10/5/23 – Issue 8.37 – Your weekly news on all things board. 

Agility. The ability to move quickly in response to changing information. It’s a critical skill in a dynamic environment, not just for individuals but for teams collectively, like boards. Keeping a finger on the pulse of what matters most is an increasingly challenging balancing act within corporate board governance. Sometimes being agile is about growing and sometimes it’s the opposite. Truist Financial provides a real time example being played out publicly as the board redefines its composition to respond to feedback. The bank’s former board of 21 directors is now shrinking to 13 members following four resignations and four directors reaching mandatory retirement age. The shift is intended to address a host of stakeholder concerns and also gives the CEO more control as the bank aims to improve profitability.

In other news, The Conference Board ties a decline in strategy to numerous risks, including shareholder activism. Clorox begins to recover from its devastating cyber attack in August. Following a high paced push for corporate director diversity in recent years, the slowdown people have sensed is now documented. More about the PwC Australia Tax Scandal. And with Cyber Security issues on the rise, advice for CISOs who are interested in a board role. 

In the Spotlight

Truist's Board Size Reduction Could Give the CEO More Control

Truist Financial's 21-member board will shrink to 13 directors

“Truist Financial is sharply reducing the size of its board of directors — a move that could give CEO Bill Rogers more leeway to make bigger changes as the bank faces pressure to ramp up its profitability. Effective Jan. 1, 2024, the board will go from 21 directors to 13, the Charlotte, North Carolina, company said Monday. Four of the directors have made the decision to "conclude their service early," the company said in a press release. A company spokesperson declined to elaborate on why those four — Anna Chablik, Paul Donahue, Easter Maynard and Frank Scruggs Jr. — are leaving early.” AMERICAN BANKER

Truist Shrinks Board to Bring It Closer to Peers After Criticism

Four board members are retiring after reaching Truist's mandatory retirement age

“Truist Financial Corp. said eight board members are resigning, bringing the number of directors more in line with industry peers after the bank faced criticism over its governance practices. Former Chief Executive Officer Kelly S. King, Nido Qubein, David Ratcliffe and Thomas Thompson are exiting as they reach mandatory retirement age, Charlotte, North Carolina-based Truist said Monday in a regulatory filing. Anna Cablik, Paul Donahue, Easter Maynard and Frank Scruggs, Jr. are also departing to ‘address other professional and personal commitments,’ the bank said.” BLOOMBERG

From Boardspan this Week:

Agile Boards of Directors: A Fad or the Future?

“Born in the software industry, the Agile philosophy quickly moved beyond it, laying the foundation for a revolutionary approach to project management and product development. In Agile organizations, self-organizing cross-functional teams experiment, learn and adapt by rapid iterations, in lock-step with evolving customer needs…Sitting at the apex of the organization, the board of directors creates a framework for executive action, guiding the CEO and other managers who run the business on a daily basis. The board appoints senior executives, defines their pay and evaluates their performance. It approves business strategy and major investments, as well as oversees risk management and compliance. It also keeps stakeholders informed about significant developments.” INSEAD via Boardspan

Across the Board

Report: As Business Strategy Experience Declines, Directors are at Greater Risk of Activism 
Companies should take a fresh look at their board size to ensure it allows for the needed range of experience, skills, and perspectives

“A new report reveals a red flag for corporate boards: At US public companies, the share of board directors who are reported as having business strategy experience has dropped significantly over the last five years. It declined from 70 percent in 2018 to 59 percent in 2023 in the S&P 500, and from 68 percent to 55 percent in the Russell 3000. The decline in such experience among new directors was even more pronounced. In the S&P 500, business strategy experience declined from 66 percent in 2018 to 47 percent in 2023, which matched the decline in the Russell 3000 from 65 percent to 47 percent. At the same time, companies are reporting higher levels of experience among directors in several ESG areas as compared to five years ago.” THE CONFERENCE BOARD

Clorox Begins Recovery from Severe Cyberattack 
Clorox begins to repair damage from an attack in mid-August that slowed production

