1/18/24 – Issue 8.50 – Your weekly news on all things board. 

The new year brings lots of change, and we’re definitely seeing that in board composition this week. The biggest news was of two major departures from the Apple board, with Al Gore stepping down after two decades and James Bell retiring after 10 years. Both are complying with Apple’s upper age limit of 75. With new board members coming on, Apple becomes the first big-tech board that is gender-equal. Disney announced its board election slate this week with a resounding rejection of Nelson Peltz and Peltz-backed nominees. Though the football field and the boardroom are two different arenas, a Forbes article draws comparisons between CEO and board transitions and this week’s resignations of three distinguished football coaches: Nick Saban, Bill Belichick, and Pete Carroll. Food for thought if transition and succession are on your board’s mind. 

In other news, Elon Musk demands a big compensation bump from Tesla; the merger of JetBlue and Spirit is off; activist investor recruiting de-mystified; and ESG expectations for 2024.

In the Spotlight

Apple Directors Al Gore, James Bell to Retire

Both are aging out at 75; Gore’s term predates the iPhone

““Longtime Apple board member Al Gore is retiring from the board, the company announced Thursday. The former U.S. vice president had been a board member since 2003, a witness of the company’s rise and transformation a few years after the return of co-founder Steve Jobs as chief executive…Retired Boeing company executive James Bell, who joined Apple’s board in 2015, is also retiring. Gore and Bell both reached the age of 75, after which Apple directors don’t stand for re-election per company policy. Apple said that Wanda Austin, the former chief executive officer of nonprofit The Aerospace Corporation, has been nominated for election to the company’s board. Austin also serves on the board of directors of Chevron and Amgen.” THE WALL STREET JOURNAL

Apple Becomes the First Big Tech Company with a Gender-Equal Board 

Wanda Austin’s appointment ushers in an even split and a big change for Apple

“Apple — which has been the most valuable company in the world over the last decade (although on Friday it was dethroned by Microsoft) — will have a board of directors with four men and four women at next month’s shareholders meeting. If, as is likely, the shareholders ratify the proposal, the company founded by Steve Jobs will become the only large tech company (a list that includes Microsoft, Alphabet, Amazon, and Meta among others) that has an even split of male and female directors. It is a big change for Apple: until now, there were twice as many men as women on the board of directors.” EL PAÍS

Disney Has Harsh Words as it Rejects Peltz Nominees 

Peltz “offered no strategic insights” and former CFO Rasulo is “stale”

“Walt Disney Co. rejected Nelson Peltz’s bid for a seat on its board, along with the activist’s nomination of ex-finance chief Jay Rasulo, saying the investor lacked new ideas and its former executive has been away from the media business for too long. Disney has had no less than 20 ‘meaningful’  interactions with Peltz since the Trian Fund Management founder dropped an earlier push for a board seat last February…Those meetings included a Nov. 19 sit down in New York between Peltz and Disney Chief Executive Officer Bob Iger and a Nov. 21 phone call. During the call, Peltz ‘offered no strategic insights or proposed courses of action to address his concerns,’ Disney said…The board said Rasulo’s perspective on the media industry is ‘stale’ after being away for eight years. His position as lead director at radio station operator iHeartMedia Inc. has “not produced strong returns,” according to Disney, which said his ‘outdated perspective on the business would be damaging to the ongoing strategic transformation underway.’” BLOOMBERG

Belichick, Saban, Carroll And Their Impact On Corporate Governance

The age and tenure parallels between coaching and corporate leadership

“Every now and then, the sporting world intersects with the business world in a meaningful manner. And the sudden, unexpected departure of three of the greatest football coaches of all time - all in their early ‘70s - is the latest such example. For as successful as each of Bill Belichick, Nick Saban and Pete Carroll have been, their separation (by retirement or otherwise) from their respective teams should fuel corporate leadership conversations on how age and tenure may affect CEO and director succession, turnover and similar topics.” FORBES

From Boardspan this Week:

WATCH: The Art of CEO Succession Planning with Guest Chip Bergh

Webcast recording now available

If you missed the webinar featuring Levi Strauss & Co. CEO and HP, Inc. board Chair Chip Bergh and Boardspan CEO Abby Adlerman, you can now watch the full recording. It was a great session with Chip talking about common challenges such as when to start succession planning, internal vs. external candidates, and ensuring a smooth transition. It was a session full of insight and great guidance from a leader who is unmatched in his commitment and results with CEO succession planning.

Across the Board

A $60-Plus Billion Pay Package? Musk Gives Tesla’s Board a Nightmare Task

The push brings up renewed questions about Tesla board governance 

“It was never going to be easy for Tesla’s board to craft a new pay package for Chief Executive Officer Elon Musk. By taking the negotiations to his social-media platform X, Musk has made the task harder. ‘I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla.’ So Musk tweeted late on Monday in response to a discussion about whether the world’s richest person needed another compensation package to keep his focus on Tesla. It is six years since his last pay deal in 2018, which came roughly six years after the previous one in 2012.” THE WALL STREET JOURNAL

Federal Judge Blocks JetBlue’s $3.8 Billion Acquisition of Spirit Airlines
Ruling thwarts the biggest airline merger in over a decade

“A federal judge on Tuesday blocked JetBlue Airways’ $3.8 billion deal to buy Spirit Airlines, rejecting a merger that he said would hamper competition and lead to higher fares. The ruling thwarts what would have been the biggest U.S. airline merger in over a decade. It marks a victory for the U.S. Department of Justice, which sued last year to prevent JetBlue and Spirit from going ahead with their tie-up. Combining Spirit and JetBlue was always going to be a bit of a culture clash. JetBlue, with its seatback screens, free Wi-Fi and snacks, said it would rip rows out of Spirit’s notoriously cramped planes to match its own roomier configuration.” THE WALL STREET JOURNAL

