Across the Board
Nelson Peltz Boosts Disney Stake, Seeks Board Seats
Following sweeping layoffs at Disney, investors remain vigilant for the next restructuring move
“Nelson Peltz said his proxy fight against Disney was over in February, but Bob Iger knew the activist investor might return. Peltz and the Disney CEO remained in direct contact this year, and Iger sought to reassure him that Disney’s $5.5 billion in budget cuts and elimination of 7,000 jobs were progressing quickly…As the share price declined over the summer, however, the Trian team lost confidence in Disney’s ability to right the ship, even as the company’s board in July extended Iger’s contract through 2026, according to people familiar with the matter. When Wall Street analysts began reducing their target price for Disney shares, it caught Peltz’s attention and contributed to his sense that Disney wasn’t on a path to financial health, according to people familiar with the matter. The company’s stock closed at $78.32 last Wednesday, its lowest level in more than nine years. The activist is seeking several board seats, including one for Peltz, and wants the board to be more focused, accountable and aligned with shareholder interests'' WALL STREET JOURNAL
AI and the Role of the Board of Directors
A dive into AI risk, impact, and compliance
“Artificial intelligence (AI) has the capacity to disrupt entire industries, with implications for corporate strategy and risk, stakeholder relationships, and compliance that require the attention of the board of directors. In 1950, Alan Turing, the father of computer science, famously asked, “Can machines think?” Since then, the application of computer science and algorithms to collect and analyze data, identify patterns, make predictions, and solve problems has advanced significantly. Today’s AI has become much better at mimicking aspects of human intelligence, such as “understanding” language, “perceiving” images, or “generating” new, albeit derivative, content (generative AI). AI is also advancing in its ability to self- improve its own performance (machine learning).” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Walgreens Names Former Cigna Executive New CEO
Tim Wentworth must tackle stock slump and C-suite departures
“Walgreens Boots Alliance Inc. appointed Tim Wentworth as its next chief executive officer, giving the industry veteran the challenge of turning around the beleaguered drugstore chain amid a faltering push into the wider health-care scene. Wentworth, the former CEO of pharmacy-benefits manager Express Scripts who led its 2018 merger with Cigna Group, succeeds Rosalind Brewer, a longtime retail executive whose 2 1/2-year tenure saw the shares lose half their value. Alongside restocking a depleted C-suite, Wentworth will take on managing initiatives such as Walgreens’ move to open hundreds of doctors’ offices in its stores. The appointment will take effect Oct. 23, when Wentworth will also join the company’s board.” BLOOMBERG
AI Isn’t Just About Risk, Says Splunk’s Cyber Chief
Splunk’s pioneering AI work resulted in its purchase by Cisco for $28B
“When there’s a new technology that comes out, I like to make sure that we’re educating the security team. It’s having a good threat model around how a generative AI is used within the company and understanding what are the risks and how are we managing the risks of ensuring that it’s not going outside the company, acceptable use, don’t put corporate secrets in here…I think the state of generative AI right now is where you can leverage it, but you’ve got to fact-check it and make sure it’s correct still. I think it’s an additive, and especially in automation processes or to help look at maybe malware analysis, or even risk-scoring to provide some context. But it’s not the end-all, be-all. It can’t be something that’s completely relied on yet.” WALL STREET JOURNAL
FDIC Proposes New Guidelines for Board Governance, Risk Management at Larger Banks
The proposed rulemaking applies to banks with at least $10 billion in consolidated assets
“Among other things, the proposed guidelines state that bank boards should establish risk management programs ‘appropriate for the size, complexity, business model, and risk profile of the covered institution.’ Banks also should have a ‘three-line-of-defense model of risk management’ for monitoring and reporting risks consisting of business units, an independent risk management function led by a chief risk officer and an institution’s internal audit unit led by a chief audit officer. In addition, banks should ‘effectively communicate’ their risk appetite and policies to encourage compliance by all employees, and identify and report breaches of risk limits, even if the institution does not realize a loss from the breach.” BANKING JOURNAL
Strikes Make Worker Issues A Topic For The Boardroom
Employees don’t go on strike without warning; directors need to watch for the signs
“Corporate directors nationwide may need to pay greater attention to the concerns of workers as a flurry of strikes by irate employees are impacting companies in several industries. Strikes by autoworkers at Ford, General Motors and Stellantis, healthcare workers at Kaiser Permanente and culinary workers at casinos in Las Vegas have made headlines recently in their attempts to get higher pay and improved conditions. As companies come to grips with what industry analysts describe as worker shortages, boards will be challenged to determine the true state of the company’s relationship with its workforce and what its workforce of the future will look like.” CHIEF EXECUTIVE
What’s Next for Diversity Shareholder Proposals
Recent trends in DEI sentiment, as revealed by annual meeting proxy voting
“Following the death of George Floyd and mass protests against racial inequity in 2020 culminating years of slowly building stakeholder pressure on various aspects of diversity, many companies expressed their commitment to racial justice and implemented or enhanced diversity, equity and inclusion (DEI) programs…There was also a similar increase in diversity-related shareholder proposals such as those related to board diversity, conducting civil rights or racial equity audits and reporting on the effectiveness of DEI programs, some of which received relatively high levels of support from shareholders. However, more recently, there has been some backlash against DEI programs (and ESG initiatives more broadly), including calls by some opponents to dismantle them.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
What The Board Needs To Know: Cyber Attack Costs
IBM calculates the global average cost of a data breach at $4.45 million
“Clorox disclosed an incident in mid-August and has now shared costs associated with the subsequent clean up. The company estimated costs of $25 million for the period ending Sept. 30, related to third-party consulting services such as forensic experts and legal counsel, ‘as well as incremental operating costs incurred from the resulting disruption to parts of [Clorox’s] business operations.’” WALL STREET JOURNAL
Unity Chief Resigns After Pricing Backlash
New pricing model incited fury, threats from game developers
“Unity, which makes the underlying software that powers video games, has long imposed an annual licensing fee on developers. But in September, the company said it would begin charging developers additional money each time someone downloaded one of their video games. That meant developers would pay more as their games increased in popularity. Mr. Riccitiello was one of the main proponents of the change. His swift exit underscored the precarious position Mr. Riccitiello found himself in after an attempt to fix a corporate balance sheet awash in red ink. But the abrupt shift in the company’s financial model angered many programmers who rely on Unity for their own businesses.” THE NEW YORK TIMES
