Across the Board
Mark Zuckerberg Wades into Harvard Board Battle
Countering Bill Ackman’s activism, Zuckerberg backs board candidate Sam Lessin
“Each January, Harvard University alumni are eligible to gather enough signatures to run for the university’s Board of Overseers. Normally, this process plays out quietly. Few, if any, alumni go through the effort to get on the ballot. But, like many things at Harvard today, this year’s board election is taking place in the national spotlight and being influenced by powerful billionaires vying to reshape a university in crisis. Mark Zuckerberg is throwing his support behind former Facebook exec Sam Lessin, a venture capitalist calling for significant reform to Harvard. The Facebook billionaire held a virtual event on Friday supporting Lessin, who has called for major reform at Harvard – including the resignation of Penny Pritzker, who leads the powerful Harvard Corporation.” CNN
Boeing Puts the Focus on Safety in Quarterly Report
In earnings call, Calhoun’s main topic is safety and responsibility
“‘We caused the problem,’ Chief Executive Officer Dave Calhoun said Wednesday on a conference call to discuss quarterly earnings. While an investigation into the root cause of this month’s accident is underway, he emphasized that the ultimate responsibility rested with Boeing. The comments highlight how management is downplaying financial results and shifting focus to the efforts to resolve safety issues. In a break from tradition, Boeing declined to give an earnings forecast as its jet-production plans remain uncertain. “While we often use this time of year to share or update our financial and operational objectives, now is not the time for that,” Calhoun told employees in a memo. “We will simply focus on every next airplane while doing everything possible to support our customers, follow the lead of our regulator and ensure the highest standard of safety and quality in all that we do.” BLOOMBERG
David Calhoun’s Crisis Management Challenge at Boeing
Brought in to fix Boeing, he now has to defend it to Congress and the public
“Instead of touting a turnaround, Calhoun has spent the past couple of weeks shuttling across the country, fielding questions from regulators and politicians, meeting with his directors and walking the factory floors where the MAX 9 jet and its fuselage were assembled. His talk with workers was at the Wichita, Kan., supplier that made the fuselage and door plug that blew off midflight.’ Boeing needs to get their act together,’ American Airlines Chief Executive Officer Robert Isom said Thursday. ‘The issues that they’ve been dealing with over the recent period of time, but also going back a number of years now, is unacceptable.’...Known for a style that focuses on holding senior leaders accountable for their approaches, Calhoun is confronted with the reality that the door-plug blowout wasn’t an isolated incident…’ He said that he has been trying to fix Boeing’s culture of safety and trying to ensure quality control. And that he’s doing everything he can and has brought safety officers to the board,’ Sen. Tammy Duckworth (D., Ill.), chair of a Senate aviation safety panel, said after meeting with Calhoun. ‘To be honest,’ she said, ‘he has been there a long time.’” THE WALL STREET JOURNAL
Boeing Faces Tricky Balance Between Safety and Financial Performance
Many accuse Boeing of sacrificing quality for shareholder value
“The National Transportation Safety Board is expected in the coming days to release a preliminary report on the incident, which occurred on an Alaska Airlines flight. The report could shed more light on how a panel blew off the Max 9 and will almost certainly ramp up scrutiny of Boeing by lawmakers, airlines and safety groups…Some aviation experts and executives have long said Boeing’s safety problems and its financial performance are intertwined. The company, these people say, has for many years put too much emphasis on increasing profits and enriching shareholders with dividends and share buybacks, and not enough on investing in engineering and safety.” THE NEW YORK TIMES
Cybersecurity Details Emerge Under SEC Rules
Initial filings from Lockheed and others to set direction for security governance disclosures
“Regulatory filings from defense company Lockheed Martin and other large corporations under strict new federal disclosure rules are setting early expectations for how much companies must disclose about their cybersecurity programs. Lockheed, oil-field services provider Schlumberger and equipment rental company United Rentals are the first major businesses to file annual reports to the U.S. Securities and Exchange Commission, with fresh information about how they handle cybersecurity. Starting in mid-December, the SEC expanded requirements for discussing cyber risk and oversight in the reports, known as 10-K filings.” THE WALL STREET JOURNAL
Forget the Term “ESG” But Don’t Ignore the Power of the Concept
The best-managed companies are integrating ESG considerations into their businesses
“In our latest research, we took a look at the 50 biggest gainers in overall effectiveness since 2018, among a group of 442 companies for which we have data going back that far, to determine what had propelled their scores higher. For the 50 biggest gainers, the leading factor in their rise was the social responsibility category, which is made up of metrics from several ESG ratings providers. Over the five-year period, their scores in that area rose on average 8.9 points on our 0 to 100 scale, compared with 8.3 points in financial strength, 6.9 in customer satisfaction, 6.5 in employee engagement and development, and 4.9 in innovation. That these big gainers had increases across the board isn’t surprising.” THE WALL STREET JOURNAL
