'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) Teneo report on the state of DEI ('DEI will survive')/the backlash against the DEI backlash/Conference Board survey on the DEI backlash:?

? ? ? ? ? ? ? ? ?(a) On Oct.1, global?CEO consulting and advisory firm Teneo posted on its website the second report in its "2024 ESG Series" analyzing 250 sustainability reports published by S&P 500 companies between January 1 and June 30, 2024, "The State of Sustainability in 2024: DEI Will Survive. " (For the first one in the series, see Teneo's 2024 annual report on the state of U.S. sustainability reports at the S&P 500 companies, "Stand by ESG? The State of 2024 U.S. Sustainability Reports ": item (i)(a) from Sept.24/24). Below are some highlights from the second report, which are accompanied by charts with more detail in the report itself:

? ? ? ? ? ? ? ? ? ? ?"Are Companies Still Using the DEI Acronym?: Given the controversy around DEI, some companies are reassessing the use of the acronym to mitigate the risk of backlash. Last year, 99% of companies included some form of the acronym “DEI” in their sustainability reports. While still high, this figure has declined to 94% in 2024. Notably, of that 94%, the percentage of companies that now prioritize “inclusion” by placing it first in the acronym has risen. There has also been a noticeable addition of “culture” or “belonging” focused titling instead.

? ? ? ? ? ? ? ? ? ? "Have Companies Ditched Their DEI Goals?: A little under half (43%) of the S&P 500 continues to maintain and promote quantitative, time-bound DEI goals within their sustainability reports, with almost 80% of these goals remaining unchanged from last year. The most common are representation goals, present in one-third of companies, followed by supplier diversity goals (14%). 23% of reports also note other DEI goals such as goals for hiring from Historically Black Colleges and Universities (HBCU) and for investing in under-represented communities. Given the criticism of DEI goals as discriminatory following the Supreme Court decision on affirmative action in higher education, the four-percentage point decrease in disclosure year-on-year is not surprising. Of the 250 companies analyzed, 24 omitted specific DEI goals from their disclosures, including 16 related to diverse representation, nine on supplier diversity and seven tied to diverse community investments. Conversely, 13 companies introduced new DEI goals, including eight on representation, two on supplier diversity and six on broader initiatives such as HBCU recruiting efforts and pay equity.

? ? ? ? ? ? ? ? ? ? "Are Corporations Scaling Back Targeted Talent Programs?: Talent programs such as mentorships, fellowships, internships and scholarships that focus on specific demographics are prominently featured in 67% of company reports. Despite some criticism of these initiatives as exclusionary, they are often framed as essential tools for reaching diverse candidates as part of a holistic recruiting strategy."

? ? ? ? ? ? ? ? (b) Much has been written in the business press over the last few months on the anti-DEI campaigns launched against major U.S. companies by activist Robby Starbuck (see, for example, item (ii) from Oct. 8/24 and item (i)(c) from Sept. 24/24). Interesting look at how companies are preparing for a possible attack on their DEI programs in this Saturday's NY Times DealBook Newsletter, "A New Business on Wall Street: Defending Against D.E.I. Backlash ", which notes that "companies are conducting vulnerability assessments, compiling research reports and writing plans for what to do if their diversity efforts come under attack." Below are excerpts:

? ? ? ? ? ? ? ? ? ? ?"Someone you probably have never heard of has managed to scare virtually all of corporate America — and Wall Street is creating a new cottage industry around the fear.....Now, Wall Street law firms and communications outfits are building businesses around preparing companies for a Starbuck offense. The methods mirror how they would prepare for a cybersecurity attack: conducting vulnerability assessments, compiling research reports and writing plans for what to do if Starbuck comes calling.

? ? ? ? ? ? ? ? ? ? ?"The furious scrutiny gets at the heart of a question facing corporate America: After many companies adopted and heralded their efforts to improve diversity, equity and inclusion — often citing studies showing benefits for business — they’re now grappling with how to handle a backlash when both customers and executives are split over the policies.....

? ? ? ? ? ? ? ? ? ? ?"Corporate America’s break-the-glass planning for a Starbuck attack comes as it faces a surging blowback to the D.E.I. practices it rushed to implement in 2020......The Starbuck defense playbook starts with stealth mode. Executives are telling employees not to look at Starbuck’s profile on LinkedIn,?which could attract his attention. (Starbuck told DealBook an “onslaught” of Lowe’s employees looking at his profile initially drew his attention to the home goods retailer; it later became one of his targets.)

