From Boardspan this Week:
The Best Way to Align Leaders: Disagree, Debate, Repeat
The best way to align leadership may not be through unanimous agreement. There is value in disagreement, debate and the repetition of raising questions and concerns when it comes to running a company.
"Leadership alignment is a popular topic in management these days: An aligned leadership team—the conventional wisdom holds—transmits a clear message of where the organization is heading and unlocks productivity by getting everyone rowing in the same direction. These assumptions, however, belie common myths about what leadership alignment looks like and how it can help an organization be more successful.” BAIN & COMPANY via BOARDSPAN
Across the Board
Disney Board Goes On Defensive
“Walt Disney Co. fired back against activist investor Nelson Peltz, saying Tuesday that he didn’t understand the company’s business and shouldn’t be granted a seat on the board. The entertainment company offered shareholders a 16-page slide deck that defends its Chief Executive Robert Iger against a months long campaign by Mr. Peltz to ‘challenge Mr. Iger’s legacy.’... Mr. Peltz and his hedge fund Trian Fund Management LP launched a bid last week for a board seat at Disney in an attempt to fix what he is calling a series of self-inflicted wounds that have hobbled the company’s recent performance.” THE WALL STREET JOURNAL
SEC Pushes Apple to Review Labor Policies
Apple has agreed to auditing and assessing their US labor practices at the request of the SEC. This comes after workers claim their efforts to organize have been restricted by the tech company.
“Apple has agreed to review its labor practices in the US after regulators and employees accused the company of union busting. In a filing with the Securities and Exchange Commission ahead of its annual shareholders meeting, Apple said it would carry out an assessment of its ‘efforts to comply with its Human Rights Policy as it relates to workers’ freedom of association and collective bargaining rights in the United States by the end of calendar year 2023.’... Workers in at least a half-dozen stores have accused Apple of violating labor laws, claiming that the company has clamped down on attempts to organize.” YAHOO
Boards Increase Focus On Human Capital
“Many corporate boards are devoting increasing amounts of time to one of their most important assets, their workers. Profound, disruptive shifts in the marketplace and worker expectations coupled with growing demands for transparency and action on environmental, social, and governance (ESG) issues, are elevating a variety of human capital risks and opportunities to boardroom discussions.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Leaning Into ESG As a Strategic Growth Platform
An executive shares his company’s experience of moving beyond risk mitigation to building real value through sustainability commitments.
“A board's ultimate purpose is ensuring the long-term viability and success of a company. Directors should consider whether they are thinking about ESG the right way. To maximize long-term value for shareholders and create value for society… It's not possible to set goals of this scale-and consistently deliver on them-without transforming every aspect of your business strategy, and consequently the board's role in strategy design and oversight for performance.” YAHOO
Good Governance and Better Returns
Check out this recent study by MorningStar looking at how governance risk impacts financial returns on a year over year basis.
“Performance is often cited as part of the win-win with environmental, social and governance (ESG) investing. In short: you can do good, and enjoy good returns in the process… What we’re looking at in particular is governance risk – more specifically, the degree to which a company’s value may be at risk driven by governance factors.” MORNINGSTAR
Must Ask Questions for a New Board Leader
As board responsibilities expand, so does the importance of having great board leadership. Here are eight questions for your board to consider when selecting a new leader.
“Today’s corporate boards are under a lot of scrutiny. They must respond to activist shareholders, concerned employees, community members, and others in a hyper-sensitive political environment. They’re also tasked with ensuring diversity in their organizations, as well as their own ranks. Board leadership is more important and urgent than ever… Without such a process, boards suffer from fractious oversight or even misdirection as their leaders fail to sufficiently align and focus them on the firm’s strategies and opportunities.” HARVARD BUSINESS REVIEW
Take Time to Thoughtfully Address Board Minutes
When the board thinks of meeting minutes as a record that proves the board is doing its job, it is less likely to find them used as evidence in stockholder litigation.
“Board minutes are an essential part of a company’s internal record keeping. But they are more than a routine, formal exercise. They also play a pivotal role in stockholder litigation. As a contemporaneous record, plaintiff stockholders will scrutinize minutes when evaluating and pursuing claims against directors and officers, and judges will consider minutes at the pleadings stage. Boards should see minutes as a way to tell how they worked in fulfilling their duties to stockholders.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
