Across the Board
Google Invests $2B in Anthropic
Announcement comes after Amazon pledges to invest $4B in the AI company
“Alphabet's Google has agreed to invest up to $2 billion in the artificial intelligence company Anthropic, a spokesperson for the startup said on Friday. The company has invested $500 million upfront into the OpenAI rival and agreed to add $1.5 billion more over time, the spokesperson said. Google is already an investor in Anthropic, and the fresh investment would underscore a ramp-up in its efforts to better compete with Microsoft, a major backer of ChatGPT creator OpenAI, as Big Tech companies race to infuse AI into their applications.” REUTERS
The FDIC Investigates Alleged Misconduct at First Republic Bank
Silicon Valley Bank and Signature Bank faced similar allegations
“The Federal Deposit Insurance Corporation (FDIC) is investigating potential misconduct by executives and board members of First Republic Bank (FRCB.PK), raising the prospect of stiff penalties for the failed bank's former bosses. "We can confirm a D&O probe into First Republic is taking place," a spokesperson told Reuters on Wednesday, referring to the bank's directors and officers. The regulator did not provide further details. The investigation, which has not previously been reported, is the third the FDIC has opened into bank failures earlier this year which cost the federal government's deposit insurance fund about $32 billion.” REUTERS
A Closer Look at the FDIC’s New Corporate Governance Standards
Standards lean toward a rules-based approach to corporate governance
“On October 3, 2023, the Federal Deposit Insurance Corporation (‘FDIC’) proposed standards for corporate governance and risk management for the institutions it regulates that have $10 billion or more in total assets…The Proposed Standards would establish extensive and rigid requirements for a wide range of state-chartered banks. Further, they would reverse decades of reliance on state law for establishing governance and oversight obligations. The FDIC board approved issuing the Proposed Standards by a 3-2 vote with Vice Chairman Travis Hill and Director Jonathan McKernan issuing dissents sharply critical of the proposals. The Proposed Standards lean toward a rules-based approach to corporate governance, in contrast to the principles-based approach that is prevalent under state law.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Why Aren’t There More CHROs on Boards?
Despite the emphasis on importance of human capital management, numbers are still small
“Equilar, a data research firm, wrote last month that CHROs are “attuned to the risks associated with human capital, such as talent shortages, workforce disruptions, and employee relations issues.” The consulting firm KPMG also notes that board members with an HR background can provide unique insights into CEO succession planning, diversity and inclusion efforts, and a host of other talent issues…While the role of the CHRO has transformed over the past few years with bigger pay packages and a viable path to the corner office, the CHRO’s leap to the board level hasn’t yet manifested as a full-blown trend, at least not at public companies.” FORTUNE
The Compensation Committee’s Evolving Role in Human Capital Management
Committees have an imperative to help companies solve complex talent issues
“Many leaders delved into human capital management (HCM) when the economy was booming, just before the Great Resignation. Boards and compensation committees worked to understand talent issues and make their companies more attractive, inclusive, and engaging. Now that the labor market is shifting, HCM has become even more critical as companies navigate new market-related challenges. The issues are not abating, just evolving, as stakeholders press for more attention on employees. While many companies worked diligently on the symptoms, they may have missed some underlying nuances driving core HCM issues. Compensation committees now have an opportunity, if not an imperative, to step up oversight and partner with management on these complex talent issues.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
The Rising Role of Cybersecurity in ESG
Cybersecurity is increasingly considered an integral part of ESG
“In today’s data-driven world, cybersecurity has emerged as one of the biggest threats to the global economy and is one of the top risks facing businesses worldwide. Data constitutes a staggering 90% of intangible asset value across companies, and with the average cost of a data breach now estimated at $4.45m, the stakes have never been higher. It is therefore not surprising that cybersecurity is increasingly at the forefront of corporate ESG agendas.” ERM
Why Boards Need to Prioritize Cybersecurity Training
Directors play a critical role in protecting their organizations from cyber threats and attacks
“Cybersecurity threats will continue to rise, with cyber-attacks becoming increasingly sophisticated and damaging. As a result, organizations are under constant pressure to ensure their data and systems are secure…By taking steps to enhance their cybersecurity knowledge, directors can help to protect their organizations from the growing threat of cyber-attacks. Cybersecurity training can help boards and management teams develop a comprehensive understanding of the risks and threats facing their organizations, as well as the steps that can be taken to mitigate those risks. Ultimately, prioritizing cybersecurity training can help to safeguard organizations and ensure their long-term success in the face of an ever-evolving cybersecurity landscape.” BUSINESS DAY
