Across the Board
FTC Lawsuit the Latest of Andy Jassy’s Succession Challenges
As a “second-generation successor,” Jassy is working to resolve Amazon’s business and regulatory issues
“In the two years since Andy Jassy replaced Jeff Bezos as Amazon’s chief executive, he has been cleaning up after his company’s aggressive pandemic expansion and after Mr. Bezos. Mr. Jassy has reined in Amazon’s voracious warehouse growth, culled from the company’s sprawl of products and laid off thousands of employees on several of Mr. Bezos’ pet projects. On Tuesday, he was handed another challenge: a long-anticipated lawsuit from the Federal Trade Commission…Mr. Jassy joins other big tech chief executives who have taken control of enormous businesses from idiosyncratic founders at difficult moments. As with those other second-generation bosses, Mr. Jassy’s success will not only depend on whether he is a visionary like the man who started the company. It could also be shaped by how well he navigates the fears of Wall Street investors and the distrust of regulators in Washington…’He is cleaning up a mess that somebody else created,’ said Sucharita Kodali, an analyst at Forrester Research. ‘And he is doing it while trying to keep the ship afloat.’ THE NEW YORK TIMES
With Howard Schultz Gone, New Starbucks CEO Looks to Reset
Laxman Narasimhan hopes to mend fractured relationship between the company and workers
“Distance between the executives who direct Starbucks’s corporate policy and the day-to-day trench warfare of serving Frappuccinos has left many of the chain’s 248,000 U.S. store workers fed up with senior management, demoralized and quick to quit. Short-staffed cafes saddled with unreliable equipment and rising quantities of online orders have contributed to clogged drive-throughs and long cafe lines. Baristas’ frustrations have fueled a unionization drive now entering its third year. Narasimhan says he gets it. Since taking the reins as CEO in March, he is working to boost store staffing levels, personally directing the revamp of problematic cafes and tackling spotty store inventories. At Starbucks’s headquarters, he is holding monthly get-togethers with rank-and-file workers, encouraging them to air frustrations. His ambition is to heal the relationship between the chain’s baristas and its corporate offices, which is hindering Starbucks despite record sales.” THE WALL STREET JOURNAL
Amid Multiple Challenges, Stanford Searches for a New President
Marc Tessier-Lavigne’s resignation, the FTX scandal, underscore need for intentional leadership
“‘It’s an opportunity for (Stanford) to gauge where they are and take into account all the things that have happened and the general direction of the institution,’ said Bill Funk, whose firm has conducted searches for university presidents over the last 35 years, including for the University of California system, Cornell University and Texas A&M University. Even amid the challenges, it’s likely to be a highly sought-after job, he said. Earlier this month, Stanford named a 20-person search committee of alumni, faculty and current students. It’s co-led by Gene Sykes, the co-chair of global mergers and acquisitions at Goldman Sachs Group Inc.; Lily Sarafan, co-founder and executive chair of home-care company The Key; and Bonnie Maldonado, Stanford’s senior associate dean of faculty development and diversity and a professor of pediatrics and infectious diseases. ’More than just finding an individual to serve in that capacity, this is an opportunity for us to collectively shape the future of our university, and to help write the next chapter for how Stanford will lead,’ Jerry Yang, the Yahoo co-founder who’s the chairman of the board of trustees, said in a Sept. 14 statement announcing the committee.” BLOOMBERG
New Research: Boards Still Lack Cybersecurity Expertise
Only 12% of S&P 500 companies have board members with relevant cyber credentials
“An analysis of board composition in companies in the S&P 500 index found that 88% have no cybersecurity expert as a director. Only seven companies had a current or former chief information security officer on their board, the research found, and in two cases, that was the same person.‘This lack of momentum in the boardroom continues to startle me,’ said Dave DeWalt, founder and chief executive at venture-capital firm NightDragon, who also sits on the boards of Delta Air Lines and software company Five9…Cyber expertise was broadly defined as people who currently work or formerly worked in CISO roles; those who held senior technology positions, but not necessarily cyber roles; and those who had technology experience without having held senior positions…About 52% of companies had a board director with some technology experience adjacent to cybersecurity. This includes people who sit on the boards of cyber companies or have an affiliation with a cybersecurity-related professional organization.” THE WALL STREET JOURNAL
