Across the Board
Plenty of Opportunity for Retired CEOs
Experienced leaders who lend credibility in tumultuous times are in demand
“Cracker Barrel’s decision to select a 69-year-old former restaurant executive to lead the chain highlights the emerging practice of boards calling in retired chief executives from the sidelines to help engineer high-profile turnarounds. The family-dining chain’s board and its current Gen X CEO had agreed that they would work together to look for her replacement after an uproar over branding changes caused the chain’s sales to plunge, according to people familiar with the search. In recent years, Boeing, Verizon Communications and others have all chosen once-retired CEOs. An established executive brings instant credibility and experience to a role, governance specialists say, even if research suggests the performance of second-act CEOs tends to be mixed. For the executives themselves, returning to the corner office often holds appeal, allowing them to dig into new business problems—while enjoying the perks and power of running a large company again.” WALL STREET JOURNAL
New Details Emerge in the Ousting of BP Chair
Newly revealed board reform proposals are fueling investor scrutiny of the company's decision to remove its chairman
“The former chairman of BP was drawing up plans to remove Dame Amanda Blanc, the company's senior independent director, before he was dramatically ousted. Albert Manifold wanted to introduce strict six-year term limits on board directors as part of a major shake-up of corporate governance…. The moves would have cut BP's board from 10 to eight members, with Dame Amanda among two non-executive directors earmarked for departure…. Without clear restrictions on time served, the Irishman feared some non-executives would have stayed beyond the six-year recommendation, potentially raising questions over the board's independence. Though Mr Manifold was unable to present his plans, board colleagues were aware of the proposals, which were intended to cut costs and improve governance standards at the oil and gas giant… Mr Manifold was dismissed after just eight months in post… Investors have questioned the board's judgment in forcing him out.” YAHOO FINANCE
Paramount’s Stunning Proposal to Delay Merger with Warner Bros.
Rather than engaging in lengthy skirmishes with state AGs, the company suggested halting the merger and going straight to trial
“On a call around 9 p.m. on Thursday, Jeffrey Kessler, the top trial lawyer for the media behemoth Paramount, made a stunning proposal that could stall the company’s $111 billion merger with Warner Bros. Discovery well into next year. Paramount, which is run by the tech scion David Ellison, was staring down a lengthy legal battle with state attorneys general, who in mid-July had sued to stop the blockbuster merger over antitrust concerns. Both sides seemed poised to spend weeks arguing about in-the-weeds legal motions and scheduling questions that precede a trial. Then Mr. Kessler, the co-executive chairman of the law firm Winston Taylor, whom Paramount retained for the deal, called the states. Let’s forgo those early legal battles and move to a trial, he suggested, according to three people familiar with the call. Paramount would agree to halt its merger until June at the latest, while the court case played out, clearing the way for a legal showdown that could redefine Hollywood. Mr. Kessler proposed the delay because Paramount thought going to a trial was the fastest way to complete the deal, according to two people familiar with the matter. At the same time, the company had already faced a series of early setbacks in the states’ lawsuit, including two court-imposed temporary pauses on the acquisition.” NEW YORK TIMES
If Paramount Fails to Complete Merger, It Will Be Costly for Ellison
Total penalties could reach $10 billion if the deal falters
“Larry Ellison and his family would be on the hook for $9.8 billion if Paramount Skydance Corp.'s deal to buy Warner Bros. Discovery Inc. falls apart. Paramount, which is run by Larry's son David Ellison, agreed to pay Warner Bros. shareholders a $7 billion termination fee if its deal to buy the entertainment giant collapses due to regulatory issues. In February, Paramount paid $2.8 billion to Netflix Inc. to get the streaming company to abandon its pursuit of Warner Bros.” YAHOO FINANCE
Opinion: Renewed Focus on Corporate Responsibility to Promote Ethical Behavior, Strong Governance, Trust
Negative public reaction to widespread corruption, graft and ethics violations in government prompts a rethinking of corporate responsibility
“Boards of directors are encouraged to anticipate a renewed focus on corporate responsibility and ethics, which would be grounded at least initially in corporate self-regulation and new governance principles, rather than in new legislation or enforcement policy shifts…. A new treatment of corporate responsibility principles would differ from their original iteration in the Sarbanes-Oxley Act and the corporate governance and legal ethics principles it prompted. Those laws, regulations, and principles arose from catastrophic bankruptcies that undermined the credibility of financial reporting and deeply weakened financial markets. Many of the Sarbanes-related efforts were thus focused on topics such as internal controls, financial reporting, accounting improvements, and changes to governance oversight and legal ethics. Rather, this renewed focus arises from (i) the intensely negative reaction to widespread corruption and graft; and (ii) the normalization of legal ethics violations, and acts of self-dealing and conflicts of interest; both perceived as occurring within the federal government. Critical perspectives on this environment from key stakeholders (e.g., consumers, employees, vendors, community members) may particularly influence new corporate responsibility initiatives. Additional motivation may come from surveys that consistently identify business as the ‘default solution on societal issues,’ with many survey respondents viewing businesses as more competent and ethical than the government.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Boards Focus on Risk, But Not All Link It to Strategy
New survey shows 60 percent are spending more time on risk oversight, but fewer than half are integrating it with strategy.