“The days of manufacturers quietly cleaning up from the damage of successful cyberattacks and their financial ramifications are over, and shareholders are paying attention. Clorox on August 14 disclosed via an SEC filing that the company had ‘identified unauthorized activity on some of its Information Technology (IT) systems’ that was ‘expected to continue to cause disruption to parts of the Company’s business operations.’ Then, on September 18, Clorox filed another SEC report stating it believed the hack was contained but resulting in slower production rates and ‘an elevated level of consumer product availability issues.’...It’s a textbook example for why no company wants to advertise a cybersecurity breach and also suggests why manufacturers are so likely to pay ransomware bounties and eliminate the problem. But Clorox’s disclosures are in keeping with new SEC rules that require disclosure of material cybersecurity incidents within four days of the incident.” INDUSTRY WEEK

Amid Push to Diversify Corporate Boards, Change Is Slow

After rapidly adding women, minorities and first-time directors, big-company boards pull back

“In recent years, “refreshment” has hovered near the top of many boardroom agendas—reshaping who sits on a company’s board in a bid to keep ideas current, meet emerging challenges and recast director demographics and experience. Boards have changed—to a point. Company boards are turning less often to the CEOs of other companies when filling seats. But they also have pulled back from an earlier and rapid run-up in naming women and racial minorities to openings.” THE WALL STREET JOURNAL

PwC Australia Tax Scandal’s Impact on Firm Governance: Explained

Here’s a rundown of what’s happened so far and what may come

“The Australian arm of PricewaterhouseCoopers has pledged to boost its corporate governance controls in response to firm-commissioned reviews faulting its culture for a leak of government tax plans. The tax leak scandal has shaken the country’s consulting and auditing industry since it became public in January.” BLOOMBERG

How to Land a Corporate Board Seat as a CISO

Learn how security executives can position themselves to become top-level decision-makers

“The role of the chief information security officer has evolved significantly in recent years. As cybersecurity becomes even more of a critical concern for businesses, CISOs now find themselves in increasingly pivotal positions within their organizations. The intensity of the CISO position means it typically has a shelf life, however, with security leaders often leaving the role before they are ready for full retirement. Today, many seasoned CISOs hope to parlay their professional experiences into seats on corporate boards, where they can use their expertise to influence high-level decisions. But, far from a foregone conclusion, the journey from CISO to board member requires careful planning, strategic networking and a diverse skill set.” TECH TARGET

Risk Management and the Board of Directors

In an increasingly complex business environment fraught with new and sometimes unexpected risks, investors are looking to the board to take the lead

“Public companies and their boards of directors face an increasingly complex array of risks that test the resilience of corporate values, strategies, operations, and enterprise risk management frameworks. Tightening monetary policies, deepening geopolitical tensions, widening domestic political polarization, labor shortages, severe weather events, growing challenges tied to biodiversity loss, and the uncertainties surrounding generative AI are among the varied risks that companies have had to contend with over the past year. Looking to the year ahead, these risks are likely to persist and even intensify—against the backdrop of an election year in the United States, ongoing war in Ukraine, and China’s sluggish post-pandemic recovery.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Seat at the Table

• Food solutions company SpartanNash welcomes to its board Kerrie McPherson, former Executive Sponsor of Entrepreneurial Winning Women for Ernst & Young

• Tech-focused retailer Overstock appoints to its board Marcus Lemonis, Chairman and CEO of Camping World

• Climate firm Trane Technologies elects to its board Ana Assis, General Manager of IBM’s EMEA market

• Rayonier Advanced Materials adds to its board Bryan Yokley, former Audit Partner at Ernst & Young

• Howmet Aerospace welcomes to its board Gunner Smith, President of Roofing for Owens Corning

• Life sciences company Revelation Biosciences elects to its board Dr. Lakhmir Chawla, CEO of Stavro Medical

• Commercial Vehicle Group appoints to its board Melanie Cook, former Chief Operating Officer of GE Appliances

• Dating application Bumble adds to its board Sissie Hsiao, Vice President and General Manager of Google Assistant

• Regenerative medicine company Athersys welcomes to its board Jane Wasman, former President, International and General Counsel at Acorda Therapeutics 

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