10/17/24 – Issue 9.39 – Your weekly news on all things board. 

In an era where the pace of business is faster than ever, recent surveys reveal that many corporate boards may be evolving too slowly to keep up with today's challenges. At the core of this issue is governance—the foundation of effective board service. Whether it's technology oversight, as seen in CrowdStrike's recent outage and its potential director liabilities, reevaluating board composition to drive value creation, or grappling with the devastating consequences of climate change, governance plays a crucial role in keeping companies agile and prepared for both strategic and unexpected challenges. This week's newsletter delves into these topics, including the value of age diversity on boards and how directors can lead on climate oversight. Lastly, no week would be complete without the latest activist developments, with Elliott and Edge One serving as reminders that strong governance is essential for smooth, strategic, and successful business operations.

In the Spotlight

Boards At Risk of More Lawsuits Linked to Cyber and Tech

As the risk of board members facing lawsuits due to technology failures rises, companies must adopt proactive strategies like technology audits and cybersecurity best practices

“Recently, an investigation of the CrowdStrike board of directors was launched to determine if its members ‘failed to manage CrowdStrike in an acceptable manner, in breach of their fiduciary duties to CrowdStrike, and whether CrowdStrike and its shareholders have suffered damages as a result.’… The risk that corporate board members could be sued and found personally responsible for incidents such as these or other errors that are made in the normal operations of a company has increased significantly in recent years.” CORPORATE BOARD MEMBER

From Boardspan this Week:

What's on the minds of Nominating & Governance Chairs?

From crisis preparedness to AI expertise to board succession planning, the NGC is covering a lot of ground. Learn what we're hearing from high-performing boards and get actionable tips to prepare your board for the future.

Across the Board

Why Corporate Integrity is Key to Shaping the Use of AI
Boards and investors' role in enabling responsible development of AI

“Companies can help support efforts by broadening corporate responsibility to integrate AI ethics for the common good, necessitating adjustments in their integrity ecosystems, corporate boards and institutional investors… Governing boards can also help enable the responsible development and deployment of AI by expanding their approach to corporate integrity and responsibility. But to do so effectively, they need to be knowledgeable about AI’s capabilities and risks and ensure AI ethics are integral to their strategic discussions, oversight responsibilities and risk assessment.” WORLD ECONOMIC FORUM

The Case for Multigenerational Corporate Boards
Just 5% of board directors are under the age of 50. However research indicates that more age-diverse boards may possess unique business advantages

“There’s a lot to be said for experience. Directors need the right mix of skills and experience to provide effective guidance and oversight. That often comes with time. But there’s a point at which boards may become too monolithic, in our view. Consider, for example, that nearly 70% of directors within S&P 500 companies represent a single generation—baby boomers. Moreover, only 5% of directors are under the age of 50. Why does that matter?” ALLIANCEBERNSTEIN

How Robust Is Your Climate Governance?

There is no one-size-fits-all playbook for climate governance, but the hallmarks of meaningful oversight can serve as a useful guide for boards seeking to integrate climate oversight into their company’s governance

“During the past few years, as evidence of climate change and its effects has mounted, many corporate boards have added climate governance to their agendas. But the maturity of boards’ climate-oversight processes and activities varies widely. To better understand how climate issues are being handled in the boardroom and to determine what good climate governance looks like in practice, the authors interviewed 20 directors who hold leadership positions on the boards of S&P 500 companies.” HARVARD BUSINESS REVIEW

Elliott Takes Southwest Fight to Shareholders, Nominates Eight Directors
For Elliott this is the first time the hedge fund is launching a board challenge at a U.S. company since 2017

“Elliott Investment Management is taking its fight with Southwest Airlines to investors by calling for a special shareholder meeting where they can vote on new director candidates who would ultimately steer company strategy… Elliott, which oversees about $70 billion in assets and owns 10% of Southwest's common stock, has pushed for months to replace some members of the board, oust Chief Executive Bob Jordan, and review its strategy to improve financial performance and boost the share price.” REUTERS

Edge One Capital Sends Letter to BuzzFeed Demanding Overhaul of Governance and Board
Activist sites an outdated share structure and unfriendly shareholder governance provisions

“Edge One Capital has sent a letter to BuzzFeed demanding a corporate board and governance overhaul, holding management and the board of directors accountable to their fiduciary duty. BuzzFeed, which also owns the Huffington Post, Tasty, and First We Feast, is fully controlled by CEO and Chairman Jonah Peretti. The letter points out inconsistencies in the board of directors' backgrounds, actions, and incentives and shows the dysfunction in BuzzFeed's corporate governance. According to Edge One Capital, the current governance structure does not protect shareholder rights or their interests.” YAHOO FINANCE

Seat at the Table

• Pfizer elects to its board Tim Buckley, former Chairman and CEO of Vanguard

• Phillips 66 adds to its board Grace Puma Whiteford, former EVP and COO of PepsiCo

• Levi Strauss & Co. appoints to its board Dan Geballe, Managing Director at SJF Ventures

• KB Home welcomes to its board Cheryl Henry, former Chairwoman, President, and CEO of Ruth’s Hospitality Group 

• Meritage Homes announces to its board Erin Lantz, Chief Revenue Officer of fintech firm Ethos

• Excelerate Energy appoints to its board Tyler Todd, SVP of Business Development at Kaiser-Francis Oil Company

• Specialty vehicle manufacturer REV Group elects to its board David Dauch, Chairman and CEO of American Axle & Manufacturing Holdings

• Financial services firm FIS names to its board Nicole Anasenes, former SVO of engineering firm ANSYS

• MaxCyte adds to its board Cynthia Collins, former CEO of Editas Medicine

• L3Harris Technologies announces to its board David Regnery, Chairman and CEO of Trane Technologies

• Multi cloud firm F5 welcomes to its board Julie Gonzalez, SVP of Business Finance at Workday; and Maya McReynolds, CFO of the Client Solutions Group at Dell Technologies

• Travel firm Sabre elects to its board Eric Kelly, Chairman and CEO of portfolio firm Overland Tandberg

• Silicon carbine manufacturer Wolfspeed nominates to its board Thomas Seifert, CFO of Cloudflare

• Bank holding firm First Hawaiian adds to its board Tertia Freas, Executive Director of private grant foundation The Clarence T.C. Ching Foundation

• AI marketplace Xometry appoints to its board Roy Azevedo, former President of Raytheon Technologies’ Space And Airborne Systems And Intelligence And Space Business Units

• Five Points Holdings elects to its board Sam Levinson, Chief Investment Officer at Glick Family Investments

About Boardspan
Boardspan helps boards raise the bar on their critical governance mandates by combining cutting edge digital capabilities with high-touch consulting services. They are leaders in board assessments, individual director & CEO evaluations, board succession strategy & search, skills & composition analyses, and bespoke advisory work. Boardspan only works with boards, bringing deep experience, objectivity, an analytical orientation, and insight-driven recommendations. Clients include Blue Shield (CA), Colgate-Palmolive, Deckers, Dynatrace, elf Beauty, HubSpot, Ingersoll Rand, KKR, Lam Research, the PGA, Roblox, Salesforce, Synopsys, the USOPC, and scores more.