10/10/24 – Issue 9.38 – Your weekly news on all things board. 

As we enter the final quarter of 2024, DEI, Activism, and AI remain at the top of directors' minds. This week's issue digs into how directors navigate these complex topics at a breakneck pace while remaining forward-looking, providing invaluable insight and effective oversight. A compelling study conducted by e.l.f. Beauty and North Carolina A&T State University begins to answer the critical question of whether diversity positively impacts company performance with evidence leading to a resounding "Yes." With an activist environment still percolating, boards are equipped with proactive strategies to address activist and stakeholder concerns that are part of good director succession planning. And finally, AI continues to dominate the headlines with immense opportunities and risks that demand directors' attention. All to say, boards are continuously challenged to provide long-term stewardship over evolving, impactful topics.

In the Spotlight

While Corporate DEI Faces Challenges, Companies with Diverse Boards Outperform

New research from E.l.f. Beauty and North Carolina A&T State University draws on five years’ worth of data to reveal the benefits of diversity in the boardroom

“Diversity, equity, and inclusion (DEI) efforts are under attack in the private and public sectors, but research has found that companies with diverse boards perform better than those with nondiverse boards... S&P 500 companies with higher board gender diversity had 15% higher ROE and a 50% reduction in earnings risk compared to less diverse peers… The typical board is 78% white, 73% male, and 58% white male.” FAST COMPANY

From Boardspan this Week:

What's on the minds of Nominating & Governance Chairs?

From crisis preparedness to AI expertise to board succession planning, the NGC is covering a lot of ground. Learn what we're hearing from high-performing boards and get actionable tips to prepare your board for the future.

Across the Board

Why Pfizer Will Find It Hard to Appease Its Activist Investor
Drugmaker has cut costs already and has no coming product approvals or research that could offer a quick lift

“The problem for the company and its new activist investor: There aren’t a lot of easy changes Pfizer can make to right itself quickly. It will be hard for the company to increase sales of new products, such as a vaccine for RSV, fast enough to lift shares… And Pfizer’s debt load is too high for the company to make a game-changing acquisition. The drugmaker could do more cost-cutting, but it is already in the midst of multibillion-dollar efforts that have soured many employees.” WALL STREET JOURNAL

Refreshing the Board Amid Activist Pressure
While such changes to board composition can often be viewed as reactive, company boards position such refreshes as a standard part of succession planning

“According to Diligent Market Intelligence (DMI) data, the number of U.S.-headquartered companies that made new director appointments within 12 months of receiving an activist demand has continued to climb, with 48 opting to do so in 2021, 52 in 2022 and 65 in 2023. In the first eight months of this year, 29 companies have added a new face to their board, while 23 moved to remove an incumbent.” DILIGENT

Governance of AI: A Critical Imperative for Today’s Boards

While AI is not new, its scaled use in the enterprise and by employees brings the question of governance and oversight of AI into sharp focus

“We are at an inflection point, not only for business and industry, but for society at large. Board members and executives alike are excited at the chance to shape a future powered by the latest technologies of the day, including artificial intelligence and generative AI. But this does not come without risk and responsibility.” DELOITTE

Technology Leadership in the Boardroom: Driving Trust and Value
Aligning on tech leadership will enable boards and corporate leaders to effectively build their companies’ purpose and values into major business decisions about technology and data

“Boards need to strengthen their oversight of the organization’s use of technology and data. This includes driving stronger alignment between the company’s purpose and values and its technology strategy and growth plans, considering changes to the oversight structure, and clarifying critical decision-making roles for the board and management. Boards and management teams need a single vision for how the organization uses technology to create long-term value.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

PwC’s 2024 Annual Corporate Directors Survey
Uncertainty and transformation in the boardroom as directors are focused on Diversity, Shareholder Activism and AI

“Directors overwhelmingly acknowledge that board diversity brings unique perspectives, improves culture and enhances board performance. However, there is skepticism about its impact on overall company performance, with only 40% of directors seeing a direct benefit… Boards are stepping up against shareholder activism, with 71% of directors saying that their boards have taken some kind of action in the past year, up from 65% in 2019… As AI becomes central to business, nearly 70% of directors trust their management's execution skills, but only half feel informed about AI-related risks.” PwC

Seat at the Table

• Orchestra BioMed welcomes to its board John Mack, former President of Cardiac Surgery at Medtronic

• Enterprise AI platform CE AI elects to its board John Hyten, Retired General of the U.S. Air Force

• Financial services firm Beneficient adds to its board Patrick Donegan, Senior Adviser at Premier Consulting Partners

• Optical sensing firm Neonode elects to its board Peter Kruk, CEO of circuit board manufacturer NCAB Group AB 

• Inozyme Pharma appoints to its board Erik Harris, Chief Commercial Officer and EVP at Ultragenyx

• Beauty and wellness platform Waldencast announces to its board Hind Sebti, Co-Founder and Chief Growth Officer at Waldencast; Kelly Brookie, former Audit Partner at Deloitte; and Roberto Thompson, Co-Founder of 3G Capital

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.