? ? ? ? ? ? ? ? ? ? ? "Communications and consulting firms trawl through any content that companies have on their website, annual report or elsewhere that might expose them to a potential attack from Starbuck. (Words like “diversity” and any public association with the Human Rights Campaign, an L.G.B.T.Q. advocacy group, are a particular red flag.)?Those considering dialing back some D.E.I. initiatives are also talking with unions, suppliers and others to understand the extent of potential financial repercussions. Will their liberal customers or suppliers boycott? Will their employees revolt? For many, these conversations started prior to Starbuck’s campaigns.....

? ? ? ? ? ? ? ? ? ? ? 'However companies ultimately handle their response to the pushback over D.E.I., it is causing a moment of reckoning within corporate offices.?An examination of D.E.I. efforts forces executives to consider whether they have followed through on promises they may have made several years ago. The next question is whether they still want to.?If executives are “learning for the first time about some various initiatives somewhere within the company,”?that’s the first issue, said Brian Bartlett, a strategist at the communications firm Kekst CNC. The second is if those initiatives are not in line with company priorities.?“That is problematic,” he said.

? ? ? ? ? ? ? ? ? ? ?"Some executives say that changing how they talk or write about their D.E.I. efforts — the most common remedy —?does not change the work that is going on behind the scenes.?But for diversity experts, that maneuver naturally gives rise to different concerns: How do you hold your leadership accountable to something that is not written? And are companies at risk of simply listening to the whims of those provoking the day’s online outrage?....."

? ? ? ? ? ? ? ? ?(c) Below is from this Bloomberg article on Monday, "Companies Are Dropping the D or E From DEI to Avoid Criticism ", with reference to Conference Board report release yesterday, "DEI Under Pressure ":

? ? ? ? ? ? ? ? ? ? ? "After a backlash against DEI programs by conservative activists,?a majority of executives in a new survey said that their companies have changed how the initiatives are described with reduced emphasis on racial diversity. Among more than 60 executives, slightly above 50% said their firms adjusted terminology, with another 20% considering similar changes, according to a survey by the Conference Board.

? ? ? ? ? ? ? ? ? ? ? ? "In many cases, companies are dropping “equity” from descriptions because it’s seen as the most controversial term, said Andrew Jones, a senior researcher at the Conference Board’s ESG Center and co-author of the study. Companies are “trying to minimize the exposure to scrutiny, to legal challenge, to backlash, to salacious headlines,” Jones said in an interview. They are?“shifting focus from talking about specific demographic groups, particularly around race.”......

? ? ? ? ? ? ? ? ? ? ? ? "It’s unclear whether companies that have altered terminology also changed how the programs are run, or if they are mainly trying to avoid controversy. "We do see the fundamental work continuing, with the recognition that the inclusive workplace does have real business benefits,”?Jones said.?“But if you’re no longer focusing on specific groups, you’re kind of saying it’s fine air for everyone. Is that a positive development? Or does that actually slow down the vital progress?”

? ? ? ? ? ? ? ? ? ? ? ?Below are three of the?Conference Board?report's "Key Insights":

? ? ? ? ? ? ? ? ? ? ? ? ? ? "-- Over 60% of executives view the current political and social climate for corporate DEI as very or extremely challenging, with most anticipating continued or escalating pushback due to growing scrutiny from agencies, lawmakers, shareholders, and activists.

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?-- Despite the adverse climate, fewer than 10% of firms plan to reduce DEI resources over the next three years,?reflecting a continued recognition of diversity’s business value in driving innovation, market adaptability, and competitiveness.

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?-- More than half of surveyed companies have revised their DEI terminology to downplay specific demographics?and mitigate political and legal risks, though doing so abruptly without clear explanation may lead to reputational challenges."

? ? ? ? ? ? ? ?(ii)KPMG with latest data of board diversity disclosure practices at the S&P 500 companies: Earlier this month, KPMG posted on its website this report, "Board diversity disclosures ", which "highlights board diversity disclosure practices for the S&P 500 and Russell 3000 as of June 2024." A good summary of the highlights appears in last Tuesday's Society for Corporate Governance blog post, "Benchmarking: Board Diversity Disclosure ", and below are excerpts:

? ? ? ? ? ? ? ? ? "Board gender diversity:

? ? ? ? ? ? ? ? ? ? ? 99% of the S&P 500.....disclose in some fashion their board’s gender composition.

