'THE DAILY CORPORATE GOVERNANCE REPORT’ (for public company boards, the C-suite and GCs)

? ? ? ? ? Please see the items below with the related links (NOTE: access to link content may be metered, require a no-charge registration or require a paid digital subscription)?

? ? ? ? ? ? ? (i) report by the cybersecurity agencies in the U.S., Canada and the U.K. on the 'top routinely exploited vulnerabilities': As reported in last Wednesday's WSJ Cybersecurity Newsletter , the cybersecurity agencies of the U.S., Canada, the U.K., Australia and New Zealand,?issued last Tuesday this?joint Cybersecurity Advisory, "2023 Top Routinely Exploited Vulnerabilities ", which "provides details, collected and compiled by the authoring agencies, on the Common Vulnerabilities and Exposures (CVEs) routinely and frequently exploited by malicious cyber actors in 2023 and their associated Common Weakness Enumerations." Below is from the WSJ Newsletter discussing the Advisory:

? ? ? ? ? ? ? ? ? ?"Cybersecurity agencies in the U.S., Australia, Canada, New Zealand and the U.K. issued a report Tuesday on the most-exploited vulnerabilities of 2023, many of which continue to provide entrée to hackers. Bugs in products from Citrix, Cisco and Fortinet?account for the top five. The agencies advised businesses to decrease their risk, in?part, by:

? ? ? ? ? ? ? ? ? ? ? ? ?-- Updating operating systems, applications and firmware in a timely manner

? ? ? ? ? ? ? ? ? ? ? ? ?-- Moving any systems that can't be scanned quickly for known bugs to a tech service provider

? ? ? ? ? ? ? ? ? ? ? ? ?-- Enforcing phishing-resistent multifactor authentication

? ? ? ? ? ? ? ? ? ? ? ? ?-- Continuously monitoring networks and devices for unusual activity—and investigate it when discovered"

? ? ? ? ? ? ? (ii) Spenser Stuart survey of directors on CEO successions: Earlier this month, Spenser Stuart posted on its website this "Director Pulse Survey: CEO Succession 2024 ", based on a survey of "797 directors on U.S. public and private company boards look(ing) at directors’ perspectives on CEO succession today and how CEO succession planning is evolving (and).....?includ(ing) almost 400 respondent comments about directors’ biggest concerns related to CEO succession planning." Below are excerpts from the survey:

? ? ? ? ? ? ? ? ? "Directors are concerned about having ready internal candidates: A little more than 20% of respondents anticipate a CEO transition within 18 months; another 30% expect a CEO change within three years. Yet nearly the same percentage (45%) are concerned they won’t have at least one internal candidate ready when the time comes for that transition. That jumps to 66% when asked if they thought they would have two or more candidates ready.?Their concerns may stem from past experience: 37% of respondents said they have delayed CEO transitions due to a lack of internal candidates. This data points to the importance of not just starting internal succession planning early, but regularly reviewing and adjusting the plan over time.

? ? ? ? ? ? ? ? ? ? ? ? ? According to the survey, the most common succession planning step taken by boards in the past 12 months was providing the board with direct exposure to potential internal successors,?cited by 66% of respondents. Sixty percent (60%) have discussed the profile and criteria for the next CEO, and 58% have developed plans for possible successors across different timelines. Interestingly, only 49% of respondents say they have discussed emergency CEO succession planning?— perhaps a reflection of the 12-month time frame, but also a possible indication that many boards are not regularly reviewing their plans.

? ? ? ? ? ? ? ? ? "Boards are struggling with how to effectively develop internal CEO candidates: Despite the concerns about candidate readiness noted above, the survey yielded no strong consensus on how boards are developing and maturing internal candidates. Half of respondents say their companies provide executive coaching to possible successors; 46% promote top talent to new roles that broaden their experience base and build capabilities, and less than one-third (32%) are put on targeted internal rotations.?About one in seven respondents (14%) of directors selected “none of the above.”

? ? ? ? ? ? ? ? ? ? ? Meanwhile, only 38% of survey respondents said that internal candidates are mentored by a board member. While the sitting CEO and CHRO own much of the process of developing internal successors, boards play a major role as well,?and directors in particular could play a unique role in advising rising internal candidates as they ascend the ranks. For example, a large industrial supply company found that connecting internal candidates with board members who have expertise in specific areas not only provided valuable guidance but also enhanced the board’s visibility among these executives.

? ? ? ? ? ? ? ? ? ? ?A large number of open responses touched on the delicacy of internal candidacy — from developing strong prospects to ensuring team dynamics aren’t disrupted before and after a move is made. “It takes a committed board and CEO to start the process years before the change to assess and groom internal candidates,” one respondent said.

? ? ? ? ? ? ? ?"Boards and CEO succession planning: 3 key principles: ......Our work points to three things for boards to keep in mind: .......

? ? ? ? ? ? ? ? ? ? ? 3. Clarify the board’s partnership with the CEO and CHRO. Succession processes can be complex, and the board, CEO and CHRO each have critical roles to play, and these roles shift over time. We often see a lack of clarity among these stakeholders as they launch, manage and govern a CEO succession program. Taking the time to clarify roles and expectations is a critical step in launching the governance program."

