Across the Board
Directors Resign From Warner Bros. Discovery Board Amid DOJ Probe
Two board members had overlapping board service with Charter Communications
“Warner Bros Discovery said Monday that Steven A. Miron and Steven O. Newhouse have both notified the company’s board that they have resigned as directors after the U.S. Department of Justice informed them it was investigating whether their service violated Section 8 of the Clayton Antitrust Act on overlapping boards — specifically involving Charter Communications. The section prohibits directors and officers from serving simultaneously on the boards of competitors, subject to limited exceptions. Newhouse is co-president of Advance and Miron is CEO of Advance/Newhouse Partnership, privately held by the Newhouse family. The family owns about 8% of WBD stock through its previous holding in Discovery. Miron is also a director of Charter, as is another Newhouse family member, Michael Newhouse.” DEADLINE
David Calhoun to Step Down from Caterpillar’s Board
The move comes two weeks after he resigned as Boeing CEO
“Dave Calhoun, who plans to step down as chief executive officer of beleaguered Boeing Co. later this year, will also depart from the board of machinery manufacturer Caterpillar Inc. The executive informed the board that he won’t stand for reelection at this year’s annual shareholder meeting, Caterpillar said Wednesday in a regulatory filing. The decision wasn’t due to any disagreement with the company, the filing said.” BLOOMBERG
The Boeing Board: A Crucial Crossroad To Rebuilding Credibility
Boeing’s stock performance and quality issues over years has left the board vulnerable
“Should the Boeing Company’s recent announcement that it would be replacing its CEO, chairman of the board and a major division head this year be seen as a positive business move that restores the airplane maker’s reputation in the industry and sets it up for future growth, or an admission of a string of failures that has damaged the credibility of the board and puts doubt on its current directors’ ability to lead the company into the future? What the board does over the next several months will answer that question. Unfortunately, the Boeing board finds itself under intense scrutiny as a string of disastrous events since 2018 have led to CEO Steve Calhoun stepping down at the end of the year, independent board chair Larry Kellner deciding not to stand for re-election and Boeing’s Commercial Airplanes CEO Stan Deal retiring.” CORPORATE BOARD MEMBER
The Power of AI and Generative AI: What Boards Should Know
AI and generative AI offer new strategic opportunities
“Artificial intelligence is back in the headlines. The technology has been around in various forms for decades, and in routine use in companies for nearly as long, but the convergence of cloud computing, high-speed computer processing and ubiquitous data have all dramatically increased accessibility and use…Most companies will likely continue to expand their use of AI and explore the possibilities of generative AI. The board’s role is to oversee management and focus on how these technologies may impact the corporate strategy and how risks — especially those that are mission-critical or threaten reputational risk — are managed across the company while not limiting innovation.” PwC
Four Things You Need to Know About Healthcare Cyber Attacks
Despite an explosion in ransomware attacks, regulation is spotty
“The recent cyberattack on the billing and payment colossus Change Healthcare revealed just how serious the vulnerabilities are throughout the U.S. health care system, and alerted industry leaders and policymakers to the urgent need for better digital security…The ransomware attack on the nation’s largest clearinghouse, which handles a third of all patient records, had widespread effects. Fixes and workarounds have alleviated some distress, but providers are still unable to collect billions of dollars in payments. Many smaller hospitals and medical offices are still having trouble getting paid more than a month after Change was first forced to shut down many of its systems…The attack on Change is just the most far-reaching example of what has become nearly commonplace in the health care industry. Ransomware attacks, in which criminals shut down computer systems unless the owners pay the hackers, affected 46 hospital systems last year, up from 25 in 2022, according to the data security firm Emsisoft. Hackers have also taken down companies that provide services such as medical transcription and billing in recent years.” THE NEW YORK TIMES
To Govern AI, We Must Govern Compute
Governing the systems that run AI is feasible and quantifiable
