3/14/24 – Issue 8.58 – Your weekly news on all things board. 

As a vote to force either a sale or a ban of TikTok passes in the House of Representatives and heads to the Senate, it raises questions: about national security, free speech, data privacy, and the economic impact of a U.S. ban on a business that generates millions in ad revenue and in income for creators. If it passes, the bill–which has both bipartisan support and opposition–would give Chinese company ByteDance six months to find a U.S. buyer. Who would buy TikTok? Who wins if it’s banned? And how would a U.S.-based owner and board address the complex governance issues that continue to exist around sensitive data and bad actors? The bill is the latest example of geopolitical issues affecting business, and another reminder of how data, algorithms–and soon AI–can make businesses and boards vulnerable if governance is lacking. 

In other news, Sam Altman is back on OpenAI’s board; The new SEC climate regulations are here; the Economist looks at women on corporate boards; and a path to better ESG strategy.

In the Spotlight

House Passes Bill to Ban TikTok or Force a Sale

Lawmakers try to balance national-security and free-speech concerns

“The House voted overwhelmingly to approve a bill on Wednesday that would ban TikTok from operating in the U.S. or force a sale, setting the stage for a final showdown in the Senate, where lawmakers signaled a more cautious approach on the legislation. The measure passed 352 to 65, with one member voting present, showing broad bipartisan support for cracking down on the app. The vote moved Congress closer to an unprecedented ban of one of the most popular apps in the U.S., with lawmakers balancing national-security worries with concerns about freedom of speech, the impact on TikTok users and creators, and misgivings about interfering with a company’s business operations.” THE WALL STREET JOURNAL

Why a Sale of TikTok Would Not Be Easy

Finding a buyer is just one of the hurdles

“ByteDance and TikTok have not said how they would handle a sale, if it’s required. But legal experts say that in the case of a sale, ByteDance would likely need to decide between selling all of TikTok globally versus trying to cordon off its U.S. business…During the Trump administration, the government forced a Chinese company to sell the dating app Grindr. Officials were concerned that the app — which includes a field for users to display their H.I.V. status — could expose sensitive information about Americans to China. A group of investors ultimately bought Grindr from its Chinese owner, Beijing Kunlun Tech, for more than $600 million. But TikTok operates on a much larger scale than Grindr, with 170 million users in the United States alone. If ByteDance is forced to sell the app, it will be a major escalation in a digital cold war between the United States and China over who gets to control critical technology.” THE NEW YORK TIMES

Who Wins if TikTok Is Banned? It’s More Complex Than It Looks.

About $6B in ad revenue could be at stake, and Meta is watching closely

“TikTok is a long way from actually being banned. But the possibility got more plausible on Wednesday, which has investors trying to look a few steps ahead. Meta Platforms is the most obvious candidate, given both its dominance of social media advertising and its ownership of Instagram, a key rival to TikTok for the attention of both young users and the influencers they follow. Meta’s share price leapt briefly Wednesday following passage by the House of a bill that would force TikTok owner Bytedance to divest its ownership of the app or face a ban in the U.S.” THE WALL STREET JOURNAL

From Boardspan this Week:

Board Succession Planning: Define Your Board’s Future
Wednesday, March 20, 2024 at 2pm ET

Only one week until our Board Succession Planning Webinar! Join Boardspan Founder and CEO Abby Adlerman and Jamie Gorelick, Lead Independent Director at Amazon and member of the Corporate Nominating & Governance Committee at Verisign, as they discuss how Board Succession Planning is key to aligning your board to the strategic vision and goals of the company and the constantly evolving market landscape. There’s still time to register: Just click the link below to sign up and submit your questions. We hope to see you there.

Across the Board

Sam Altman Returns To OpenAI Board Of Directors

Altman starts his new tenure, along with three new directors

“On Friday, OpenAI announced the appointment of four new directors: Altman, former Gates Foundation CEO Sue Desmond-Hellman, former Sony General Counsel Nicole Seligman, and Instacart CEO Fidji Simo. ‘I am excited to welcome Sue, Nicole, and Fidji to the OpenAI Board of Directors,’ (Board Chair Bret) Taylor said in a statement. ‘Their experience and leadership will enable the Board to oversee OpenAI’s growth, and to ensure that we pursue OpenAI’s mission of ensuring artificial general intelligence benefits all of humanity.’...OpenAI also announced the completion of an independent investigation into the circumstances surrounding Altman’s firing. It concluded that Altman was fired not out of concern for safety or security related to artificial intelligence. Instead, the board members believed firing Altman would fix management issues.’” DEADLINE

New SEC Climate Regulations: What’s in There, What to Do? (OPINION)
Answer: Collect lots and lots of data

“Now that the Securities and Exchange Commission has finally issued its long-debated and largely expected greenhouse gas emissions disclosure requirements for public companies, they can all start the hard work of doing what they thought they’d be doing: Gathering a lot of data and making sure their CFOs can handle the workload…’I’m excited that we finally have some regulation to start talking about and start moving forward with clarity,’ Sam Holroyd, board member at Chord Energy and Amerant Bank, said at a session during our Board Forum in Dallas, ‘because I think right now a lot of us have been swimming around in deep water, not knowing what’s coming. Now it’s on the table. We don’t love all of it, but it’s a great forward path.’" CORPORATE BOARD MEMBER

More Women are Getting onto Corporate Boards. Good.