? ? ? ? ? ? ? ? ? ? ? 53% of the S&P 500.....disclose gender by individual directors’ names.

? ? ? ? ? ? ? ? ? ? ? 92% of the S&P 500....disclose the number or percentage of directors identifying as gender-diverse.

? ? ? ? ? ? ? ? ? ?"Board racial/ethnic diversity:?

? ? ? ? ? ? ? ? ? ? ? 98% of the S&P 500....disclose in some fashion their board’s racial/ethnic diversity.....

? ? ? ? ? ? ? ? ? ? ? 43% of the S&P 500......disclose race/ethnicity by individual directors’ names.

? ? ? ? ? ? ? ? ? ? ? 45% of the S&P 500.....disclose the number/percentage of directors identifying with particular racial/ethnic categories.

? ? ? ? ? ? ? ? ? ? ? 74% of the S&P 500.....disclose the number/percentage of racially/ethnically diverse directors on the board.....

? ? ? ? ? ? ? ? ? ? "Director search: ?

? ? ? ? ? ? ? ? ? ? ? ?100% of the S&P 500......disclose that they incorporate diversity generally in their director search criteria.

? ? ? ? ? ? ? ? ? ? ? ? 93% of the S&P 500.....disclose gender diversity among their search criteria.

? ? ? ? ? ? ? ? ? ? ? ? 93% of the S&P 500......disclose racial/ethnic diversity among their search criteria.

? ? ? ? ? ? ? ? ? ? ? ? 17% of the S&P 500.....disclose sexual orientation diversity among their search criteria.

? ? ? ? ? ? ? ? ? ? "Director self-identified race: ??

? ? ? ? ? ? ? ? ? ? ? ?72% of the S&P 500.....disclose their directors’ self-identified racial categories by director name or by number or percentage of the board identifying with a particular racial/ethnic category.

? ? ? ? ? ? ? (iii) Starbuck's return-to-office (RTO) policy/WSJ with latest data on RTO policies/HBR post on hybrid work:?

? ? ? ? ? ? ? ? ? ?(a) Amazon made the headlines recently with its new RTO policy requiring staff to be in the office five days a week (see item (i) from Sept. 17/24). Now Starbucks?has stiffened its RTO policy, as reported in this Bloomberg article yesterday, "Starbucks Threatens to Fire Staff Who Don’t Come Back to Office ":

? ? ? ? ? ? ? ? ? ? ? ? ?"Starbucks Corp.?is telling its corporate staff they could be fired if they don’t come to work at the office three days a week. Starting in January, Starbucks will implement a “standardized process”?to hold workers accountable if they don’t abide by the coffee chain’s return-to-office policy, according to a memo sent to one of the company’s divisions that was seen by Bloomberg News. Consequences are “up to, and including, separation,” the email said.

? ? ? ? ? ? ? ? ? ? ? ? ? "The message marks an escalation in enforcement of the company’s hybrid work rules?less than two months since Brian Niccol took over as chief executive officer.?He told employees last month that they should work wherever they need to in order to get their jobs done, but that he thought that place was usually the office.

? ? ? ? ? ? ? ? ? ? ? ? ? "Starbucks said its expectations for hybrid workers hadn’t changed and that vacation, sick time and business travel are excluded from the calculation. Workers can request an exemption from the mandate due to physical, mental, sensory impairment or another disability, the company said. The policy applies to about 3,500 corporate employees. Most of the company’s workers are employed at its stores. “We are continuing to support our leaders as they hold their teams accountable to our existing hybrid work policy,” the company said in a statement on Monday.?Starbucks is the latest company to shift from carrots to sticks in the ongoing return-to-office battle that has been playing out at workplaces......"

? ? ? ? ? ? ? ? ? ? (b) From this WSJ article today, "Bosses Are Calling Workers Back to the Office. That’s Good News for Landlords ":

? ? ? ? ? ? ? ? ? ? ? ? ?"......More companies are backing away from the looser workplace policies they adopted during the early years of the pandemic as executives increasingly recommit to promoting an office culture. Amazon called corporate staffers back to the office five days a week last month. The company is now looking for a big block of expansion space in Manhattan, according to brokers. Dell Technologies?said it is requiring its global sales team to work from company offices full time.?3M's new chief executive last week said the company expected higher attendance from senior employees at the company’s headquarters and other large sites.