? ? ? ? ? ? ? (iii) case study of a CFO succession: Affirm Holdings, Inc. is a Nasdaq-listed, technology company that provides financial services, and its recent CFO succession plan, including a "soft launch" via an earnings conference call followed by a CFO appointment earlier than scheduled, is discussed in last Wednesday's WSJ CFO Journal Newsletter, "Why Affirm, the Buy-Now-Pay-Later Company, Accelerated Its CFO Succession Plan ". Affirm initially announced a CFO succession plan in this August 28 Q4/24 earnings call, as recorded in the transcript ?posted on its website, as follows:

? ? ? ? ? ? ? ? ? ?"Max Levchin, Founder and Chief Executive Officer: .......One thing though that.....I did want to share, to build on the great momentum that we're having, to help us continue to scale in the long-term, we're evolving our leadership structure a little bit. Very excited to share that our Chief Financial Officer, Mr. Michael Linford himself, will be taking on an expanded new role as Chief Operating Officer for Affirm. For now, he will remain our CFO, but today, we?also have the talented and handsome Mr. Rob O’Hare, a veteran of the Affirm finance team joining us on?this call for a reason. I expect Rob to take on the CFO role by the end of this fiscal year, still reporting to Michael......"

? ? ? ? ? ? ? ? ? ? Further disclosure of the CFO formally taking on the additional role of COO, and the appointment of a new CFO,?appear?in this Sept. 30 conference call, as recorded in this transcript ?posted on the company's website:

? ? ? ? ? ? ? ? ? ? "Katie Perry Co-Host:?........(T)oday, we're welcoming Michael Linford. He is the newly appointed COO and CFO of Affirm, formerly was just CFO, and he is taking your burning questions.....

? ? ? ? ? ? ? ? ? ? Michael A. Linford Chief Operating Officer & Chief Financial Officer:?We announced at our last earnings, that I would be taking on the title of COO and I'll be our CFO until we transition that to Rob O'Hare, who's one of our leaders in the finance org.

? ? ? ? ? ? ? ? ? ?And then the company announced on Nov. 7/24 in this Current Report? filed with the SEC the appointment of Rob O'Hare as CFO earlier than scheduled, as follows:

? ? ? ? ? ? ? ? ? ?"On November 5, 2024, the Board of Directors of the Company appointed Rob O’Hare as the Company’s Chief Financial Officer?effective November 8, 2024. Mr. O’Hare will succeed Michael Linford, who will continue to serve as the Company’s Chief Operating Officer.?Mr. O’Hare, age 43, has served as the Company’s Senior Vice President, Finance, since August 2020,where he is responsible for financial planning, investor relations, corporate development, merchant pricing, and procurement......

? ? ? ? ? ? ? ? ? ? "Mr. O’Hare’s compensation as Chief Financial Officer includes an annual base salary of $475,000 and participation in the Company’s annual cash incentive plan with a target equal to 75% of his annual base salary. In addition, Mr. O’Hare will receive a Restricted Stock Unit award with a grant date fair value of $1,250,000 and a stock option award with a grant date fair value of $1,250,000. The RSUs will vest in equal quarterly installments and the stock options will vest in equal monthly installments, each over a four-year period and subject to Mr. O’Hare’s continued service as of each vesting date. In the event of a qualifying termination of his employment, Mr. O’Hare will be eligible to receive severance benefits provided under the Company’s Officer Severance Plan.....In connection with his appointment as Chief Financial Officer, the Company will enter into its standard form of indemnification agreement with Mr. O’Hare....."

? ? ? ? ? ? ? ? ?Below is from the WSJ Newsletter discussing the CFO succession:

? ? ? ? ? ? ? ? ?"There are many ways for companies to announce a CFO succession plan.?Affirm,?the buy-now-pay-later company that appointed a new finance chief last week,?chose to do it through a soft launch of sorts.?Affirm said in August that?Rob O’Hare, a senior finance leader at the company, would take over as chief financial officer by the end of the fiscal year in June 2025, succeeding?Michael Linford, CFO since 2018. Affirm?at the same time named Linford as chief operating officer, effective Sept. 1.?“CFO announcements can be stressful for the market. We wanted everyone to understand that I wasn’t going anywhere,” Linford said.

? ? ? ? ? ? ? ? ? ?"Investors welcomed the news of O’Hare as incoming CFO,?viewing him as ready to step into the role, according to Linford. So Affirm?accelerated the timing of the transition, making it effective Nov. 8....."

? ? ? ? ? ? ? (iv) press release of the day: Intact Financial Corporation?announced yesterday in this press release a "CFO transition", as follows:

? ? ? ? ? ? ? ? ? ? "Intact Financial Corporation today announced that Louis Marcotte?will step down as Executive Vice President and Chief Financial Officer (CFO) after the Q4-2024 earnings are released?on?February 13, 2025.?He will remain with the organization serving as IFC Vice Chair and, in that role, his main mandate will be to support the development of our European operations within Global Specialty Lines.....Ken Anderson, currently Executive Vice President and Chief Financial Officer for?RSA UK?&?Ireland, will succeed Mr. Marcotte as Executive Vice President and Chief Financial Officer......"

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