in ferocity. Yahoo’s board appointed two new members in a gesture that was widely interpreted as an affront to vocal investors allegedly hoping to oust chief executive Marissa Mayer, while Viacom re-elected its entire slate of directors, despite investors’ calls for a leadership change. Meanwhile, Harvard Business Review suggests that CEO resistance to activists may have more to do with self-preservation than company performance. In other news, Germany and Japan are both struggling to fulfill their aims of bringing more women into the boardroom.
March 10, 2016What makes a great board? It depends who you ask. Studies show that companies with women directors tend to perform better, nonetheless Carl Icahn and fellow activists apparently prefer loyalty to diversity in the boardroom. Harvard Business Review suggests that the ability to openly address conflicts is essential, while Knowledge@Wharton highlights the importance of ethics. Closer to home, Boardspan's CEO Abby Adlerman shares that strategic thinking, governance know how and cultural compatibility are among the attributes of an outstanding board. All of this and more is surely under consideration at United Continental Holdings, the latest large company board to find itself under siege.
March 03, 2016Powerful people are in demand. Alphabet executive chair and former Google CEO Eric Schmidt will surely seek them to fill the new advisory board on tech innovation that he heads for the Pentagon. Blythe Masters’ new financial services startup, Digital Asset Holdings, is bringing them on board with appointments like former Bank of America exec Sallie Krawcheck. Activist investors are increasingly filling boards like Angie’s List with them, too. Harvard Business Review, however, strikes a cautionary note about bringing too many leaders together to serve a common cause: Powerful people, who are extremely successful when reigning solo, don’t always work so well together -- perhaps something to consider when you are aiming to compose a truly effective board.
February 25, 2016It’s all about the almighty dollar. Or at least much of this week’s board news is: Director pay at large public companies has risen 10% over the past three years, with a number of board members receiving well over half a million dollars for what the Wall Street Journal calls a part-time job. Executive pay has risen faster still and researchers suggest one reason could be board member ignorance about the mechanics of stock grants. (Really?) Other researchers provide evidence that “pay for performance” doesn’t actually provide the desired results and argue that a fixed CEO salary is the way to go. And weighing in from the Boardspan archives, Kellogg Insight offers the voice of yet another researcher, who makes the case that a hefty load of options can alter a CEO’s performance —and not always in good ways. Our conclusion? It’s never a bad idea to review your director and exec comp structure.
February 18, 2016They are active all right. Activist investors are seemingly everywhere: reshaping the board of insurer AIG, demanding changes in the corner office and boardroom of media giant Viacom, even looking for some action in the UK at luxury automaker Rolls-Royce. A writer for Harvard Business Review makes the case that the presence of activist investors often leads to better company performance. If, however, you would prefer to avoid such interference, you’ll find some expert advice here as well. Hint: It’s not just lagging stock prices that catch the attention of activists--a board that fails to adopt best practices, like diversity among its directors, is more vulnerable to outsiders wanting to have their say.
February 11, 2016Oh, Silicon Valley and its penchant for pushing limits. Jack Dorsey, already managing dual CEO roles at Twitter and Square, is looking to be re-elected to the Disney board—begging the question: Will stakeholders at all three companies be well served by such a plan? Marc Andreesen, the venture capitalist and Facebook director, shares his personal opinions about the Indian government's decision to block Facebook’s latest business move, then finds himself redacting an inflammatory Tweet. And Zenefits jumps into crisis management after its CEO departs amid allegations that an excessive focus on new business caused it to lose site of regulatory requirements for insurance sales. The company's response to right the wrongs include promoting its COO into the chief executive role and adding three high-profile board members: PayPal cofounder Peter Thiel, Valor Equity Partners founder Antonio Gracias, and TPG Growth founder Bill McGlashan. What a week!
February 04, 2016In through the out door? While this week saw the departure of several high-profile board members from unsettling situations—including Charles Schwab from the Yahoo board as the company grapples with an uncertain future, and executive chairman Sumner Redstone from the CBS board after a lawsuit alleged that the nonagenarian was mentally incompetent—it also brought at least one unlikely appointment: Famed attorney David Boies, (the man who represented Al Gore in the disputed 2008 presidential election), has taken on the dual role of litigator and director at the beleaguered blood-testing startup Theranos. The New York Times ponders the wisdom here, asking if it is possible to simultaneously protect shareholder interests as a director and management interests as a lawyer.
