7/14/22 – Issue 7.77 – Your weekly news on all things board. 

No escaping politics. CEO advocacy of political causes, once unheard of, has become routine, with executives frequently announcing boycotts of states and nations whose laws and actions don’t align with their values. Now political activists are urging CEOs and corporations to take a stand on abortion rights, pressing them to share their plans for ensuring abortion access for all employees or calling out those who don’t immediately articulate a plan. Meanwhile, Twitter sues Elon Musk to force him to complete his $44 billion acquisition of the social media company. Gap CEO Sonia Syngal steps down and will be replaced by Executive Chairman Bob Martin. The Wall Street Journal takes readers into the world of a Fortune 500 board member and reveals how she has built her confidence and who she turns to for advice.  

BOARDS ADD VALUE: At Boardspan, we spend a lot of time talking to board members about the ways they add value and the many challenges they’re facing. Check out this two-minute video that highlights what we’ve learned.

In the Spotlight

Twitter Takes Elon Musk To Court

“Twitter sued Elon Musk on Tuesday to force the billionaire to complete his $44 billion acquisition of the company, setting the stage for a prolonged legal battle over the fate of the social media service. Mr. Musk agreed in April to buy Twitter but declared last week that he intended to walk away from the deal. To push Mr. Musk to abide by the acquisition agreement, Twitter sued him in Chancery Court in Delaware. The court will determine whether he remains on the hook for the purchase or whether Twitter violated its obligation to provide Mr. Musk with data he requested, entitling him to walk away.”  

NEW YORK TIMES

How The Suit May Play Out, According to One Governance Expert

“To my eye, the Twitter board did exactly what it was supposed to do. They got this unsolicited deal. They formed a special committee of independent directors, got outside legal and financing help to evaluate the thing, and discussed it internally. And they came to an agreement saying, ‘Based on what we know about the company or future plans or whatever, $54.20 seems good to me, we’ll set this.’ I think the board would get back together and say, ‘Do we want the billion dollars?’ And of course they incurred all kinds of legal costs and finance expertise costs and all that. ‘Or do we think the deal is such that given the probability of us winning the case and forcing the $44 billion deal to go through, net net, what are we willing to do’ I think they did the right thing, which is to decide, ‘We think we have a pretty strong case. $44 billion is real money for our shareholders. We have a fiduciary duty there, so we’re taking it into Delaware court.’ They’re going to be sued for sure. I mean, this is America, where the joke is anybody can sue anybody for anything, any time.” [Q&A with Stanford Graduate School of Business Professor Emeritus David Larker] SLATE

Across the Board

Post-Roe, Companies and Their Boards Pushed To Act on Abortion Access

“Companies are being cautious and deliberative in how they factor abortion into their long-term ESG plans despite demands for swift action from shareholders, employees, and the public after the Supreme Court overturned Roe v. Wade. Following the ruling in Dobbs v. Jackson Women’s Health Organization, companies including Microsoft Corp., Meta Platforms Inc., and JPMorgan Chase & Co. said they would help cover employees’ travel costs to access an abortion… Critics on social media were quick to point to big corporations that didn’t immediately voice any statements, including Walmart Inc…. Corporate executives and boards of directors must now plan for what consistent action they will take on reproductive health rights across their business, including responding to thorny investor questions about benefits and political spending, according to environmental, social, and governance (ESG) consultants.” BLOOMBERG LAW

GAP CEO Steps Down Amid Sales Slump

“Gap Inc. said its chief executive Sonia Syngal is stepping down after a little more than two years on the job, and warned that its profits would slide amid a continued sales slump. The apparel retailer said its executive chairman Bob Martin, a former Walmart Inc. executive, would serve as interim CEO while it searches for a permanent replacement. The company also said it hired former Walmart executive Horacio Barbeito to take over as CEO of the Old Navy chain. The leadership shake-up comes after problems at the Old Navy chain, which accounts for more than half of total revenue, sapped sales and profits.” WALL STREET JOURNAL

700 Directors Surveyed: Clear Need for More Progress On Diversity 

“Recent progress—and the continued push—toward greater boardroom diversity comes at a pivotal time for corporate America. The ability to challenge long-held assumptions; understand megatrends; and effectively calibrate strategy, risk, and talent in the context of heightened stakeholder expectations puts a premium on thinking differently. To better understand how directors view the opportunities and challenges of enhancing diversity in the boardroom, the KPMG Board Leadership Center surveyed more than 700 directors around the world. Among the U.S. respondents to the survey, it’s clear that: Many directors would make moderate changes to their board’s composition if starting from a clean sheet… Directors have concerns about blind spots and missed opportunities due to a lack of diverse views….Sixty-nine percent of directors say board diversity of composition and thinking is relevant or very relevant to the company’s consideration of its role in society….” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

Where Does A Fortune 500 Director Turn for Advice?