“Boards are devoting more time to risk oversight, but new survey data suggests that added attention is not always accompanied by changes in how risk connects to strategy, reporting or management engagement. That’s the picture from Corporate Board Member’s Q2 survey of nearly 150 U.S. public company directors, conducted with EY Center for Board Matters. Sixty percent of directors polled say their board has increased the time devoted to risk oversight on the full board agenda over the past two years. Smaller shares report related changes: 39 percent say risk discussions have become more closely integrated with strategy, 32 percent say reporting on emerging risks has improved, and 22 percent have increased the use of scenario planning." CORPORATE BOARD MEMBER
Google Is Latest Big Tech Company Fined for Anti-Competitive Behavior in EU
The $1 billion fine is protested by US politicians, who call the European law discriminatory
“The EU fined Google €890 million [about $1 billion] on Thursday and ordered the U.S. internet giant to overhaul how it ranks rivals in search results and how it polices its app store, as it concluded two investigations into whether the company had breached the bloc’s flagship Big Tech law. Google becomes the third company to face significant fines under the EU’s three-year-old Digital Markets Act, a rulebook meant to fast-track investigations into dominant tech platforms that has been denounced by Washington as discriminatory because most of the companies covered by it are American.” POLITICO.EU
How Aligned Are CEOs and Their Boards?
When it comes to taking risks, many boards are less confident than their first-time CEOs
“As more first-time CEOs step into the corner office, they are embracing the role with notable self-assurance. Many believe they’re well positioned to lead their organizations through the next wave of disruption and opportunity. Boards, however, are far less convinced. Data from Korn Ferry’s Annual Board and CEO Risk Survey reveals a growing confidence gap between new CEOs and the directors charged with overseeing them—particularly around technology, AI and future risk. … This confidence divide is most pronounced between first-time CEOs and the boards they serve—and it may be less about capability than context. One explanation lies in how many of today’s CEOs reached the role. A significant share were elevated or recruited under accelerated—and sometimes reactive—circumstances rather than through deliberate, long-term succession planning.” CORPORATE BOARD MEMBER
Board Diversity at a Crossroads
New appointments suggest years of gains in boardroom diversity have slowed as legal and regulatory pressures reshape director recruitment
“As U.S. President Donald Trump intensifies his campaign against diversity programs, appointments of women and racial minorities to S&P 500 boards have dropped to their lowest level in more than a decade, threatening to unwind years of gains in corporate boardroom diversity…. Of the 364 new independent directors named to S&P 500 boards during the year ended April 30, 40% were women or racial minorities, the lowest level since 2014, when 39% of incoming directors were diverse…. While board diversity remains near a historic high, the lineup of new directors is becoming markedly less diverse, suggesting those gains may prove difficult to sustain if current hiring patterns persist and a larger share of new board seats goes to white men…. George Anderson, co-leader of Spencer Stuart's North American Board Advisory Practice, said boards are responding to changing legal, regulatory and political pressures.” REUTERS