? ? ? ? ? ? ? ? ? ? ? ? ?"One-third of all companies required workers to be in the office five days a week in the third quarter,?up from 31% in the second quarter, according to Flex Index, which tracks workplace strategies.?That terminated a streak over the previous five quarters when that rate had steadily fallen......"

? ? ? ? ? ? ? ? ? ? ? ?(c) On the subject of hybrid work, note this HBR post today, "One Company A/B Tested Hybrid Work. Here’s What They Found ", co-authored by Nicholas Bloom, a professor of economics at?Stanford University and who has written extensively on the hybrid workplace and has advised several major U.S companies, including Microsoft. Below is the post's headnote summary:

? ? ? ? ? ? ? ? ? ? ? ? ? ? "Summary: Since the pandemic, executives have had to rethink their work-from-home policies to better support their companies’ bottom line. Recent research conducted in a real company showed that employees who worked from home three days a week experienced higher satisfaction and lower attrition rates compared with their colleagues who worked from the office. This reduction in turnover saved millions of dollars in recruiting and training costs, thereby increasing profits for the company. Business leaders can learn valuable lessons from this study to implement a successful hybrid work model: establishing rigorous performance management systems, coordinating team or company-level hybrid schedules, and securing support from firm leadership. Additionally, executives should A/B test their own management practices to find what works best for them."

? ? ? ? ? ? ? ? (iv) press releases of the day:?

? ? ? ? ? ? ? ? ? ?(a) Nasdaq-listed biotechnology company Biogen Inc.?announced yesterday in this press release the promotion of the Chief Accounting Officer to the position of CFO,?as follows:

? ? ? ? ? ? ? ? ? ? ? ? "Biogen Inc. today announced that Michael McDonnell, Biogen’s Executive Vice President and Chief Financial Officer, plans to retire from the company on February 28, 2025. Upon Mr. McDonnell’s retirement, Robin Kramer, currently Chief Accounting Officer at Biogen, will assume the role of Chief Financial Officer (CFO). In the coming weeks and months,?Mr. McDonnell will work closely with Ms. Kramer to ensure a smooth transition.

? ? ? ? ? ? ? ? ? ? ? ? ?"Mr. McDonnell....has served in his current role since August 2020.....Ms. Kramer joined Biogen in 2018 and has served as Senior Vice President and Chief Accounting Officer since 2020. In this capacity, she has overseen key finance functions including Treasury. She is also responsible for global procurement and Biogen's Global Business Services operations....."

? ? ? ? ? ? ? ? ? ? ? (b) On Oct.2/23, NYSE-listed,?global shipping and mailing technology company Pitney Bowes Inc. announced ?in this press release that?its CEO was stepping down,?to be replaced by the current Executive VP and Group President, Jason Dies,?as interim CEO, and that the Board had formed a Long-Term Planning Committee to lead?a comprehensive search process for a new permanent CEO; on May 22/24, Pitney Bowes?announced in this press release that the current interim CEO was stepping down, to be replaced by Lance Rosenzweig, a board member, as a second interim CEO (see item (iv)(b) from May22/24). Today, Pitney Bowes?announced in this press release ?the appointment of Lance Rosenzweig as permanent CEO,?as well as changes and enhancements to its board, as follows:

? ? ? ? ? ? ? ? ? ? ? ? ? ?"Pitney Bowes Inc., a technology-driven company that provides SaaS shipping solutions, mailing innovation, and financial services to clients around the world, today announced the appointment of Lance Rosenzweig as the Company’s permanent Chief Executive Officer, effective immediately. The Company’s Board of Directors?carried out an extensive CEO search process that was supported by a nationally recognized executive recruiting firm and included both internal and external candidates.?

? ? ? ? ? ? ? ? ? ? ? ? ? ?"After assessing Mr. Rosenzweig’s considerable contributions as interim CEO and his track record of value creation at Pitney Bowes and at other companies, the Board determined that he is the best-qualified individual to complete the Company’s transformation and pursue future opportunities for maximizing value. Mr. Rosenzweig will continue to serve as a member of the Board. In addition,?Pitney Bowes today announced the following changes and enhancements to its Board:

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?-- The election of Milena Alberti-Perez as non-executive Chair.....

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?-- The appointments of Paul Evans, Catherine Levene and Julie Schoenfeld to the Board.....

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?-- The intended appointment of Mr. Evans as Chair of the Audit Committee......"

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