January 28, 2016All eyes are on the boardroom. From activist investors wanting access, as United Airlines is hearing about this week, to the SEC wanting to know the diversity profile of public company boards, the board is under more pressure than ever to open its clubby doors to greater visibility as well as to a whole new breed of director. Right on cue, this week’s newsletter comes with helpful advice for dealing with all this attention, including pointers for cultivating independence and trust, for creating a “mindful board,” and for boosting performance by increasing gender diversity and improving recruiting practices. And here’s a little layman’s advice: Apply that mindfulness to compensation guidelines and avoid the fate of Facebook, which this week settled a suit against it alleging that it substantially overpaid its directors, by some 43% above industry peers.
January 14, 2016People power. Nothing could be more important to a company’s success than those who lead and advise them, and this week’s news is all about finding the right mix of players. From a critique of Valeant’s CFO-heavy board to an Apple shareholder’s proposal to recruit more people of color into senior executive and director roles, board composition is a hot topic. And shareholders are quickly gaining more say in that composition: Some 21 percent of S&P 500 companies now embrace proxy access—up from just 1 percent in 2014. Meanwhile, a tough retail season is playing out in the boardroom, where both Kohl’s and Macy’s face potential activist-investor action.
January 07, 2016Vrooom. The new year is off to a quick start with General Motors CEO Mary Barra becoming the first woman to chair the board of a major automaker and critics bemoaning any CEO’s unfettered access to the driver’s seat. Others see the move as a victory for women in the boardroom, at a time when the U.S. government estimates it will be,—wait for it—four more decades before the male-dominated boardroom gives way to a 50-50 gender split. Meanwhile, the next appointment on many a board may be a cybersecurity expert if a bill proposed by two US senators passes, requiring corporate boards to disclose whether or not their ranks include a cybersecurity expert (to mitigate the risks of being hacked), and if not why not.
December 17, 2015Boards are flexing their muscles this week as they push back on activist investors whose “good ideas” don’t look all that great to insiders. Directors at Dow Chemical made a public show of their unanimous support for CEO Andrew Liveris and an announced Dow-DuPont merger, thwarting efforts by Daniel Loeb’s Third Point LLC to derail the deal and dethrone the executive. The Qualcomm board followed suit, announcing that—after appointing a special committee to review the company’s structure—it opposed the proposal of an activist hedge fund investor to split the company into two business units. One imagines that these CEO-supporting victories are music to the ears of Irene Rosenfeld, chief executive of Mondelez International, who estimates she spends 25% of her time addressing activists.
December 10, 2015What did Jack Dorsey, Robert Iger, Sheryl Sandberg and other Disney board members know about alleged wage-fixing in the animation industry? The board now faces a lawsuit claiming it unjustly enriched itself by signing off on SEC documents that did not spell out these concerns. (No wonder the D&O insurance market is $7 billion.) Meanwhile, the Yahoo board confirms it is unraveling its plan to spin off its stake in Alibaba and is instead splitting off the Internet pioneer’s core business interests into a separate company. And news of a potential Dow-DuPont merger has board critics talking.
December 03, 2015Fresh off the holiday weekend, Viacom’s board members appear to be wrestling with more allegations that 92-year-old executive chairman Sumner Redstone has become unfit to govern the global media company. It’s a directors' dilemma: Does a chairman’s right to privacy trump a shareholder’s right to know about health issues? Notably worth asking: Would this question burn so hot if Viacom made public its succession plan? …. Meanwhile, there are rumors that the Yahoo board is wrestling with issues of its own, namely whether to sell off key parts of the business and/or give Marissa Mayer the boot. Former Twitter CEO Dick Costolo is picking up new board seats. And, yes, activist investors and even billionaires lose some of the time.
November 19, 2015CalPERS, one of the world's largest public pension funds with $293 billion in assets, is throwing its weight behind change. Calling for a major boardroom makeover, the behemoth investor is asking the most common face in the boardroom—the older white man—to step aside and make way for people of color and women. Meanwhile, the biotech industry, one of Wall Street's liveliest darlings, is learning the hard way that better corporate governance is essential to good performance. In the Hot Seat this week is that old buzzword "Sustainability", as investors join environmentalists in asking: What did the Exxon board know about climate change research and could a greater emphasis on sustainability in the boardroom have reduced risk for the company (and the planet)?
November 12, 2015If you’ve been following the fate of Valeant Pharmaceuticals, you’ll know that the stock continues to plummet (from $263 in August to $86 now) as the company fights allegations of inflating its revenues. With yesterday’s news that the company now faces insider trading charges from the failed Allergan deal, last week’s $100 million margin call on the CEO, and last month’s resignations of two independent directors from one of the company’s long-term investors, we imagine that the board will be in the Hot Seat soon. Also on our watch screen: expected Twitter board changes and a potentially smoother path forward for DuPont. And for all of you directors who worry about corporate hacking, you’ve got reason to do so – and reason to read below. All this and much more in this week’s Directors Domain.