“When Amy Chang joined the board of Procter & Gamble Co. at 40 years old, she was so intimidated by the company’s Fortune 50 status that she arrived 30 minutes early to her first meeting and snapped a photo of her name placard. She quickly texted it to her parents. Within months Ms. Chang found herself in the middle of what was then the most expensive proxy fight in U.S. history as activist investor Nelson Peltz pushed for control of the household products company. The two sides waged a monthslong, public battle before P&G agreed to add Mr. Peltz as a director. Now, as a member of Walt Disney Co. ’s board, she is once again part of another corporate drama... Here are four of her most trusted advisers….” WALL STREET JOURNAL

Boards & ESG: Good Communication With Stakeholders Is Key

“One thing is clear, the requirements for ESG reporting are not going away and enhanced disclosures are at the forefront of three recently proposed SEC rules. Simultaneously, investors are using the power of the proxy vote to demand that companies do more to further their ESG initiatives and embed ESG in the company’s long-term strategy. The 2021 proxy season demonstrated that environmental and social proposals remained the majority of shareholder proposals filed at U.S. companies, with every indication that this trend will continue. In 2022, corporate boards of directors need to be prepared to i) Disclose their individual climate-related expertise. ii) Engage with institutional investors on ESG priorities ahead of the proxy season. iii) Provide greater insight into the criteria and methodology used in the company’s ESG disclosures.” FORBES

Lack of Shareholder Support Delays Vote On Spirit-Frontier Airlines Merger

“Spirit Airlines has delayed a vote on its planned tie-up with Frontier Airlines for a fourth time as concerns mount about a lack of shareholder support. Spirit said Wednesday it now plans to hold the vote, most recently scheduled for Friday, on July 27 so it can continue deal talks with Frontier and with JetBlue Airways, whose competing bid for Spirit has thrown the original deal into question. Over the weekend, Frontier Airlines’ CEO, Barry Biffle, wrote to his Spirit counterpart to ask for a delay of the vote to July 27.” CNBC

Seat at the Table 

• Congratulations to Duston Williams, CFO at cloud software and hyperconverged infrastructure solutions company Nutanix, on his appointment to the board of Meridian Link, a leading provider of modern software platforms for financial institutions and consumer reporting agencies. Boardspan is delighted to have advised Meridian Link on this placement.

• Congratulations also to Dr. Michael Okoroafor, Chief Sustainability Officer at McCormick & Company, and Jeff Wooster, former Global Sustainability Director for Dow Packaging and Specialty Plastics, on their election to the board of Charter Next Generation, a leading producer of high-performance specialty films. Boardspan is very pleased to have advised Charter Next Generation on these placements.

We offer congratulations to all recent placements:

• The United States Olympic & Paralympic Committee (USOPC) elects as chair Gene Sykes, Co-Chairman of Global Mergers and Acquisitions (M&A) and Co-Chairman of the Global Technology, Media and Telecom Group at Goldman Sachs, and former CEO of LA2028, which successfully campaigned for Los Angeles to host the 2028 Olympic Games

• Jose Tomás, CAO for Spanish language media company TelevisaUnivision, joins the board of auto services company Driven Brands

• The Estée Lauder Companies elects to its board Angela Wei Dong, Global Vice President and General Manager, Greater China, of Nike

• Christiana Smith Shi, principal at digital transformation consulting firm Lovejoy Advisors and previously President, Direct-to-Consumer at Nike, is appointed to the board of Columbia Sportswear

• Healthcare solutions company Owens & Minor welcomes to its board Carissa Rollins, CIO at Illumina, maker of genetic variation analysis systems

• Cummins, maker of engines, filtration and power generation equipment, elects to its board Gary Belske, former Deputy Managing Partner and Chief Operating Officer at Ernst & Young

• Aerospace company Lockheed Martin elects to its board retired Marine Lt. Gen. Vincent R. Stewart, former deputy commander, U.S. Cyber Command

• Oil and diversified energy company Phillips 66 appoints to its board its new CEO Mark Lashier and Raytheon Technologies Chair and CEO Gregory Hayes

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.