10/24/24 – Issue 9.40 – Your weekly news on all things board. 

This week’s newsletter may seem quieter than usual, but with the presidential election just two weeks away, it feels a bit like the calm before the storm. Interestingly, however, a noticeable theme emerges around the fundamentals of board service. Disney has tapped boardroom veteran James Gorman to lead the essential task of CEO succession, aiming for a smooth and lasting transition after a tumultuous year. Meanwhile, Starboard is pushing Pfizer’s directors, and Elliott pressured and reached a settlement with Southwest on board and management accountability — underscoring a board’s fiduciary responsibility related to underperformance. A highlight in the 2024 BDO Board Survey is the opportunity to leverage technology for growth. And finally, the “ABCs of Boardroom Dynamics” reinforce a core principle: good governance is the bedrock of success for companies and the boards that guide them.

In the Spotlight

The Wall Street Veteran Leading Disney’s Search for Iger’s Replacement 

James Gorman wanted a challenging board role after nailing succession at Morgan Stanley; He’s getting one at Disney

“The former Morgan Stanley chief executive is set to become chairman of Disney’s board in January, charged with executing a smooth and lasting transition to a new leadership regime, while righting past wrongs of a board that critics view as too deferential to Bob Iger… The board initially planned to name Iger’s successor next year, but on Monday Disney said it would select the next CEO in early 2026. That will give him [Gorman] more time to focus on executing his turnaround strategy and allow Gorman and the board to take a closer look at external candidates alongside internal contenders.” WALL STREET JOURNAL

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

Starboard Value CEO says Pfizer's Board Should Hold Management Accountable
Investors have fled Pfizer as pandemic worries declined and billions of dollars in COVID-19 vaccine and treatment sales disappeared

“Activist hedge fund Starboard Value's chief executive officer said on Tuesday that drugmaker Pfizer's board needs to hold management accountable for its underperformance, particularly for its record for producing profitable new drugs… Starboard's campaign got off to an unusual start. Two former Pfizer executives had indicated they were working with Starboard to press for changes at Pfizer but then reversed course and said they supported the company's current CEO, Bourla.” REUTERS

Southwest Airlines Ends Feud With Activist Investor Elliott
The settlement deflects a potentially rancorous proxy fight

“Southwest Airlines struck a truce with Elliott Investment Management, giving the activist a significant presence on its board but not the majority control the hedge fund initially sought… Elliott got much of what it wanted. Five of its proposed directors will be added to the budget-airline pioneer’s board… Former Chevron finance chief Pierre Breber will also join the board, which will be reduced to 13 members next year.  Southwest Executive Chairman Gary Kelly, who served as the airline’s CEO for nearly two decades, will leave the board earlier than planned and hold the title chairman emeritus.” WALL STREET JOURNAL

Board Directors Balance Innovation and Risk Management Amid Financial Pressures

The survey of nearly 250 directors finds that innovation represents both a significant organizational opportunity and risk, and boards are taking action to address both

“Driving growth is the top-cited strategic priority for public company board directors in the year ahead, according to the 2024 BDO Board Survey. With monetary policy (33%) and inflation (31%) noted as directors’ top issues in the 2024 presidential election, increased investing in emerging technologies and artificial intelligence (AI) appears to emerge as a strategy to offset financial pressures and drive top line growth.” MORNINGSTAR

Timeless Principles of Board Dynamics
Board members need to possess not just the right skills and experience, but also the appropriate attitudes, behaviors, and candor for effective collaboration within the boardroom

“The understanding of a board of directors’ function can be framed using the analogy of understanding the parts of a broader, complex machine. The context of good governance is a principle recognized for its pivotal role in driving organizational success. This embodies the existential ‘why’ of a board, with a particular emphasis on how good governance can serve as a strategic advantage, most notably for private company boards.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Seat at the Table

Boardspan congratulates James (J.D.) Fay, Chief Financial Officer at special data firm Matterport, on his appointment to the board of Mitek Systems. Boardspan is delighted to have advised the company on this placement. We extend our congratulations to all recent placements:

• Coca-Cola welcomes to its board Bela Bajaria, Chief Content Officer at Netflix

• JPMorganChase elects to its board Brad Smith, President of Marshall University

• Space solutions firm WillScot Holdings appoints to its board Worthing Jackman, former CEO and Director of Waste Connections

• Eaton elects to its board Andre Schulten, Chief Financial Officer of The Procter & Gamble Company 

• Engineering firm Hillenbrand welcomes to its board Joseph Lower, EVP and Chief Financial Officer at AutoNation

• Evoke Pharma adds to its board Ben Smeal, former Marketing Director of Overstock.com

• Health tech partner TruBridge announces to its board Amy O’Keefe, Chief Financial Officer of Avaya

• Stanley Black & Decker welcomes to its board John Garrison, former President and CEO of machinery manufacturer Terex Corporation

• Social media firm Triller Group appoints to its board James McCann, Founder and former Chairman of 1-800-Flowers.com

• Equity derivative firm OCC adds to its board Rachelle Keller, former Managing Director and Chief Operating Officer of Investor Services and Global Equities at Citi; and Mike West, Head of Operations at the New York Stock Exchange

• Humana elects to its board Gordon Smith, Operating Advisor of private investment firm Clayton, Dubilier & Rice LLC Funds

• Human risk management firm Mimecast announces to its board Amol Kulkarni, former Chief Product and Engineering Officer at CrowdStrike

• USA Basketball names to its board Greg Sankey, Commissioner of the SEC; and Nina King, VP and Director of Athletics at Duke University

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.