Across the Board
Lululemon Drafts Former Nike Executive as Its Next CEO
Lululemon taps Nike veteran Heidi O’Neill as CEO amid investor pressure and governance tensions, aiming to stabilize U.S. performance and leadership direction
“Lululemon Athletica is picking longtime Nike executive Heidi O’Neill to be its next leader as the athletic-apparel retailer works to shore up its U.S. business. The company announced the selection Wednesday, capping an extensive search process that kicked off at the end of last year after Lululemon announced that Calvin McDonald was departing…. O’Neill is set to start as Lululemon chief executive and join its board on Sept. 8, executives said. Meghan Frank, Lululemon’s chief financial officer, and André Maestrini, its chief commercial officer, have been serving as co-CEOs and are expected to transition back to their respective roles at that time…. The stakes to find McDonald’s successor escalated in recent months when Lululemon’s estranged founder and an activist investor began agitating for the company to turn things around faster. Elliott Investment Management by mid-December had built a more than $1 billion stake in the company and started pushing for Jane Nielsen, former chief financial officer and chief operating officer at Ralph Lauren, to be the next Lululemon CEO…. Meanwhile, Lululemon founder Chip Wilson launched a proxy fight at the end of last year in a bid to remake the retailer’s board, after he had already undertaken a public campaign against management. Wilson has maintained that picking a new CEO won’t be enough to solve what he views as broader governance problems.” WALL STREET JOURNAL
Best Buy CEO Corie Barry to Step Down After Sluggish Sales
Successor Jason Bonfig steps in amid ongoing efforts to revive growth
“Best Buy said Wednesday that company veteran Jason Bonfig will succeed Corie Barry as the retailer’s CEO on Oct. 31, taking over as Best Buy tries to break a run of stagnant sales…. Barry will stay on as a strategic advisor for six months after stepping down, the company said in a news release. She is the second-longest tenured CEO in the company’s history after its founder, Dick Schulze. Best Buy’s leadership change comes as the retailer tries to get back to meaningful sales growth and capitalize on the wave of artificial intelligence-enabled mobile phones and laptops…. Barry, 51, will step down after nearly seven years in the company’s top job. She became the first woman to lead Best Buy when she started in the role in June 2019. She led Best Buy through a period marked by rapid changes and spikes in demand — including a rush to buy computer monitors and kitchen appliances during the Covid pandemic — along with supply chain headaches, high inflation and President Donald Trump’s sharp increase in global tariffs.” CNBC
Reed Hastings to Exit Netflix Board, Marking End of an Era
Longtime chair steps down after nearly 30 years, signaling a new phase of board evolution
“Netflix Chairman and co-founder Reed Hastings will step down from the company’s board after his term expires in June, the streaming giant said Thursday, ending a nearly three-decade run at the direct-to-consumer pioneer. Netflix said Hastings has decided not stand for re-election to its board so he can focus on philanthropy and other pursuits. Hastings’s departure marks an end of an era for Netflix, which under his leadership transformed from a DVD-by-mail business to a juggernaut in subscription streaming that disrupted Hollywood by changing how people consume and make entertainment…. Netflix in December struck a deal to buy the Warner entertainment assets for $72 billion, a deal that would have dramatically changed Netflix’s business and the entertainment landscape…. But Netflix in February decided to walk away from the deal after David Ellison-led Paramount increased its offer for all of Warner Discovery…. The Warner deal would have been a break from Netflix’s typical practice, nurtured by Hastings, of building from within rather than buying other companies.” WALL STREET JOURNAL
The CEO as Spokesperson: Opportunity or Liability?