2023 Silicon Valley 150: Corporate Governance Report
Key takeaways from the Lonergan SV150 survey
“Virtual meetings are here to stay. Following the practice started during the COVID-19
pandemic, approximately 89% of the SV150 opted to hold a virtual meeting in 2023
rather than a physical one…The top 50 companies, on average, have up to one more director. In addition, directors at the top 50 companies have longer tenure, are older, and are more likely to be subject to mandatory retirement policies. Female directors, however, are more common throughout the SV150, with the bottom 50 companies actually averaging a higher percentage of female directors (36.1%) than the top 50 companies (32.3%).” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Vince McMahon Resigns From TKO Group Board
Longtime wrestling executive’s exit follows recent sexual abuse allegations
“Vince McMahon, the founder of modern professional wrestling who weathered allegations of sexual misconduct for decades, resigned as executive chairman of TKO Group on Friday. His resignation came a day after a former employee alleged in a lawsuit that McMahon sexually abused her and trafficked her to others inside World Wrestling Entertainment. Last year, McMahon sold WWE to Ari Emanuel’s Endeavor Group to create the merged company TKO Group…Thursday’s lawsuit by Janel Grant, whom McMahon agreed in 2022 to pay $3 million to keep her quiet about their relationship, contained graphic allegations of abuse that she said began soon after they met in 2019.” THE WALL STREET JOURNAL
A Publishing Giant’s Risky Fight Against Book Bans
At Penguin Random House, a fiery board meeting led to a stronger stance
“When Penguin Random House held a board meeting in May, book banning was one of several topics on the agenda. It was supposed to be a routine discussion. The company had mostly kept a low profile on the issue. Then Skip Dye spoke up. Dye, who oversees U.S. library sales for the global book-publishing giant, launched into an impassioned speech about the company’s handling of the issue, saying the publisher wasn’t doing enough to oppose the removal of hundreds of books from public school libraries and classrooms across the country. While backers of the book bans believed they were targeting titles that were pornographic or otherwise inappropriate for young people, Dye saw an assault on free speech and on the publisher’s authors. ” THE WALL STREET JOURNAL
Top Actions to Help boards Lead Oversight in the 21st Century
It’s time to fill knowledge gaps and bring on new skill sets
“The knowledge that board members are expected to acquire and how they are expected to provide oversight in the wake of an expanding agenda of geopolitical, economic, environmental, regulatory, supply chain, and data and privacy risk issues and technology shifts is challenging the collective performance of boards. The idea of how boards need to effectively manage risk has expanded immensely and has become a key topic in board discussions…The necessary actions for boards to take go beyond acquiring new talent to address knowledge gaps must include addressing shortcomings and changing board practices around continuous learning and performance.” REUTERS
Driving Board Excellence
In light of expanding workloads, boards should take a fresh look at time commitments
“Management bears much of the responsibility for ensuring that the board is fluent in areas that are relevant to the company’s business and business strategy. Currently, however, management itself sees significant gaps in board knowledge. As boards are addressing an array of topics—ranging from AI to climate change to supply chain resilience—companies should consider enlisting the assistance of outside expertise in providing relevant educational programs for the board to complement management’s knowledge of the company. At the same time, the board can ask for presentations on areas where it wants additional information. Exposing the board to diversity of thought, whether from within or outside the organization, can enhance its ability to make informed decisions, adapt to changing circumstances, and avoid institutional groupthink.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
At Davos, Businesses Look to Move from Talk to Action on AI
Boards want to see a strategy on the table in 2024
“Artificial intelligence was once again the biggest topic at the World Economic Forum, but this year's conversation was much more focused on tangible action…AI conversations at Davos evolved from ‘check out the speech I wrote with ChatGPT’ to far more nuanced discussions around how generative AI could increase productivity and allow businesses to expand into new areas. Sensing the business opportunity, tech firms and consultants filled the storefronts on the main promenade in Davos, pledging their help.” AXIOS
Allen Entertainment Makes $14B Bid for Paramount Global
The deal would net Byron Allen some of the most valuable properties in entertainment
“Media mogul Byron Allen has extended yet another multibillion-dollar takeover offer — this time a $14.3 billion bid for film and TV giant Paramount Global, parent of the CBS broadcast network and cable outlets like Nickelodeon. Allen is offering $28.58 each for the voting shares of Paramount, a 50% premium to recent trading, and $21.53 for the nonvoting shares, people familiar with the matter said. Including existing debt, the total value of the deal rises to about $30 billion.” BLOOMBERG
