4/27/23 – Issue 8.15 – Your weekly news on all things board. 

Succession planning is back in the headlines this week as the longtime CEO of NBCUniversal resigns in the wake of complaints about inappropriate conduct. Does the company have a plan? And a new episode of The Journal. podcast dives into the world of LVMH chair Bernard Arnault and his long game for succession. 
  

In other news, what happens when Disney files suit against a sitting governor?; a look at the partnership between Apple and Goldman Sachs; big tech companies see stock surges with new earnings reports; why AI governance starts in the boardroom; and navigating activist investor campaigns during the 2023 proxy season. 

In the Spotlight

CEO of NBCUniversal Steps Down Following Inquiry 

With nearly two decades at the helm, Jeff Shell was instrumental in ushering the company into the streaming era.

“NBCUniversal Chief Executive Jeff Shell is departing after an investigation into a complaint of inappropriate conduct, a stunning fall for an executive who pushed for sweeping changes at the media giant as it entered the streaming era. ‘I had an inappropriate relationship with a woman in the company, which I deeply regret,’ Mr. Shell said in a statement. ‘I’m truly sorry I let my Comcast and NBCUniversal colleagues down.’…Senior leaders who could be considered as successors to Mr. Shell include (Comcast President Mark) Cavanagh and (NBCUniversal Television Executive Mark) Lazarus and Cesar Conde, who heads the NBCUniversal News Group, people familiar with the situation said. (Theatrical Operations Head Donna) Langley also could be in the mix. A decision isn’t likely to be made in the near future, however, people familiar with the situation said.” THE WALL STREET JOURNAL

NBCUniversal Faces Company Defining Decisions with Shell’s Departure
The future of Hulu, NBA broadcast rights, and a possible merger with Warner Bros. Discovery are potentially on the table in the next few years.

“While Shell was never the ultimate decision-maker at Comcast — that job falls to CEO Brian Roberts, whose family controls the company — his input and vision helped dictate the company’s pathway through streaming, sports rights and acquisitions…In 2019, NBCUniversal agreed to an unusual deal with Disney, allowing it to sell its 33% stake in Hulu in January 2024 at a valuation of at least $27.5 billion. But comments from Disney CEO Bob Iger earlier this year have put Disney’s motivation to buy the remainder of Hulu in doubt…NBC Sports is interested in bringing the National Basketball Association back to NBC, its broadcast TV home from 1990-2002, CNBC reported in February…But if the NBA decides it wants NBC as a partner, the media company will have to pay billions per year for the privilege. The NBA is looking for a substantial increase in current rights payments, which are $1.4 billion annually for Disney and $1.2 billion for Warner Bros. Discovery…The elephant in the room with NBCUniversal is the frequent speculation in media circles that a merger with Warner Bros. Discovery could be coming in the next two years.” CNBC

A Kinder, Gentler “Succession” (Podcast)
Bernard Arnault is no Logan Roy as he prepares his children to take over LVMH, Europe’s largest listed company.

“Late last year, Arnault took a big step in preparing for succession. He put LVMH under a private holding company that is equally owned by his five children and that has the power to take control of LVMH. He remains in charge, but his children have the power to oust him…So they now own the company with a 20% stake each. If they want, they can use this new company which they own to take over LVMH, essentially end their father's reign, and control the conglomerate. In practice, this decision is obviously quite extreme and would likely be taken together with the dad at a given moment. But in handing them the company, yes, he has obviously given them the power to take over the company and run it as they see fit collectively.” THE JOURNAL. PODCAST (WALL STREET JOURNAL)

From Boardspan this Week:

Ten Key Dimensions of Effective CEO Succession

What are the key ingredients for a successful plan?

"In the course of our succession-planning practice, we have concluded that there are 10 key dimensions for effective CEO succession planning. These essential elements – what we consider the ingredients for success – will help any organization build and maintain a successful CEO succession program. Each of these dimensions must be maintained to ensure that the risks inherent in each leadership transition are minimized and the best outcomes are achieved. Having best practices in place to manage each of these 10 dimensions in a continuous process will ensure that a board of directors is operating at peak effectiveness and efficiency, and that its CEO succession-planning program is, without question, a best practice.” RHR INTERNATIONAL via BOARDSPAN 

Across the Board

Disney Sues Florida Governor Ron DeSantis Over Control of Walt Disney World

Florida’s largest taxpayer claims recent oversight measures are “a targeted campaign of government retaliation.”

