2/13/25 – Issue 10.06 – Your weekly news on all things board. 

Unpredictable terrain. The DEI debate continues to evolve, with legal and cultural headwinds reshaping corporate diversity policies. Boards and other executives find themselves navigating shifting expectations as companies face legal challenges, political pressures, and investor scrutiny over their commitments to inclusion. Meanwhile, cybersecurity oversight is becoming a more urgent responsibility for directors, as threats grow more sophisticated and regulatory expectations increase. At the same time, AI governance remains a high-stakes issue, as industry leaders push for regulatory restraint while OpenAI’s internal power struggles highlight the volatility of the sector. As if innovation, oversight and power struggles are not enough to spin one’s head, the recent ESG and regulatory shifts, such as the SEC’s reversal on climate disclosure rules, raises questions about how companies should adjust their reporting strategies. For boards, the potential swings in investor, regulator, employee, and other constituents’ expectations create a sense of shifting sands nearly every step of the way.

In the Spotlight

Though Still a Fraction Compared to Pro-DEI Proposals, Anti-DEI Shareholder Proposals Tripled Since 2020

Meta and other companies that used to tout their diversity efforts are now rapidly running away from them

“The number of anti-DEI proposals is still a fraction of the pro-DEI proposals, but has more than tripled since 2020… Their opposition got a huge boost in 2023, after the Supreme Court overturned affirmative action at the university level. After the ruling came down, scrutiny of company programs grew, and some groups began filing lawsuits against corporations for, effectively, discriminating against white people in hiring.” AXIOS

Balancing Saying Too Much or Too Little on DEI Policies 

The way boards communicate about shifting policies matters

“By now, many organizational leaders are well aware of the need to conduct a legal review of their DEI programs. But having lawful policies in place is one part of the equation. The way you communicate about those policies matters just as much… The first challenge is talking too much… Any organization that wants to avoid being targeted needs to learn what language might inadvertently and falsely signal that it is engaged in illegal activity. The second challenge is talking too little. Many leaders and employees have told us they fear that merely mentioning the acronym ‘DEI,’ advocating for ‘equity,’ or touting their organization’s commitment to diversity, might be legally risky. As a result, they fall silent unnecessarily.” HARVARD BUSINESS REVIEW

How One Anti-DEI Agitator is Pressuring Companies to Rethink Their DEI Policies 

A social media rabble-rouser is waging war on “woke” policies at the likes of Lowe’s and Ford

“Speaking in tones that swung between urgent, amused and appalled, Mr. Starbuck listed an inventory of what he considered to be outrages committed by Tractor Supply… In the months that followed, Mr. Starbuck kept prodding one of the more jangled nerves of the body politic, posting a series of similar videos about John Deere, Harley-Davidson, Caterpillar, Stanley Black & Decker, Jack Daniel’s, Lowe’s, Ford Motor, Molson Coors and, most recently, Toyota. All have since announced retreats from their D.E.I. policies, though almost none would discuss their reasons for this article. His playbook is to exhort his audience to pressure companies and threaten them with economic pain. For corporations, the worst-case fate is what happened to Bud Light in 2023…” NEW YORK TIMES

From Boardspan this Week:

Governance in a Time of Turmoil

The world today demands more from boards than ever before. Risks are no longer isolated; geopolitical turmoil bleeds into operational disruptions, and technological advances bring both innovation and unforeseen threats. Yet within this complexity lies opportunity. Boards that can anticipate disruption, act with agility, and align their oversight with strategic priorities will not only safeguard their organizations but also position them to thrive in a volatile world. Join Michèle Flournoy, co-founder of WestExec Advisors and former Under Secretary of Defense for Policy, and Abby Adlerman, CEO of Boardspan as they discuss how boards and leadership teams can steer their organizations toward success in even the most complex circumstances.

Across the Board

Board Directors Are Taking the Lead on Cybersecurity Oversight 
37% of directors report expanding accountability by shifting the treatment of cyber risk from an IT responsibility to a company-wide responsibility

“Corporate board directors are taking financial and cultural action to protect their organizations against cybersecurity risks—and build resilience for future challenges—by fostering a culture of shared responsibility, creating access to good data, and using proactive incident response strategies… Regulatory compliance adds a layer of complexity. The Securities and Exchange Commission’s cybersecurity disclosure rules have heightened the need for timely, transparent, and accurate reporting of material cyber incidents. The rules also have expanded information about a company’s cybersecurity strategy, risk management, and governance.” BLOOMBERG LAW

Sam Altman Rejects Elon Musk’s Offer to Buy OpenAI Control

Musk and other investors made a $97.4 billion unsolicited bid to buy the nonprofit group that controls OpenAI, escalating a longstanding feud with OpenAI CEO Sam Altman

“After Musk left OpenAI, which was founded as a nonprofit, Altman created a for-profit subsidiary to raise money and he is in the process of breaking that off into its own company. Musk’s offer could complicate that transition, since the nonprofit arm will still own a stake in the for-profit company, and Musk’s high valuation set with the offer could mean the nonprofit entity maintains significant control of the new company… Altman took to X—formerly known as Twitter until Musk purchased and rebranded it—to say: ‘no thank you but we will buy twitter for $9.74 billion if you want.’” FORBES

VP Warns U.S. Allies to Keep AI Regulation Light

U.S. at odds with dozens of countries pushing for common set of principles for multilateral artificial-intelligence governance at Paris summit

