Across the Board
The Push to Split CEO and Board Chair Roles Is Gaining Traction
Goldman and Bank of America say they should be able to pick the most effective structure
“Surprisingly, last month’s announcement regarding the addition of an Artificial Intelligence (AI) member to the board of Abu Dhabi’s International Holding Company (IHC) does not appear to have galvanized global attention. Co-developed by a local Emirati AI company G42 and Microsoft, Aiden Insight, the first AI board member in the Middle East, is positioned to be a game changer for corporate boards and their regulators worldwide. In fact, it is not the first time an AI board member has been appointed to a corporate board. Exactly a decade ago, Hong Kong’s Deep Knowledge Ventures had assigned Vital as the sixth AI member of its board of directors, marking the first attempt to bring AI to the board not as an enabling mechanism but rather as a decision-maker.” BARRON’S
Where Directors and C-Suite Leaders Align and Diverge
Like every relationship, there are areas of strong alignment, as well as divergence
“Based on our survey of more than 1,000 directors and C-level executives, respondents reported a meaningful perception gap between how the Board views its performance and risk preparedness and how management teams view these same critical areas. Taken together, the areas of agreement and the points of difference provide reminders and insights on how boards and the C-suite can accomplish more together.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Fostering Growth Through Pricing: The Board’s New Role
Amid volatility, boards need to be prepared to help companies hold the line on price adjustments
“The past three years have been a period of intense learning for board members, with pricing at the core of many discussions. This crash course has highlighted the disparities in readiness and response among different organizations. While some were quick to adapt, employing new tools and leveraging informed teams to stay ahead of the inflation wave, others hesitated. They were hampered by a lack of preparedness and visibility, resulting in profit wipeouts that will take the balance of the decade to recover from, if at all. These recent stresses uncovered what it means to be commercially agile, and board members shared front-row seats to this unique theater.” CORPORATE BOARD MEMBER
Now Corporate Boards Have Responsibility For Cybersecurity, Too
Despite recent efforts to beef up cybersecurity, data breaches continue to increase year over year
“A new ruling from the U.S. Securities and Exchange Commission (SEC), known as the Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, went into effect last fall. The ruling requires public companies to disclose whether their boards of directors have members with cybersecurity expertise. Specifically, registrants are required to disclose whether the entire board, a specific board member, or a board committee is responsible for the oversight of cyber risks; the processes by which the board is informed about cyber risks, and the frequency of its discussions on this topic; and whether and how the board or specified board committee considers cyber risks as part of its business strategy, risk management, and financial oversight.” MASSACHUSETTS INSTITUTE OF TECHNOLOGY
Data in the Driver’s Seat
What boards need to know about data governance
“From data privacy to the numerous global regulatory regimes governing data to the emergence of generative AI, regulatory and reputational risk regarding data is at an all-time high. Data is a mission-critical asset, and it is important for the company’s board of directors to exercise appropriate oversight of the company’s data governance – not merely cybersecurity, but also its regulatory and reputation risks – including by understanding potential data-related risks and setting appropriate expectations for management reporting to the board on data governance and protection. Below, we describe several key areas of emerging data-related regulation and risk that boards should know about, and describe measures that boards can take to help exercise appropriate oversight in this rapidly-changing area.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Preparing For Climate Risks to Key Commodities: What Businesses Should Know
How heat stress and drought imperil the production of minerals, food crops, and industrial metals
“For companies that depend on crops such as rice and wheat or minerals such as lithium and iron, climate change has become a real and present threat. Rising temperatures result in more heat stress and more drought. That puts pressure on farms and mines—and, ultimately, the businesses that buy from them. Take cobalt. As renewable-energy generation expands, makers of solar panels, batteries, wind turbines, and other hardware need more of this critical mineral. From 2017 to 2022, world cobalt demand grew 70%, and the share being used in clean energy tech nearly doubled, according to the International Energy Agency. Demand for critical minerals could double again by 2030.” PwC
