8/25/22 – Issue 7.83 – Your weekly news on all things board. 

ESG 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 being called out for focusing on sustainability over profits. 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.

BOARDS ADD VALUE: At Boardspan, we spend a lot of time talking to board members about the ways they add value and the many challenges they’re facing. Check out this two-minute video that highlights what we’ve learned.

In the Spotlight

BlackRock Among ESG-Focused Firms Banned By Texas From Working With State Entities

“Texas banned BlackRock Inc., UBS Group AG and eight other finance firms from working with the state after finding them to be hostile to the energy industry. Glenn Hegar, the Republican state comptroller, on Wednesday named the firms he will prohibit from entering into most contracts with the state and its local entities after his office found they ‘boycott’ the fossil fuel sector… The comptroller sent inquiries to more than 150 companies in March and April, requesting information on whether they were shunning the oil and gas industry in favor of sustainable investing and financing goals.” DALLAS MORNING NEWS

Gov. DeSantis Blocks ESG As Investment Strategy for Florida State Pension Funds

“Florida Governor Ron DeSantis is the latest Republican politician to take aim at environmental, social and governance investment strategies by eliminating such considerations for the state pension funds. DeSantis, along with other trustees of the State Board of Administration, passed a resolution on Tuesday that directs fund managers of Florida’s pensions to invest state funds in a way that prioritizes the highest return possible, without considering ESG criteria, according to a statement from the governor.” BLOOMBERG

Across the Board

Boards Need to Focus On CEO Succession Planning: Start By Knowing Your CEO

“The best medicine for healthier succession planning is garnering a deep understanding of what your company needs in a CEO, and that means really getting to know your current CEO and engaging in robust business scenario planning with the CEO and executive team. Data suggest that many boards of directors are unprepared for engaging in the process of CEO development and succession…. Robust business scenario planning and CEO succession planning go hand in hand: you can’t have one without the other. Knowing the expected trajectory of the business is a critical ingredient to properly planning for CEO succession.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

CFO Performance Under Greater Board Scrutiny, Even As Turnover Is Expected to Rise

“Halfway through 2022, there have been 51 CFO transitions within the S&P 500, bringing turnover to 10% year to date. This number is slightly down from 12% … [but] multiple trends are suggesting that turnover will be on the rise in the second half of the year… Due to the expected increase in market volatility, CFOs should expect more scrutiny of their job performances from the CEO and Board, therefore increasing the potential for increased turnover. Better succession planning is leading to more internal and first-time CFO appointments, resulting in the fight for women CFO talent to carry on, with the percentage of newly appointed women CFOs continuing to outpace the broader S&P 500, although slightly down since last year.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Ford Lays Off Thousands As It Pivots Toward Electric Vehicles

“American carmaker Ford announced Monday it’s cutting 3,000 jobs in an attempt to lower costs. The cuts affect 2,000 salaried employees and another thousand contract workers, mostly in the U.S., Canada and India. The job cuts come as the company is undertaking a massive shift towards connected and electric vehicles, says Jessica Caldwell, executive director of Insights at Edmunds. ….” MARKETPLACE

Musk's Lawyers Subpoena Twitter Co-founder Jack Dorsey In Search For Spam Accounts...

“Elon Musk’s lawyers have sent a subpoena to Jack Dorsey, the first indication that Twitter co-founder and former chief executive will be officially involved in the legal fight over Mr. Musk’s stalled $44 billion deal. Mr. Musk is seeking documents from Mr. Dorsey relating to the effect of false or spam accounts on the social-media platform’s business… Mr. Dorsey hasn’t publicly weighed in on the legal dispute between Mr. Musk and Twitter in a substantive way and hasn’t made a public statement about Mr. Musk’s prospective ownership or decision to abandon the deal since he tweeted his support in April.” THE WALL STREET JOURNAL

...As Twitter Pushes Back on Whistleblower's Claims

"Executives at Twitter pushed back on Wednesday against what they said was a ‘false’ narrative being created around a former executive’s allegations about the company’s security practices. At its weekly companywide meeting, Parag Agrawal Twitter’s chief executive, addressed a whistle-blower complaint made by Peiter Zatko, the former head of security, who was fired in January. Mr. Zatko’s complaint, in which he accused Twitter of lying about its security practices and violating a 2011 agreement with the Federal Trade Commission, was made public on Tuesday…. ‘This complaint that was filed yesterday is foundationally, technically and historically inaccurate,’ Mr. Agrawal told employees at the meeting.” NEW YORK TIMES

From the Boardspan Library

Secrets of Successful CEO Succession

"Independent lead directors and independent chairs play a pivotal role in helping ensure their boards are ready for a CEO change—planned or unplanned.… Asking management to assign high-potential candidates to cross-functional projects provides candidates with broader internal experience while offering the board exposure to the candidates through their presentations. Pairing a director with a member of the senior leadership team can also give the board direct insight into a candidate’s strengths and weaknesses… When naming a new CEO, one potential challenge for the board is retaining valued executives who have been passed over. Some lead directors noted the benefit of conversations between the board and CEO candidates about who they envision as part of their teams. With that knowledge, the company may seek to enter into retention agreements with certain executives before or after naming a new CEO.” KPMG via BOARDSPAN

Seat at the Table 

• Risk assessment firm Verisk welcomes to its board Olumide Soroye, President and CEO of Intelligent Operating Solutions at industrial technology manufacturer Fortive

• Content cloud company Box elects to its board Amit Walia, CEO of cloud data manager Informatica

• Yahoo appoints to its board Jen Rubio, Co-Founder and CEO of luggage retailer Away

• USA Triathlon welcomes to its board Yvonne Spencer, Senior Air Force Advisor at the Office of Local Defense Community Cooperation

• Cloud identity security company Okta elects to its board Emilie Choi, President and COO at crypto currency trading platform Coinbase

• Semiconductor manufacturer Marvell appoints to its board Rebecca House, SVP, Chief People and Legal Officer at industrial automation company Rockwell Automation

• Software company Autodesk elects to its board Rami Rahim, CEO of network product company Juniper Networks

• McDonald’s welcomes to its board three directors: Tony Capuano, CEO of Marriott International; Jennifer Taubert, EVP of Johnson & Johnson; and Amy Weaver, CFO of Salesforce

• Alcohol detection company SOBRsafe appoints to its board David Crandall, Executive Director at Northrop Grumman

• Experience management creator Qualtrics adds to its board Robin Manherz, COO at software company SAP

• Pharmaceutical company Mallinckrodt appoints to its board Karen Ling, EVP and CHRO of global insurance agency AIG

• Pay-at-closing home improvement company Curbio elects to its board Fazeela Abdul Rashid, former Managing Director at investment firm Temasek International

• Efficiency technology company SMART Global Holdings welcomes to its board Mark Papermaster, CTO and EVP at semiconductor company Advanced Micro Devices

• EBay appoints to its board Aparna Chennapragada, former CPO at Robinhood
• Cisco elects to its board Sarah Rae Murphy, former Chief Procurement Officer and SVP of Global Sourcing at United Airlines

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.