"Walt Disney Co. sued Florida Gov. Ron DeSantis on Wednesday, alleging the Republican has waged a ‘relentless campaign to weaponize government power’ against the company amid a protracted fight over a controversial classroom bill. The federal lawsuit alleges that DeSantis ‘orchestrated at every step’ a campaign to punish Disney that now threatens the company’s business. The move dramatically escalates the drawn-out feud between DeSantis, who is expected to become a top Republican contender in the 2024 presidential race, and Disney, which is among Florida’s largest employers. The fight began last year, when Disney came out against a Florida bill limiting classroom discussion of sexual orientation or gender identity, dubbed ‘Don’t Say Gay’ by critics. Soon after, the governor and his allies targeted the special tax district that has allowed Disney to essentially self-govern its Florida operations since the 1960s.” CNBC

Is Apple’s Partnership with Goldman Sachs the Future of Banking?

At a time when regional banks and smaller FinTech firms are struggling, the duo is dropping in.

“Last week Apple effectively dropped the mic on the nation's banking industry. While the average bank is paying less than a half a percent on savings accounts, the $2.6 trillion technology company announced it would be offering 4.15% annual returns to savers – no minimums, no lockups and FDIC-insured. The new product rollout comes at a time when regional banks are scrambling in the wake of the Silicon Valley Bank crisis to maintain their deposit bases, and cash-starved fintech startups are likewise struggling…Technically Apple doesn’t have a banking license. It is fronting for Goldman Sachs Bank USA, otherwise known as Marcus, which has a state charter and is FDIC-insured. In fintech parlance, Apple is a neobank like Chime, Revolut and Monzo – except its brand strength is unparalleled given that there are more than two billion iPhones globally, now serving as Goldman’s branch network.” FORTUNE

Large Tech Stocks See Surge as Strong Earnings Come In

Both Meta and Google see double-digit increases due to ad sales and cost-cutting measures.

“Meta Platforms Inc. shares surged 15% after the company reported a surprising rebound in digital advertising sales, buying it time to keep pouring money into speculative businesses like artificial intelligence and virtual reality.” BLOOMBERG

“Google parent Alphabet Inc. reported first-quarter results that exceeded analysts’ estimates, as the company’s dominant search business weathered the economic downturn and its cloud unit turned a profit for the first time.” BLOOMBERG

AI Harmony Starts in the Boardroom

How to set the tone at the top as AI takes hold at companies.

“The rapid advancement of artificial intelligence (AI) and its wide availability to the general public has sparked a debate regarding the safeguards necessary to ensure that AI is used ethically and for the benefit of humankind. A recent open letter published by some AI researchers even calls for an immediate ‘pause for at least 6 months the training of AI systems…to jointly develop and implement a set of shared safety protocols for advanced AI design and development that are rigorously audited and overseen by independent outside experts.’” MAYER BROWN

Foresight Against an Activist Attack

Navigating activist investor campaigns and predicting which directions these attacks may come from is becoming increasingly difficult, but it is not impossible.

“The surge in campaigns by activist hedge funds against companies of varying market caps, industry sectors and governance/structural profiles is not abating. It is unlikely that today’s elevated level of activism will be curbed by legislation, regulation or market forces in the near term. While some of these campaigns have been public, there are a number of private campaigns putting pressure on public companies, with more expected heading into 2024.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Seat at the Table

• Digital marketplace bank LendingClub Corporation welcomes to its board Janey Whiteside, Partner at financial advisor Consello Group and CEO of Consello’s Growth and Business Development division

• RBB Bancorp elects to its board Robert Frank, former President and CEO of First Choice Bancorp; and Scott Polakoff, Executive Vice President at securities registration platform FinPro

• Cocrystal Pharma adds to its board Fred Hassan, Director of private equity firm Warburg Pincus

• Electric car company Lucid Group appoints to its board Sherif Marakby, Advisor at automotive products company MemryX; Chabi Nouri, Co-Manager of private equity fund Mirabaud Asset Management; Ori Winitzer, Partner of digital media platform Integrated Media Company

• Cleantech integrator Ameresco welcomes to its board Charles Patton, former Executive Vice President of External Affairs at American Electric Power Company

• Financial services company First Foundation adds to its board Gabriel Vazquez, VP and Associate General counsel of Operations for energy company Vistra Corp

• Virgin Galactic elects to its board Raymond Mabus Jr., former US Secretary of the Navy; and Diana Stranberg, former Senior Vice President and Director of International Equity at investment manager Dodge & Cox

• Digital workflow company ServiceNow appoints to its board Deborah Black, Vice President of Engineering at Netflix

• Synovus Financial Corp welcomes to its board Stacy Apter, Vice President of Corporate Finance at The Coca-Cola Company

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.