Public-facing leaders can boost performance, but tenure risk makes the strategy fragile
"When the Burger King marketing department suggested that Tom Curtis, the company’s president, take a starring role in its latest television commercial, his answer was swift: No…. But Mr. Curtis’s chief marketing officer, Joel Yashinsky, insisted. The commercial would launch a big campaign acknowledging that Burger King locations looked shabby and that quality had suffered, but promising better menus and restaurants. The leader of the company should be the face of the turnaround story…. In general, customers would be hard-pressed to identify the chief executives of the brands they bought or used…. Making themselves known as the face of a brand — especially in the midst of social media unruliness — can feel both burdensome and unnatural. It can also be risky. For one, chief executives may not be around for long. Consumer companies accounted for nearly a quarter of all chief executive turnover…. But when a company needs to respond to a crisis or pull itself out of a sales slump, billing the chief executive as the face of the brand can be an effective strategy….” NEW YORK TIMES
Spirit Airlines Explores Government Lifeline Amid Financial Strain
Potential federal government intervention as cost pressures mount
"Under the agreement being discussed, the U.S. government would loan the embattled discount carrier as much as $500 million, receiving in return warrants to take a potential significant stake in Spirit, the people said. The Transportation Department and Commerce Department are involved in the discussions, which aren’t yet final, and the terms of any agreement could still change. President Trump met Tuesday night with Commerce Secretary Howard Lutnick and Transportation Secretary Sean Duffy to hash out a deal to keep Spirit Airlines alive…. While the government has helped the airline industry in times of crisis, like the aftermath of the Sept. 11 terrorist attacks and the Covid-19 pandemic, rescuing Spirit would be a rare intervention to prop up a single carrier. Trump said Tuesday he was troubled by the idea that Spirit, which employs about 14,000 people, could go out of business.” WALL STREET JOURNAL
Boards and CEOs Brace for AI-Driven Workforce Shifts
Near-term impact may be modest, but longer-term shifts raise questions around strategy and board oversight
“Ask a CEO or board member how AI will change their workforce in the next year, and the answer—at least on the surface—would appear to be not much. Roles are evolving, skills are shifting but for most companies, the AI revolution won’t alter the existing workforce beyond what one might expect in an uncertain economy. Three or five years from now, that won’t be the case. A new survey by Chief Executive Group and the Long-Term Stock Exchange (LTSE), fielded in early April among 109 CEOs and board members at U.S. companies, finds that within three years, 43 percent of those surveyed anticipate a net reduction in workforce size due to the use of AI. Five years out, that figure rises to 53 percent. Just 16 percent anticipate a net reduction in headcount over the next 12 months, though 64 percent expect AI to shift roles and skills during that period.” CORPORATE BOARD MEMBER
Big Cuts, Bigger Applause
Companies embracing large-scale layoffs are increasingly seeing stock gains and investor support
“Snap is laying off 16% of its staff. Block lopped off 40% of its workforce. Oracle, meanwhile, is shedding thousands of employees, after Amazon.com cut about 30,000 in a matter of months. Welcome to the era of the mega-layoff. In Silicon Valley and beyond, companies that are cutting staff are doing it with a big ax. Instead of laying off people in more incremental—and less disruptive—waves, employers are seizing on the potential financial upsides of severing swaths of their workforces at once. That is a departure from not long ago, when mass layoffs registered as a sign of trouble or mismanagement and that a company needed to take drastic measures to right its performance. Now, such a company is more likely to get a big stock bump and praise from investors for acting boldly…. The willingness to make the big cuts reflects a fundamental shift in how U.S. companies view their professional talent. Instead of competing for knowledge workers with big pay raises and other perks, as many did for much of the past decade, corporate leaders have come to see large teams as impeding progress, not helping it.” WALL STREET JOURNAL
Board Equity Ownership and its Link to Stronger Long-Term Performance
Greater director equity stakes tied to improved returns, lower volatility, and strategic investment
“Boards with higher and more durable equity ownership are associated with stronger long-term shareholder returns, risk-adjusted returns (alpha), and differences in investment behavior, specifically higher R&D intensity…. This joint analysis by FCLTGlobal and MSCI Institute finds that board equity ownership is associated with long-term value creation across global public markets. Companies in which directors hold higher and more durable equity stakes exhibit stronger long-term outcomes across several dimensions that matter to investors, boards, and other stakeholders. Higher board ownership is associated with stronger five-year shareholder returns, improved risk-adjusted performance, lower volatility, and greater investment in innovation. These relationships are most pronounced where ownership is sustained over time, held by independent directors, and meaningful relative to executive ownership.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Opinion: Boards Weigh the Risks of Restricting Shareholder Proposals
Constraining proposals could undermine an important signal of investor sentiment and board performance
“The debate over the necessity, content and future of shareholder proposals has been ongoing for the entirety of my professional career. Recently, it took a dramatic turn with an initiative begun by SEC chair Paul Atkins to significantly limit, if not to eliminate entirely, such proposals, which many view as a wasteful managerial nuisance. While I sympathize somewhat with this position, on the whole, I think that the elimination or even serious limitation of this long-standing element of the annual meeting process would be a mistake, especially for corporate directors…. But for corporate directors, there are two dangers to proposal restriction or exclusion. First, to exclude a proposal risks souring relations between shareholders and the board. This is why, many times, management will compromise with a proposer to resolve the issue. Second, and more importantly, the vote on a shareholder proposal is akin to the canary in the mineshaft. A strong vote for a resolution signals serious dissatisfaction with the board by investors and may foreshadow a more serious anti-board campaign the next time around….” DIRECTORS & BOARDS
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