An annual measure of the role and influence of women in the workforce

“Women make up half of humankind, and it is reasonable for representative institutions such as corporate boards to reflect this. In 2022 the European Parliament ruled that at least 40% of non-executive directors at firms with more than 250 employees should be women by 2026. Britain’s FTSE 350 companies hit that mark last year, on average. Japan, where only 18% of directors are women, recently told big businesses to get to 30% by 2030. America’s constitutional dislike of quotas dooms similar efforts. But its market regulator wants firms to disclose diversity statistics, which may shame some into action.” THE ECONOMIST

Guide to Becoming a Model Code Company
Internal audit teams' responsibility to verify material ESG data continues to expand

“With corporate political disclosure and accountability accepted as the norm, the next step for companies is to put in place a framework for approaching, governing and assessing their election-related spending. The framework would establish policies for when or whether to spend and a process for evaluating the benefits and risks associated with a decision to use corporate resources to advance a political cause or candidate. It would also provide companies with the internal controls to assure that the spending comports with its public values and its duties legal and fiduciary. An added benefit is that it provides corporate leadership with the opportunity and time to reflect on the full consequences of its spending and to resist any undue pressure from powerful political figures to contribute.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Petco CEO Ron Coughlin Steps Down

Coughlin became CEO in 2018

“Petco announced Wednesday that its CEO, Ron Coughlin, is stepping down, and said board member and Best Buy executive R. Michael Mohan will take over as interim chief executive as the company searches for a permanent replacement…The company’s shares rose as much as 9% in premarket trading Wednesday after the CEO change and earnings announcements. Coughlin’s decision to step down comes as Petco’s market cap has eroded over the last year, even as the company has reported consistent sales growth and comparable sales gains…The pet industry has faced pressure and contended with a demand slowdown after a pandemic-fueled boom fizzled. Record numbers of families adopted pets during the Covid pandemic and then needed supplies to support those animals, leading to massive gains for retailers like Petco and Chewy. However, new adoption has since slowed.” CNBC

Reforming Corporate Governance Is a Path to Better ESG Strategy

Companies are shifting gears on ESG

“Environmental, social, and governance activity has become a major target in the right-wing campaign against ‘woke capitalism.’ Corporate ESG technocracy that prioritizes topical expertise and relevant, routine procedures rather than politics could be a solution for more purposeful and effective ESG programs. A turn away from corporate ESG is playing out against the backdrop of a forceful legislative attack by Republican lawmakers: At last count, 181 anti-ESG bills were proposed or enacted between 2018 and 2023.” BLOOMBERG LAW

Board Effectiveness: Practical Approach to Corporate Governance 

The standards to which boards hold themselves should be well understood

"Board members often ask me how to add value to topics and issues outside of their areas of expertise. Two helpful operative concepts are continuous learning and active listening. Active listening and curiosity augment board members’ abilities to contribute to all board discussions and effectively carry out their duties of care, monitoring and loyalty…The importance of continuous learning is impossible to overstate. With the development and implementation of groundbreaking new technologies, increased and changing regulatory and reporting requirements, and disruptions coming from every direction, risks and opportunities have never been so plentiful.” INTERNATIONAL BANKER

Seat at the Table

• Vail Resorts announces to its board Reggie Chambers, EVP and Chief Transformation Officer at TIAA

• Advance Auto Parts welcomes to its board Brent Windom, former President and CEO of Uni-Select; Gregory Smith, EVP of Global Operation and Supply Chain of Medtronic plc; Thomas Seboldt, former VP of Merchandising at O’Reilly Automotive

• Fiserv appoints to its board Ajei Gopal, former SVP and General Manager at Hewlett Packard Software

• Intel Corporation announces to its board Stacy Smith, Executive Chairman of memory solutions firm Kioxia Corporation

• Insurance firm Hamilton welcomes to its board Dr. Terri Vaughan, former CEO of the National Association of Insurance Commissioners; and Neil Patterson, former Lead Audit Partner at KPMG

• Vistra elects to its board John Pitesa, former Chief Nuclear Officer at Duke Energy

• Private aviation firm Wheels Up adds to its board Tom Klein, Senior Managing Director at Certares

• Micron Technology appoints to its board Robert Swan, Operating Partner at Andreessen Horowitz

• Corebridge Financial welcomes to its board Deborah Leone, former Partner at Goldman Sachs Group

• CRISPR Therapeutics appoints to its board Dr. Christian Rommel, EVP and Global Head of Research & Development at Bayer Pharmaceuticals

• Dynex Capital elects to its board Andrew Gray, former Group Chief Risk Officer for the Depository Trust and Clearing Corporation; and Alexander Crawford, former Partner and Chief Investment Risk Officer at Lord Abbett

About Boardspan
Boardspan is the leading provider of digital governance solutions for boards across all sectors. Our cloud-based assessments, benchmarking analytics and governance education programs complement our board search and advisory services to deliver a holistic approach to governance. Boards of all sizes and stages rely on Boardspan to deliver analytics, insights and outcomes that improve their effectiveness and performance. Clients include KKR, The Kellogg Foundation, Ingersoll Rand, Farfetch, McAfee, Beyond Meat, Box, e.l.f. Beauty, Satellite Healthcare and the U.S. Olympic & Paralympic Committee.