“The U.S. is winning the race to build the best AI-training chips and the most advanced AI algorithms, and “intends to keep it that way,” Vice President JD Vance told a collection of world leaders… Vance’s remarks stood in contrast to the push by other leaders at the summit to agree on a common set of principles that they say will lead to safe AI systems that are energy efficient and available to the developing world. Dozens of governments attending the summit signed a joint declaration on those goals that the U.S. and U.K. declined to endorse, delivering a major setback to the summit’s ambition to build an international consensus around the new technology.” WALL STREET JOURNAL

SEC Moves to Ditch Climate Disclosure Rules
The US regulator’s acting chair, Mark Uyeda, described the rules as ‘deeply flawed’

“The SEC started developing the rules back in 2022, under then-president, Joe Biden. After pushback from industry and major delays, the final rules were published last March, and were substantially watered down from the original plans… The rule was delayed as a result of the lawsuits, which were consolidated to allow the SEC to argue against them all in a single case, lodged with the Eighth Circuit Court of Appeals. Uyeda has now asked the judge not to schedule a date for the SEC to defend itself, because it wants to rethink its position.” IPE

A Review of Director Commitments Policies, 2023 to 2024

While each company’s policy is designed to suit their specific needs, there are certain common features relating to policy limits and application

“In recent years, director commitments policies have become more prevalent at U.S.-based companies. Director commitments policies can reduce risks stemming from potentially overcommitted directors, facilitate active board refreshment and ensure that a board engages in thoughtful dialogue around director time commitments. Many institutional investors are incorporating director commitments policies into their evaluation of directors and proxy voting guidelines, and in response companies are increasingly implementing them.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Activism Challenges Demand Strong Lead Directors

When an activist comes calling, it is vital for board chairs to display balanced decision-making, strategic leadership and value alignment

“In today's evolving corporate landscape, the role of the independent board chair and/or lead director has become increasingly pivotal, particularly when navigating the complexities of shareholder activism. When shareholders demand greater transparency, accountability or alignment, the independent chair or lead director plays a pivotal role in steering the board's response, fostering constructive dialogue, and ensuring outcomes that align with the company's long-term vision and shareholder interests.” DIRECTORS & BOARDS

Rebuilding Trust with Investors is Key for Boards

70 percent of recent activist investor demands have focused on governance reform

“Boards cannot rely solely on legal departments to handle regulations. They need a comprehensive strategy that covers regulatory monitoring, compliance programs, regulatory engagement, and risk management. With new regulations like the Corporate Sustainability Reporting Directive (CSRD) on the horizon, boards must prepare by understanding the requirements, developing data reporting systems, and adopting frameworks like the Global Reporting Initiative. Proper preparation will help companies avoid the pitfalls of ‘greenwashing’ or ‘greenhushing’ as they navigate sustainability efforts.” WORLD FINANCE

Is Your Board Stuck in the Wrong Gear?

Effective boards shift between passive, mentor, partner and control modes to optimize engagement

“Most boards are stuck in passive mode. The data we collected revealed that most boards adopt a passive approach, deferring to management on key decisions like mergers and acquisitions and director appointments. More specifically, we found that 46 percent of the boards we studied primarily operate in passive mode, compared to 14 percent that use a mentor approach, 12 percent that play a partner role and 19 percent that stick to control mode. Just 9 percent of boards used multiple approaches.” INSEAD

Seat at the Table

• Industrial chemical firm Chemours elects to its board Leslie Turner, former SVP, General Counsel, and Corporate Secretary at The Hershey Company

• Matinas BioPharma appoints to its board Evelyn D’An, former Partner at Ernst & Young

• LP Building Solutions adds to its board Jean-Michel Ribiéras, Chair and CEO of paper company Sylvamo; and Ty R. Silberhorn, CEO of architecture firm Apogee Enterprises

• Aerospace firm TriMas welcomes to its board Shawn Sedaghat, Co-Founder and former Chairman and CEO of SEDA Specialty Packaging

• Healthcare firm TruBridge adds to its board Jerry Canada, former Group President of Harris Computer; and Andris Upitis, Head of Ocho Investments

• Energy firm Southern Company elects to its board James Etheredge, former North American CEO at IT firm Accenture

• Rail transit firm Wabtec announces to its board Juan Perez, EVP and CIO of Salesforce

• Mortgage firm Radian appoints to its board Jed Rhoads, former President and Chief Underwriting Officer for the Global Reinsurance Division at Markel Group

• Agricultural Machinery firm AGCO Corporation welcomes to its board Zhanna Golodryga, EVP of Emerging Energy and Sustainability at Phillips 66

• Advertising firm The Trade Desk elects to its board Alex Kayyal, former SVP at Salesforce

About Boardspan
Boardspan helps boards raise the bar on their critical governance mandates by combining cutting edge digital capabilities with high-touch consulting services. They are leaders in board assessments, individual director & CEO evaluations, board succession strategy & search, skills & composition analyses, and bespoke advisory work. Boardspan only works with boards, bringing deep experience, objectivity, an analytical orientation, and insight-driven recommendations. Clients include Blue Shield (CA), Colgate-Palmolive, Deckers, Dynatrace, elf Beauty, HubSpot, Ingersoll Rand, KKR, Lam Research, the PGA, Roblox, Salesforce, Synopsys, the USOPC, and scores more.