A Guide to Using Generative AI in Board Management
How to use AI to help manage your board processes
“AI tools are beginning to transform our lives by streamlining processes that would otherwise take us hours to carry out. The corporate world is no different, and many are applying the evolving technology to improve their operations – including governance professionals. But what tasks can corporate secretaries and general counsel automate using AI? And how can governance professionals best employ the technology to help streamline their board management tasks?” GOVERNANCE INTELLIGENCE
The End of an Era as Hess Sells to Chevron
Activist pressure from Elliott in 2013 brought changes to the family-owned oil giant
“Under John Hess’s leadership, the company forayed into new offshore frontiers and started drilling into shale-rock formations in North Dakota. But it suffered some costly misses in Indonesia, Brazil and Texas, and analysts said the company was spreading itself thin. Hess’s lagging share price gave an opening to activist investor Elliott Management…In 2013, (Elliott) pushed for a board overhaul and a split of Hess into an international and a domestic company, among other changes. It eventually reached a settlement that saw Hess appoint three Elliott nominees on its board, and John Hess relinquish his chairmanship—a heavy price to pay for the dynasty’s survival…After Elliott’s intervention in 2013, Hess shed more than $10 billion worth of assets—including its gas stations—to raise cash and become a nimbler player focused on a few large oil-and-gas projects, such as North Dakota’s Bakken Shale.” WALL STREET JOURNAL
Research: Firms with Diverse Boards Achieve Higher ESG Ratings
Findings come from analysis of 15 years of data from the S&P 1500
“Building an effective, engaged board of directors is critical to a highly functioning nonprofit organization. In my experiences as the president and CEO of the Dave Thomas Foundation for Adoption, and as a board member of several child welfare organizations, I have identified some best practices to support the development of a robust nonprofit board that's deeply committed to and invested in the mission of the organization. The relationship between a nonprofit’s CEO and board is unique. A CEO serves as the main conduit of information to the board and should play a crucial role in recruiting, training and guiding its members. It is important to place a heavy emphasis on relationship-building with each board member.” HARVARD BUSINESS REVIEW
PwC Names Advisory Head at New Global Chair
Mohamed Kande is expected to succeed departing chair Robert Moritz
“PricewaterhouseCoopers’ board selected the global head of the firm’s advisory business as its new global chair to helm the Big Four professional-services giant beginning next summer as it navigates slowing revenue growth…Moritz has served as global chair since 2016, acting previously as chair and senior partner of the U.S. unit. He was reappointed for a second term in 2020, ending June 30, 2024. Moritz in an interview last week said he would weigh his next steps closely in the first half of next year. ‘I have not landed that at all yet,’ Moritz said last week. ‘There’s plenty going on in the world that I’ve said, let me get through a few more things first before we actually move on to that.’” THE WALL STREET JOURNAL
Nelson Peltz’s Push for Disney Board Seats Boosted by Ike Perlmutter
The former Marvel Entertainment Chair voices frustration with business performance
“Perlmutter became one of Disney’s largest independent shareholders when he sold Marvel to the entertainment giant for $4 billion in 2009. Perlmutter told the Journal he plans to urge Disney’s board to accept one or more of Trian’s board nominees, including Peltz…’While I was a Disney employee, I was not comfortable publicly stating my views on the company and its performance,” Perlmutter said. “As someone with a large economic interest in Disney’s success, I can no longer watch the business underachieve its great potential.’ Peltz and Perlmutter are neighbors in Palm Beach, Fla., and frequently dine together with their wives.” THE WALL STREET JOURNAL
eDNA: Accountability Breakthrough, or Greenwashing?
The technology can help companies measure their biodiversity impact
“In December 2022 at a United Nations summit in Montreal, officials from almost 200 countries agreed to set aside 30% of the Earth’s land and ocean for conservation by the end of this decade. The new pact asks major companies and financial institutions to monitor and disclose their biodiversity-related risks…Salesforce Inc. in April announced plans to become ‘nature positive.’ Cement maker Holcim AG pledged to have ‘a measurable positive impact’ on biodiversity by 2030…Easy to use, highly sensitive and low-cost, eDNA technology has found early adopters in industries that are often scrutinized for their footprints on land and water: agriculture, forestry, land development and mining…Yet biodiversity has no single metric as essential as the one at the heart of climate change: the concentration of carbon dioxide in the atmosphere…And it’s not clear just what companies will do with the wealth of information that eDNA provides, in the absence of strict regulation. Does it simply make obfuscation and greenwashing easier?” BLOOMBERG