Walmart's Longest-Serving Director Rob Walton to Retire From Board
Walton helped shape some of Walmart's most important moments, including its IPO in 1970
“Walton served as the company's chairman of the board of directors after his father died in 1992 and held the post until June 2015. He was replaced by his son-in-law Greg Penner, who remains chairman of the world's largest retailer…During Walton's tenure as chairman, Walmart grew its sales from about $44 billion to $482 billion to become the biggest U.S. retailer. In its most recent year ended Jan. 31, 2024, Walmart reported sales of $648.1 billion, much of its success down to persistent inflation leading customers to shop at its discount stores...Walmart said it has nominated Brian Niccol, chairman and CEO of restaurant chain Chipotle Mexican Grill to replace Walton on the board, which consists of 11 directors. If elected, Niccol would be the fifth new independent director added to the board since 2017, the company said.” REUTERS
Exec Flights on Corporate Jets Worth Millions More Than Reported
Executive jet use is under heightened scrutiny after the IRS announced a plan to audit personal aircraft use
“Disney said it spent almost $800,000 for Bob Iger to use company aircraft for personal trips in the last fiscal year. Taking similar trips at his own expense would have cost the chief executive more than $2 million, a Wall Street Journal analysis found. The same is true for other executives. Netflix co-founder Reed Hastings took personal flights on company aircraft in 2022 that would have cost him about $2.2 million by Journal estimates; the company reported spending about half as much. Chief Executive David Calhoun’s personal flights on Boeing’s tab would have cost him $1.25 million, more than double what the company said it spent. At many of the biggest U.S. companies, CEOs and other executives are getting tens or hundreds of thousands of dollars more in flight benefits than company disclosures suggest.” THE WALL STREET JOURNAL
Secrets of America’s Top Value-Creating Directors
Call it a “secret sauce” for success in the boardroom
“In a first-of-its-kind exercise, CBM and AlixPartners partnered to identify the Top 20 Value-Creating Directors in America, using an approach that relies on total shareholder return (TSR) relative to peers for the companies these board members help guide. It’s one thing to use quantitative measures to come up with America’s best independent board members, but it’s quite another to figure out what qualities lead to those superior results. Why are these 20 elite performers able to function at such a high level? What metrics can be teased out as qualifications or predictors that put the most effective board members atop thousands of peers?.. All 20 directors were in the top 15 percent of independent corporate board members who have served on four or more boards with a market cap that averaged $1 billion or more during their tenure, with board start dates of 2008 or later.” CORPORATE BOARD MEMBER
4 Ways to Develop the Optimal Board
Self-awareness is the cornerstone of effective governance
“Today's boards are changing. They're becoming more inclusive, purposeful, and adaptable. And it's not just because of outside pressure—it's because they see the strategic value in it. In a recent Korn Ferry survey of over 180 board members, 81% said they see the benefits of diversity and inclusion for the board. They know it leads to better problem-solving and more innovative ideas. But it's not enough to just have diverse faces around the table. Real inclusivity means every voice is heard and valued. The most effective board isn’t just about ticking boxes—it sees inclusivity as an integral part of its board culture.” KORN FERRY
Strengthening Boards to Navigate the Intersection of Profit and Purpose
Research shows hybrid governance models can be successful—with effective boards to lead them
“On March 8, 2024, Sam Altman made a triumphant return to the board of OpenAI, the tech start-up whose ChatGPT program has revolutionized generative artificial intelligence. This happened just a few months after the board’s decision to remove Altman from his position as CEO in November 2023 triggered an employee revolt and governance crisis, causing nearly the entire board to resign. Altman returned as CEO soon after, but OpenAI has remained under public scrutiny amidst investigations and lawsuits. Months of twists and turns in OpenAI’s leadership sparked curiosity about the tech start-up’s governance structure. Originally founded as a nonprofit, OpenAI launched a for-profit subsidiary in 2019.” STANFORD SOCIAL INNOVATION REVIEW