Shareholder Activism in Practice, from an ESG Watchdog Group
An interview with Brynn O’Brien from the Australasia Centre of Corporate Responsibility
“Brynn O’Brien is talking about the tedious world of tracking companies’ greenhouse gas emissions. While it’s seldom described this way, O’Brien is specifically referring to the contradiction between corporations making big claims in their climate ledgers and facing zero repercussions if their carbon accounting isn't as rigorous as their financial accounting. Emissions, O’Brien says, are ‘absolutely material financial risk,’ and her organization intends to hold companies responsible for them…O’Brien is the executive director of the Australasian Centre for Corporate Responsibility, a shareholder activist organization that keeps careful watch on the climate plans of companies in which it owns shares…A human rights lawyer before becoming a shareholder activist, O’Brien says engaging a company from within is also more effective at cutting emissions than simply divesting…ACCR has been part of some impressive wins. The organization was part of an initiative to replace the board of directors of AGL, an Australian utility and the country’s largest emitter; now AGL is investing in renewables. ACCR is also pushing mining giant Glencore to curb its coal investments — the company has already backed down from one mine — and is part of a greenwashing lawsuit against Santos over the oil giant’s net-zero strategy.” BLOOMBERG
Google Pushes to Limit Disclosures in Antitrust Trial
Efforts to limit transparency by Google, others make this the most secretive antitrust trial in decades
“The upshot is that last week, more than half of the testimony in the trial was given behind closed doors, according to one analysis. When one witness, the chief executive of the search engine DuckDuckGo, testified on Thursday, he spoke on the stand for nearly five hours — of which just one hour was open to the public. At the judge’s request, the Justice Department, which is one of the plaintiffs, has also removed its presentations and evidence from the open web. The lack of transparency continued this week as a top Apple executive, Eddy Cue, testified on Tuesday about a crucial search agreement that Apple struck with Google. The federal government has accused Google of illegally using agreements with companies like Apple to maintain its monopoly in online search and to crush rivals…’The secrecy surrounding the proceedings is unprecedented in antitrust trials,’ Diane Rulke, an organizational behavior professor at Carnegie Mellon, said in an interview. Four other antitrust experts interviewed by The Times also described the proceedings as unusually opaque, adding that the government’s antitrust case against Microsoft more than 24 years ago was far more accessible to the public and the press.” THE NEW YORK TIMES
2023 Corporate Governance Developments
As we head toward year’s end, a look at the hot topics for boards and committees in 2023
“Many boards are seeking a general understanding of AI, how their companies and peers are using it, and potential risks and concerns arising from the use of AI, including any cybersecurity, privacy and other liability issues, as well as employee and ethical implications. Although there is not one correct approach for overseeing AI risks, boards of companies that rely on AI for material products, services or operations (or relevant committee members) may want to consider receiving training on AI and associated risks, as well as management reports on the company’s use of AI…In light of the agenda‑ed October release of the SEC’s final climate disclosure rules (which will likely require detailed information and third-party attestation of GHG emissions metrics and may require the inclusion of climate-related information in audited financial statements) and the adoption of international sustainability reporting standards and frameworks that may be applicable to certain U.S. companies, audit committees may need to establish and oversee disclosure controls and procedures for climate and other sustainability disclosures…With director overboarding a recurring investor concern and the Department of Justice and FTC increasingly scrutinizing interlocking directorates for potential Clayton Act issues, nominating and governance committees should review the outside board memberships and other employment affiliations of their directors to ensure such service aligns with the current overboarding expectations of their top investors and also does not raise potential Clayton Act or conflict of interest issues.” HARVARD LAW SCHOOL CENTER FOR CORPORATE GOVERNANCE
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