Across the Board
More Than Half of FTSE 100 Boards Now Have ESG Committees
“While 54% of the FTSE 100 companies have board-level ESG committees, the percentage varies by industry. It ranges from 100% for oil, gas and mining companies to just 13% in the non-bank financial services sector, including insurers, asset managers and retail investment platforms… Of the 54 companies with ESG committees, 56% are made up of entirely of non-executive directors, which could allow companies to add directors with ESG expertise, and allow those directors to exercise greater independent oversight of the companies' ESG performance.” PENSIONS & INVESTMENTS
Starbucks Names New CEO
“Starbucks named as its new CEO consumer products executive Laxman Narasimhan, months after former head Howard Schultz temporarily took over to steer the coffee giant through rising costs, a unionization push and challenges overseas....” THE WALL STREET JOURNAL
Bed Bath & Beyond’s Leadership Turmoil
“Bed Bath & Beyond's chief financial officer Gustavo Arnal died Friday after falling from a New York City building, rocking the retail world. The tragedy also sparked renewed public scrutiny on the challenges the struggling retailer has faced in recent months. … Sales at the chain have been slumping for years. In late 2019, the company mounted an effort to turn things around, bringing in fresh blood in new CEO Mark Tritton as six senior executives departed in a major leadership shakeup. Tritton's tenure was short-lived, though, as he was ousted in June after the company posted lackluster sales for two consecutive quarters, sending its stock plunging. He was replaced by board member Sue Gove in the interim. Last week, the company announced it's closing 150 stores and slashing 20% of its corporate staff, with the aim of cutting $250 million in costs this fiscal year. …Arnal's death came less than two weeks after he was named in an insider trading lawsuit that alleges federal securities fraud, insider trading, and breach of fiduciary duty.… Bed Bath & Beyond has named Laura Crossen, its senior vice president of finance and chief accounting officer, as its interim chief financial officer.” BUSINESS INSIDER
BlackRock Takes Aim at Over-Boarded Directors
"BlackRock is clamping down on company directors in the US technology industry who sit on too many boards, as chief executive Larry Fink intensifies the fund group’s scrutiny of corporate governance. The world’s largest asset manager said in regulatory filings at the end of August that it had voted against the reappointment of Sanford Robertson to the board of Salesforce, where he is chair of the US software company’s governance committee... It also voted against Egon Durban, board director at Twitter, who sat on seven public company boards…the company’s stance diverges from rival asset manager Vanguard, which voted in favor of Robertson and Durban, underscoring the different approaches investors are taking to board compositions.” FINANCIAL TIMES
How New SEC Rule May Fuel More Battles With Activist Investors
“The SEC rule requiring a universal proxy card in director election proxy fights is now effective. The resurgence of activism is already in progress, and the universal proxy card may significantly facilitate some proxy contests in which an activist is seeking to elect one or more directors to a company’s board to replace incumbent(s). It will also affect proxy contest strategies, tactical considerations and the behavior of proxy advisory firms assessing competing director slates…regardless of industry, size, performance or ‘newness’ to the public markets, no company should consider itself immune from activism. No company is too large, too new or too successful. Even companies that are respected industry leaders and have outperformed the market and their peers have been, and are being, attacked. And companies that have faced one activist may be approached, in the same year or in subsequent years, by other activists or re-visited by the prior activist.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
The SEC Wants You To Spend More Time With The CISO…
“Busy boards historically have shorted the chief information security officer on meeting time or relied on others for cyber briefings. Now the Securities and Exchange Commission and other regulators are pressing boards to improve oversight of cybersecurity risk…. McDonald’s Corp. CISO Shaun Marion says the relative youth of the corporate security chief role can sometimes hinder rapport with board members who boast decades of business expertise. ‘How many CISOs around have 20 to 25 years of experience in cybersecurity?’ Mr. Marion says. ‘I think there’s a maturity gap and there is a communication gap.’” THE WALL STREET JOURNAL
…And You Might Expect the CISO To Ask About D&O Insurance
“Joe Sullivan, Uber's former chief of security, faces criminal charges for his handling of a 2016 security breach… in what is believed to be the first time a company executive has faced potential criminal liability for an alleged data breach… Chief information security officers, or CISOs, are responsible for ensuring that their companies’ data remains safe from hackers and fraudsters, a high-stakes job that has become increasingly tricky. In the past year or so alone, T-Mobile, Planned Parenthood and the NFT marketplace OpenSea have been hacked. Perfect security is impossible, and now CISOs are wondering what happens if — or rather when — they fail. If Mr. Sullivan is convicted, they worry the outcome could set a precedent for who is at fault for a data breach…. At the very least, security executives are worried about being on the hook for potential legal bills.” NEW YORK TIMES
Study: Women Managers Typically Pay Employees Better Than Male Managers Do
“When given the task of deciding how much to compensate employees for a set task, male managers chose to keep more for themselves than their female counterparts, according to the findings of researchers at the Karlsruhe Institute of Technology…. The study found that both male and female managers took advantage of opportunities to enrich themselves by paying lower wages, when circumstances allowed this. But women were in general less likely ‘to be selfish’ than men and generally awarded about 13% more….The findings come as European countries tighten quotas for diversity in the boardroom, with the region’s largest economies all introducing some form of mandate to ensure women get at least a third of directorships.” BLOOMBERG
From the Boardspan Library
ESG and Sustainability: The Board’s Role
"Be aware that sustainability has become a major, mainstream governance topic that encompasses a wide range of issues, including a company’s long-term durability as a successful enterprise, climate change and other environmental risks and impacts, systemic financial stability, management of human capital, labor standards, resource management, and consumer and product safety, and consider how your company presents itself with respect to these matters…ESG matters often have important reputational impacts and significant public, investor and stakeholder relations dimensions. The board should work with management to identify which ESG issues are most pertinent to the company’s business and key stakeholders and to oversee implementation of appropriate policies and processes for assessing, monitoring and managing material ESG risks and opportunities.” WACHTELL LIPTON via BOARDSPAN
