Across the Board
Toyota Fires Daihatsu’s CEO After Quality Scandal
Daihatsu safety issues also halted production of many Toyota brands
“Just two months since an embarrassing safety scandal tarnished micro-car maker Daihatsu's name, with the dirt spreading to parent company Toyota, the Toyota-Daihatsu scandal took an unexpected turn in Japan today…Toyota conducted a joint press conference with Daihatsu today in Tokyo, with Toyota’s president Koji Sato announcing that former CEO of Toyota Latin America, Masahiro Inoue, would replace Okudaira in the top job at Daihatsu…Daihatsu was forced to halt the shipment of all models late last year, including some that were sold to Toyota, Subaru, and Mazda for sale under those brands.” FORBES
Costco’s CFO and ‘Voice to Wall Street’ Is Stepping Down
Galanti, who has been CFO since 1985, was a major influence on company growth
“Costco Wholesale’s finance chief plans to step down after nearly four decades directing finances at the retailer, which is weighing a potential increase in membership fees, a major driver of profits. Richard Galanti, who was named as chief financial officer in 1985, became a key figure for the discount membership retailer. Often, he was the only person leading the company’s earnings calls with analysts. ‘Richard has been the primary Costco ‘voice’ to Wall Street and others,’ Chief Executive Ron Vachris wrote…Costco’s sales have held strong in recent years, even as other retailers struggled with changing consumer behaviors and online competitors. The company benefited during the pandemic as shoppers stockpiled on essentials, bought groceries in bulk and loaded carts with home furnishings. That demand has remained healthy.” THE WALL STREET JOURNAL
Disney Gears Up for Expensive Proxy Fight
More than $70 million could be spent in bid to win everyday investors’ votes
“A boardroom brawl at Walt Disney DIS 0.84%increase; green up pointing triangle is expected to be the most expensive shareholder fight ever, and a chance for everyday investors to have a big impact. Two activist hedge funds—Nelson Peltz’s Trian Fund Management and the smaller Blackwells Capital—are separately going toe-to-toe with Disney to gain spots on its board and challenge the strategy of Chief Executive Bob Iger. All in, the three parties could spend north of $70 million ahead of an April 3 shareholder vote. They are already shelling out for slick marketing materials, social-media blitzes and the services of proxy solicitors—akin to campaign strategists—who wrangle shareholder support for their clients’ board candidates.” THE WALL STREET JOURNAL
Walmart in Talks to Buy TV Maker Vizio
The company would take on Amazon in both advertising and the smart TV business
“The retail giant is in talks to buy smart television-manufacturer Vizio for more than $2 billion, according to people familiar with the situation. The move would give Walmart more places where it can sell ads and pitch shoppers on goods. Walmart, including its Sam’s Club chain, has historically been Vizio’s largest customer. Vizio is historically the largest television brand sold at Walmart by sales…The deal talks demonstrate the importance of consumer data and ad space for major retailers as they build out their ad businesses and compete with Amazon. In addition to being an e-commerce behemoth, Amazon is among the biggest ad players in the U.S. behind Google parent Alphabet and Facebook owner Meta Platforms. Amazon has also been building its own smart TV business.” THE WALL STREET JOURNAL
What Boards of Public Companies Can Learn from Private Equity
The PE model provides examples of where boards can make strategic impact
“Public company boards have made quite a few upgrades over the past decade. They have become far more diverse, more focused on risk management, and more attentive to the environmental impacts of the companies they oversee. But in other ways, public company boards still look eerily similar to what they looked like 50 years ago, when modern governance rules were first enacted after the high-profile collapse of Penn Central. Directors basically still show up to board meetings once a quarter to approve the strategy, discuss risks, and once every five years or so, select the next chief executive officer.” HARVARD BUSINESS REVIEW
Why Good Boards Make Bad Decisions
Problematic group dynamics can derail all kinds of teams; boards are no exception
“A widely accepted notion is that corporate boards function like well-oiled machines. And why shouldn’t they? At their core, boards are more than a group of highly qualified individuals — they are sophisticated teams, assembled to work together smoothly while bringing diversity of thought, expertise and experience to their oversight role. Boards are largely made up of executives, industry veterans and subject matter experts with decades of business experience, and they have the support of skilled management teams and access to numerous advisors, to assist them in their oversight role. Directors certainly know how to work in high-level teams. They’ve done it their entire careers.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
The Tiny Thorn in the Side of BP
How one activist hedge fund is making waves at the energy giant
“Giuseppe Bivona and his partners run a tiny activist hedge fund from a small office here not far from Buckingham Palace. The single room has big windows, seven desks and little space for much else. From this unlikely perch, the fund, called Bluebell Capital Partners, aims to punch far above its weight by launching campaigns against some of the world’s biggest companies, most of them in Europe. Sometimes the punches land. The fund’s latest target, British oil giant BP, has already granted Bivona a meeting with its chairman.” THE WALL STREET JOURNAL
Safety Fast: Governance and Innovation
Recent scandals highlight how an ‘unsexy’ topic is important to tech start-ups