November 05, 2015We all know the buck stops with the board. When corporate scandals erupt, people expect the board to take action—sometimes within the board itself. That's what happened at blood-testing company Theranos, which had been vilified by the press not only for failing to disclose that many of its tests allegedly don’t actually use its breakthrough technology but also for the relevance of its board. No big surprise then that the company announced a major reorg of its governance structure, complete with a new medical advisory board. What is surprising is that Volkswagen, weeks into its growing emissions scandal, has so far failed to respond to the cries for board reform, which many say are necessary if the automaker has any hope of rewiring its corporate culture and rebuilding its credibility. One thing that seems certain: VW is among the very few boards with a falling stock price that isn’t worrying about activist investors, whose influence seems to be on the rise. Not only are we seeing more shareholder-led take-overs, but in a strange new twist, activists are being hired as consultants to companies who want to know how they think.
October 29, 2015While a great board member is priceless, director pay is raising eyebrows this week: Mark Zuckerberg faces a lawsuit for allegedly overcompensating the Facebook board and USC Athletic Director Pat Haden comes under scrutiny for taking home nearly a half million dollars in annual compensation from the dozen boards he sits on. Meanwhile activist investor Carl Icahn places AIG in his crosshairs and demands the company be split in three. And women cybersecurity experts are making big gains in the boardroom, snapping up 10 of 16 seats at large corporations that have recently added directors to bolster their boards’ security expertise.
October 22, 2015“Crisis management” sounds like a business textbook chapter—until your board finds itself dealing with the unthinkable: a second CEO search in two months, even as you comply with a federal corruption investigation into the prior CEO’s business dealings. Or you discover that the $9 billion company your very visible board serves is very publicly accused of failing to deliver on its core promise. As these real-world dramas play out at United Continental Holdings and Theranos, respectively, you may want to heed the advice of the HBR writer who suggests that the key to great leadership is dedication to learning. In fact, you may want to reread that chapter on crisis management, just in case.
October 15, 2015Boards behaving badly… It’s not the kind of thing we like to dwell on, but this week former board members of Chicago Public Schools were called on the carpet for failing to provide oversight of the organization’s chief, who has pled guilty to serious corruption charges. Plus, governance expert and professor at Yale School of Management Jeffrey Sonnenberg offers a long, detailed look at flawed corporate boards and the trouble they’ve caused. For something more uplifting, spend a little time with the world’s best CEOS, who balance their drive for financial gains with attention to environmental and social issues.
October 08, 2015CEO Ellen Kullman’s surprise departure from DuPont was the talk of the boardroom this week, with pundits wondering why the chemical giant didn’t appear better prepared for a CEO transition. Many are speculating that DuPont may now bow to activist-investor pressure to split its business into multiple units—pressure Kullman had seemed to successfully deflect earlier this year. Another CEO transition, the appointment of Jack Dorsey to the power seat at Twitter, emboldened billionaire investor Chris Sacca to push for a shake-up of the ailing social media company’s board. Meanwhile, the drumbeat grows louder for increased diversity, better succession planning, and a greater focus on cybersecurity in the boardroom.
October 01, 2015This week, “engagement metrics” come to the boardroom: Twitter’s directors, under fire for their slow-motion approach to filling the CEO role, are outed for lackluster participation on the social media network. Large companies across the globe are shown to be forfeiting hundreds of billions of dollars by not engaging women directors. And directors contend that more debate in boardrooms would lead to better decision-making. Meanwhile, there’s no time like the present to ensure you have at least one tech-savvy director and a strategic CFO on your side.
September 24, 2015It’s a busy week in the boardroom. All eyes are on Volkswagen, whose board accepted CEO Martin Winterkorn’s resignation on Wednesday amid the $7 billion+ emissions scandal; more heads will likely roll and a new chief executive may be named as early as Friday, following a full meeting of the 20-person supervisory board. Meanwhile, BofA shareholders rally behind CEO Brian Moynihan, who will remain chairman of the bank, and billionaire Ron Perelman outs the Carnegie Hall board for its alleged lack of transparency and oversight.
September 17, 2015Welcome to the first issue of Director’s Notes, Boardspan’s weekly news digest. What a great moment to launch—with an activist investor attack on Bank of America’s board and a hostile takeover bid in the pharmaceutical industry sparking heated debates and creating real-time case studies on governance, the CEO-Chairman role, activist threats, and more. Find it all here, plus "must reads" on delegating risk management, when boards should ignore shareholders, and the causes of board failure.
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