“States understand the importance of compute. The U.S. and the EU are both investing $50 billion in subsidies through their Chips Acts. Companies understand its importance, too. Almost all start-ups working on advanced AI have entered into “compute partnerships” with U.S. Big Tech compute providers. This includes most recently the French company Mistral, even though it had branded itself as a French-European national champion. Microsoft is reportedly investing $50 billion into expanding its Azure data centers worldwide, one of the biggest corporate infrastructure investments ever. NVIDIA has rocketed up to having the third biggest market capitalization in the world. And to boost compute production, Sam Altman is reportedly trying to raise $7 trillion…However, just because compute can be used as a tool to govern AI doesn’t mean it should be used in all cases. Compute governance is a double-edged sword, with both potential benefits and risks: It can support widely shared goals like safety, but it can also be used to infringe on civil liberties, perpetuate existing power structures, and entrench authoritarian regimes. Indeed, some things are better ungoverned.” LAWFARE
What Today’s AI Companies Can Learn from the Fall of Enron
Enron is a case study in culture as much as greed
“Like Enron, today’s AI companies are similarly pushing the frontiers of innovation while investing substantially less in developing the organizational culture and infrastructure to manage risk. Unlike Enron, AI companies may not face legal consequences for the harmful impacts of their systems due to the current uneven AI regulatory landscape. At the same time, poor risk management and an unhealthy organizational culture can set AI companies on a path that damages their businesses and society. AI incidents can lead to public relations disasters, negative media attention, and user complaints, all of which can trigger greater scrutiny by policymakers, slow user adoption, and deter outside investment. To avoid this fate, AI companies must avoid organizational pitfalls akin to those overlooked by Enron. Specifically, they must translate vague value statements into actionable plans, safeguard internal critics, bolster accountability measures, and prevent ideological monocultures from taking root.” TECHPOLICY.PRESS
Corporate Boards Face ESG Pressure From Both the Left and Right
Often, the challenges involve claims against boards
“Over the past decade, environmental, social and governance (ESG) topics have featured heavily in social and political discourse. ESG has also become prominent in the boardroom as directors navigate how best to address ESG-related issues. Stockholders have weighed in, too, using tools such as stockholder proposals, books and records and litigation demands, and litigation to put pressure on corporations to address or, in some cases, ignore ESG matters. Initially, the claims were left-leaning. More recently, the right has chimed in, buoyed by the U.S. Supreme Court’s ruling in 2023 involving university admissions and by growing anti-ESG sentiment in some quarters. Though the issues are often charged, courts have been reluctant to let politics invade corporate boardrooms and have deferred to directors’ business judgment.” JD SUPRA
Questioning Technology Governance Orthodoxy
Emerging tech’s speed of development may indicate a need to assess risks more often
“The connections between 2024’s technology trends and board oversight, strategy, and governance may seem to echo the 2023 report. But a closer look reveals important nuances—especially in terms of risk and opportunity assessment. For instance, the 2023 report noted the emergence of AI—and presciently, the possibilities that lay beneath its computational power. As the AI trend has evolved, the focus has shifted in 2024 to its use as a growth catalyst. In other words, technology evolution has led to a potential business revolution. The implications for directors could be far-reaching, depending on industry and whether there are existing AI use cases in the organization. Comparing the six macro technology forces between the two years reveals a few other differences that may have board implications.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Talks Between Paramount and Skydance Heat Up
Skydance joins the list of suitors for the entertainment giant
“Shari Redstone is getting one step closer to selling her media empire. Paramount, home to one of Hollywood’s most storied movie studios as well as CBS and cable networks like Nickelodeon, has been discussing entering into exclusive talks with the media company Skydance for a potential deal, according to four people with knowledge of the discussions. Moving to exclusive talks would be a significant step forward in a process that has been shrouded in uncertainty for months. Whether the two sides will agree to exclusivity remains to be seen, especially with other investors still pursuing Paramount. Apollo Global Management, an investment firm with more than $500 billion under management, has submitted an $11 billion offer to acquire the Paramount movie studio. Paramount’s board of directors, though, is seeking a deal for the entire company — including its cable channels and CBS — rather than pieces. Apollo continues to evaluate what proposal might most appeal to the company’s board, two people familiar with the situation said. Byron Allen, whose Entertainment Studios owns the Weather Channel, has also expressed interest in acquiring Paramount.” THE NEW YORK TIMES
