4/13/23 – Issue 8.13 – Your weekly news on all things board. 

ChatGPT and other AI-related products continue to be hot topics in and out of the boardroom. As Google and Microsoft move quickly to get their own AI solutions to market, it’s triggering questions about whether the quest to be an AI market leader is an ethics tradeoff. What does that mean for boards overseeing these initiatives?

Other ethical quandaries are in the news this week. In Canada, the board and leadership of the Trudeau Foundation quit over questions about a donation linked to the Chinese government.  And a Fox Corp shareholder files a suit against Rupert Murdoch and four other board members alleging that the board breached their ethical duties by failing to stop Fox News from reporting falsehoods about the 2020 election.   

In other news, Southwest seems like business as usual three months after its epic holiday meltdown; encouraging a board culture that fosters healthy debate; and how Tyson Foods illustrates the complexities of overseeing a family-owned business.  

In the Spotlight

As Google and Microsoft rush to develop AI products, is there an ethical impact?

Has the quest to control the generative AI market caused the companies to rethink ethics questions raised just months ago?

“In March, two Google employees, whose jobs are to review the company’s artificial intelligence products, tried to stop Google from launching an A.I. chatbot. They believed it generated inaccurate and dangerous statements. Ten months earlier, similar concerns were raised at Microsoft by ethicists and other employees…The companies released their chatbots anyway…The surprising success of ChatGPT has led to a willingness at Microsoft and Google to take greater risks with their ethical guidelines set up over the years to ensure their technology does not cause societal problems, according to 15 current and former employees and internal documents from the companies.” NEW YORK TIMES

Trudeau Foundation’s Leadership Resigns
What happens when a nonprofit foundation suspects interference from a foreign government? In the case of the Trudeau Foundation, the board and chief executives resign. 

“A foundation honoring the father of Prime Minister Justin Trudeau of Canada announced Tuesday that its board of directors and chief executive had resigned after being swept into a political storm over leaked intelligence showing that China planned to interfere in Canadian elections. A leak, published in February in The Globe and Mail, a Toronto newspaper, accused China of being behind a 200,000 Canadian dollar donation pledge to the Pierre Elliott Trudeau Foundation in 2016, but did not accuse the foundation of being aware of China’s involvement.” THE NEW YORK TIMES

Fox Corp Shareholder Sues Directors and Robert Murdoch
Who’s responsible for the alleged ethical shortcomings at Fox News?

“A Fox Corp shareholder sued Chairman Rupert Murdoch and four other board members on Tuesday, saying they failed to stop Fox News from reporting falsehoods about the 2020 U.S. presidential election that damaged its credibility and prompted lawsuits.” REUTERS

From Boardspan this Week:

The Best Way to Align Leaders: Disagree, Debate, Repeat

Debunking two leadership myths in the boardroom, from the Boardspan Library. 

"The critics may turn out to be right about running a company with so many cooks in the kitchen. But they are wrong about leadership alignment. 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

Southwest, Post-Meltdown

A business professor examines of what has–and hasn’t–changed after December’s travel catastrophe.

"Many pundits predicted that Southwest’s epic 17,000 canceled-flight, $825 million meltdown would serve as a lasting example of tech neglect’s severe consequences to boards and C-suites. That’s quickly proven to be untrue. There were no executive ousters and little change to Southwest’s board. CEO Bob Jordan was spared the spectacle of congressional testimony, as COO Andrew Watterson appeared before the U.S. Senate Commerce Committee to offer the airline’s pro-forma mea culpas. Most interestingly, speaking unscripted to the press during a testimony break, Watterson pledged, ‘Executive bonuses for 2022 will be reduced because of this…Southwest’s recent SEC filings show that Jordan’s overall compensation increased by 75% to $5.3 million last year. While the bump can be partially attributed to his 2022 promotion, notably, his cash bonus jumped 89%.’” FORBES

At Tyson Foods, John R. Tyson Gets Back to Work

As Tyson heir and CFO John R. Tyson returns to the business, leadership reflects on the past and looks forward. 

“Since his arrest, the family-controlled Tyson Foods, Inc. has stood by its chief financial officer, who is also the great-grandson of the company’s founder and son of its current chairman, as Mr. Tyson’s case played out in court and the media…In addition to the business pressures, the company is also dealing with questions about its rapid turnover of executives. And the arrest of Mr. Tyson has highlighted the questions that public family-owned companies can face about corporate governance…Tyson said that it is confident in its growth strategy, its portfolio of brands and its executive ranks to help it navigate difficult market conditions. ‘We remain focused on operational excellence,’ a company spokesman said. ‘We have a disciplined growth strategy and a strong, proven executive leadership team.’” THE WALL STREET JOURNAL

Does Your Board’s Culture Allow Honest Debate?

A healthy exchange of ideas and the ability to listen to all voices in the room are critical to every board’s success. 

“Most of the time, directors resign discreetly if they feel very strongly that their company is going in a direction they cannot endorse. However, even when directors do resign quietly, intense discussions about governance issues and business strategy may have taken place behind closed doors. Unfortunately, as more boards are being sued for oversight violations and breaches of fiduciary duty, a greater number of directors may decide to resign their positions or take the more serious step of publicly clashing with the CEO and other board members to highlight governance lapses. These directors may hope that such actions could help the company avoid disaster and help them avoid personal liability if the company is ever sued.” CHIEF EXECUTIVE

Balancing ESG Critics and Key Stakeholders

Getting on the same page about what ESG means to your company is the first step in making progress.

“Environmental, social and governance (ESG) topics are often discussed as if there is a collective understanding about what they mean. But company leaders, regulators, investment analysts, portfolio managers, activists and retail investors may use the ESG acronym to talk about everything from investment strategies and investment vehicles to corporate social responsibility (CSR) and shareholder proposals. Put them all in a room together and they will quickly realize they may not be on the same page…The use of ESG as an umbrella term for so many topics has led to misperceptions and, at times, controversy about whether focusing on certain risks and opportunities violates duties to investors.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Seat at the Table

• Visa elects to its board Pam Murphy, CEO of cybersecurity software provider Imperva

• Starwood Property Trust welcomes to its board Deborah Harmon, Co-Founder and CEO of private equity firm Artemis Real Estate Partners

• Digital experience company TELUS International appoints to its board Madhuri Andrews, former Executive Vice President and Chief Digital and Information Officer at engineering firm Jacobs Solutions; and Navin Arora, Executive Vice President at TELUS International

• The Procter & Gamble Company appoints to its board Sheila Bonini, Senior Vice President of the World Wildlife Fund; and Rob Portman, former U.S. Senator, Congressman and United States Trade Representative

• Workplace supply company Cintas adds to its board Martin Mucci, former CEO of payroll company Paychex

• Manufacturing company Trane Technologies elects to its board John Hayes, former President and CEO of packaging firm Ball Corporation

• Professional services firm Aon welcomes to its board Sarah Smith, former Senior Advisor at Goldman Sachs

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.