Hewlett-Packard Enterprise Hopes Time is on its Side with Juniper 
A long close could help HPE get investors on board with the acquisition  

“Hewlett Packard Enterprise doesn’t exactly qualify as ‘big tech’ anymore. That might not matter as the corporate-tech half of the once mighty HP empire tries to curry support for its biggest move ever. The company now commonly known as HPE announced its $14 billion acquisition of Juniper Networks late Tuesday… The deal gives Juniper shareholders $40 a share in cash, which is 32% above the stock’s last closing price before the Journal’s report and would be the highest price Juniper’s shares have fetched in more than a decade. Juniper is the largest acquisition HPE has attempted since splitting from the PC and printer side of the former Hewlett Packard conglomerate in 2015.” THE WALL STREET JOURNAL

Sheryl Sandberg is Leaving Meta's Board of Directors
Sandberg remained on the board after stepping down as COO in 2022

“Sheryl Sandberg said Wednesday she's leaving her position on the board of directors at Meta after 12 years. Sandberg served as the COO of Facebook, and then Meta, for over 14 years before stepping down in 2022 while remaining on the board...Sandberg, who became COO in 2008, also praised Facebook co-founder and CEO Mark Zuckerberg and other colleagues at Meta in her announcement. ‘Serving as Facebook's — and then Meta's — COO for 14 ½ years and a board member for 12 years has been the opportunity of a lifetime,’ she said.” BUSINESS INSIDER

Activist Investor Board Recruiting De-Mystified

Establishing a strong process for recruiting board directors can go a long way

“Activist investors attempt to catalyze change at the companies they invest in. They employ multiple strategies and levers to kick-start transformation and growth; among these, corporate board change is an important one…A few activists have built a board recruitment mechanism within their firm. They follow board recruitment best practices and appreciate the value of an ongoing mechanism to identify and engage with potential director candidates. Many other activist investors work with board recruitment search firms. The search firms that recruit board directors for activist investors tend to differ from those that recruit for issuers. However, the same or even superior board recruitment techniques are employed.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

New IBM AI Index: While AI Adoption Increases, Barriers Can Limit Usage

Forty percent of organizations remain in the exploration/experimentation phases

“Forty percent of companies surveyed  are exploring or experimenting with AI but have not deployed their models. The top barriers preventing deployment include limited AI skills and expertise (33%), too much data complexity (25%) and ethical concerns (23%), the company said. Generative AI poses different barriers to entry from traditional AI models, the report noted. For example, IT pros at surveyed organizations not exploring or implementing generative AI reported that data privacy (57%) and trust and transparency (43%) concerns are the biggest inhibitors of generative AI. Another 35% also said a lack of skills for implementation is a big inhibitor, according to the report.” TECH REPUBLIC

Key ESG Trends in 2023 and What to Expect for 2024

The market pullback on ESG is a natural and anticipated course correction

“After years of buzz in business circles, ESG seemed to have lost some of its shine in 2023. We saw a host of new state laws looking to limit its use. Mentions of ESG on earnings calls dropped to their lowest level since 2020. Governors from 19 states joined an anti-ESG coalition and conservative members of Congress dubbed July ‘ESG month’ as they held hearings and advanced bills aimed at limiting ESG-based investing.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Corporate Governance Practices and Trends in Silicon Valley, Nationwide

Classified boards remain significantly more common among tech and life sciences companies

“Most of the governance practices and trends from previous years continued in the 2023 proxy season. A notable development includes the continued increase in board gender diversity in both the SV 150 and S&P 100. We also saw changes in other key areas, which are discussed in our report, including the prevalence of dual-class voting structures, board classification, majority voting and stock ownership guidelines for executive officers and directors, board leadership structure, frequency of board and board committee meetings, board and board committee size, and executive officer numbers and classification.” FENWICK

Artificial: A New Podcast from the Wall Street Journal

Wall Street Journal reporters discuss OpenAI and Sam Altman

“When the OpenAI board ousted CEO Sam Altman last November, very few people knew exactly what was behind it. In the final episode of our series, we reveal what led to Altman’s firing and explain why he was able to get his job back just days later. Plus, an exclusive interview with one of the people who fired him.” THE WALL STREET JOURNAL

Seat at the Table

• JPMorgan Chase appoints to its board Mark Weinberger, former Global Chairman and CEO of Ernst & Young

• Nordson Corporation welcomes to its board Christopher Mapes, former President and CEO of Lincoln Electric Holdings

• Voya financial appoints to its board Robert Leary, Senior Advisor at Leapfrog Investments

• Freddie Mac elects to its board Roy Swan, Director of Mission Investments at the Ford Foundation

• Park Hotels & Resorts announces to its board Terri McClements, former Partner with PricewaterhouseCoopers

• J.B. Hunt elects to its board Patrick Ottensmeyer, former President and CEO of railroad firm Kansas City Southern

• Construction firm Fluor Corporation adds to its board Lisa Glatch, former President of LNG and Net Zero Solutions at Sempra Infrastructure

About Boardspan
Boardspan is the leading provider of digital governance solutions for boards across all sectors. Our cloud-based assessments, benchmarking analytics and governance education programs complement our board search and advisory services to deliver a holistic approach to governance. Boards of all sizes and stages rely on Boardspan to deliver analytics, insights and outcomes that improve their effectiveness and performance. Clients include KKR, The Kellogg Foundation, Ingersoll Rand, Farfetch, McAfee, Beyond Meat, Box, e.l.f. Beauty, Satellite Healthcare and the U.S. Olympic & Paralympic Committee.