“Since the turn of the century, the prevailing mantra of successful businesses has been that disruption trumps caution. Facebook — now Meta — once worked to the now discredited internal motto: ‘Move fast and break things’. But, at times, innovation and genius have seemed diametrically opposed to good governance. Sheryl Sandberg was originally brought into Facebook with the intention of curbing that mentality. Elon Musk, feted by some as a visionary, has faced criticism over his handling of social media site X. Sam Altman’s departure from — and return to — OpenAI left a cloud hanging over one of the world’s most hyped tech companies.” FINANCIAL TIMES
Living in “Interesting” Times: The 2024 Board Agenda
Risk and strategy are evergreen areas of priority for board oversight
“While no one can know the future, it seems safe to say several large-scale risks could loom in 2024. Geopolitical upheaval, political instability, economic uncertainty, regulatory change, rapid technology development—just to name a few challenges—may be frequent items on the board’s agenda. In the current environment, the short-term fallout has the potential to be substantial. But in the longer term, how boards respond may be just as (if not more) impactful. Ultimately, the board’s oversight and governance actions shape the sustainability and resiliency of its companies in the face of risks and opportunities.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
America’s ESG Hiring Boom Is Starting to Cool
Companies have slowed hiring on environmental, social and corporate-governance
“U.S. companies are hiring fewer people for roles related to environmental, social and corporate-governance issues as finance executives assess costs and seek faster returns on investments. ESG job departures outpaced arrivals for half the months of last year, marking the reversal of a multiyear trend. Companies had 3,071 ESG departures compared with 2,897 arrivals in December 2023…Meta Platforms, Amazon and Google had the largest ESG job outflows among U.S. companies in 2023, according to the data. Tech, financial-services and consulting companies were particularly active with ESG departures, representative of broader cutbacks in those sectors including layoffs in some cases.” THE WALL STREET JOURNAL
5 Essential ESG Questions for Boards
What to ask about company strategy, risks, and regulations
“The pace and scale of recent developments in ESG can make it difficult for directors to determine what they really need to know to provide effective oversight. Controversy around the term ‘ESG’ and anti-ESG viewpoints has contributed to the volatile environment in which public company directors fulfill their fiduciary responsibilities. Moving away from ESG as a politicized umbrella concept, directors may focus on the specific E, S and G topics that can contribute to sustainable corporate performance over the long term when setting corporate strategy and providing risk oversight. To do this effectively, all directors should have a baseline understanding of ESG topics affecting their company and industry. To refresh their ESG literacy, U.S. directors should consider these five high-level questions.” DIRECTORS & BOARDS
Succession Challenges for NFL Teams Open Door to Private Equity
Special committee considers removing the block on PE investors
“The Bears are part of a towering U.S. media colossus. The National Football League was responsible for 93 of the 100 most-watched TV broadcasts last year, and brought in nearly $20 billion in revenue. McCaskey’s team alone is worth $6 billion, according to the latest estimates by sports-business media outlet Sportico, and across the league average franchise valuations rose 69% between 2020 and 2023. That growth has helped make NFL team owners rich. But it has also created succession-planning challenges in a league that venerates family and tradition — and could force the doors open for investors driven by financial imperatives. In September, the NFL formed a special committee of five owners to consider ending a block on private-equity funds. The nation's other top sports leagues have already lowered the gates for such investors, but the country’s most popular one has remained a holdout.” CRAIN’S NEW YORK
The Spectacular Fall of 23andMe (Podcast)
How the red-hot startup went from a $6B valuation to trading as a penny stock
“Kate Linebaugh: What is the lesson of this story? Rolfe Winkler: The lesson is that hype and virality aren't enough. Eventually you need to be able to make a profit. This is a company that still could if some of these drug candidates work out, but it's not a layup. It's pretty hard and it's going to take a while for them to get there. Kate Linebaugh: So this is a story about hype? Rolfe Winkler: Kate, all of Silicon Valley is about hype. Sometimes the hype works out. Sometimes you lose money in the early going and the company founder builds something that can profit later, right? Everybody loves to hold up Jeff Bezos and Amazon as the primary example. But you know what? If you're a startup founder, chances are you're not Jeff Bezos and you're not Amazon. Those stories are very rare. So some of these companies, they never profit. But eventually you get to a certain scale, you gotta start making money, and this company never did.” WALL STREET JOURNAL (PODCAST)
NVIDIA Joins AI Safety Consortium
Hardware technology leader brings track record of collaboration
“NVIDIA has joined the National Institute of Standards and Technology’s new U.S. Artificial Intelligence Safety Institute Consortium as part of the company’s effort to advance safe, secure and trustworthy AI. AISIC will work to create tools, methodologies and standards to promote the safe and trustworthy development and deployment of AI. As a member, NVIDIA will work with NIST — an agency of the U.S. Department of Commerce — and fellow consortium members to advance the consortium’s mandate. NVIDIA’s participation builds on a record of working with governments, researchers and industries of all sizes to help ensure AI is developed and deployed safely and responsibly.” SILICON VALLEY DAILY
