'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) Spencer Stuart 2024 S&P 500 director compensation 'snapshot'/director compensation at Hertz (and Hertz director indemnification agreement):?

? ? ? ? ? ? ? ? ? (a) In August, Spencer Stuart posted on its website its report on director compensation at the S&P 500 companies,?this "2024 S&P 500 Director Compensation Snapshot", based on its review of the "latest proxy statements from 489 companies filed between May 1, 2023, and April 30, 2024." Below are some of the highlights from the report:

? ? ? ? ? ? ? ? ? ? ? ? ?"-- The average total compensation for S&P 500 directors (excluding independent chairs’ fees)?is $327,096, an increase of 1.8% from 2023 ($321,220).?

? ? ? ? ? ? ? ? ? ? ? ? ? – Stock accounts for 58% of director compensation, with cash accounting for 37%?for the third year in a row.

? ? ? ? ? ? ? ? ? ? ? ? ? ?– The average annual retainer for S&P 500 independent directors is $144,077, up only slightly from $143,106 in 2023......

? ? ? ? ? ? ? ? ? ? ? ? ? ?– More than three-quarters of boards (76%) grant stock awards to directors,?up from 74% in 2023. The average targeted dollar value of annual stock awards is $190,489,?up 2.7% from $185,460 in 2022.

? ? ? ? ? ? ? ? ? ? ? ? ? ?– For the first time in two decades, the number of companies awarding directors stock options increased in 2024.?This year, 10% of boards awarded stock options to directors, worth an average of $140,405 — a 6.5% increase from 2022. In 2004, 68% of boards granted stock options; that fell to 18% by 2014 and 7% in 2023.

? ? ? ? ? ? ? ? ? ? ? ? ? – Of the 190 S&P 500 boards with independent chairs, all but six provide the chair with additional compensation.?This chair premium averages $173,279,?a 1.3% decrease from $175,519 last year, and ranges from $25,000 to $500,000.?

? ? ? ? ? ? ? ? ? ? ? ? ? -- Most S&P 500 boards (97%) provide a supplemental retainer for service as a committee chair,?compared with 95% a decade ago. Among these boards, audit committee members and chairs tend to receive the highest supplemental retainer.

? ? ? ? ? ? ? ? ? ? ? ? ? ?-- Board meeting attendance fees are rare. Only 12 boards, or 2%, pay board meeting attendance fees?— down from 17 boards (3%) last year.....Where they are paid, they range from $900 to $20,000; the average is $3,825 (up from $3,141 in 2023). The number of boards paying for telephonic board meetings also continues to decrease.?This year, only four boards (1%) pay a telephonic meeting fee....."

? ? ? ? ? ? ? ? ? ?(b)?Hertz Global Holdings, Inc. announced last Tuesday in this press release that it was adding two new members to its board (see item (vi)(b) from yesterday). Compensation to be received by the two new directors is disclosed in the related Current Report?filed with the SEC, as follows:

? ? ? ? ? ? ? ? ? ? ? "On August 26, 2024, the Board of Directors of Hertz Global Holdings, Inc. increased the size of the Board of Directors from 9 to 11 and elected Mr. Francis Blake and Ms. Lucy Clark Dougherty to serve as directors of the Company, effective August 27, 2024, to fill such vacancies. Upon their appointment as non-employee members of the Board, Mr. Blake and Ms. Clark Dougherty will each receive the standard compensation paid to non-employee members of the Board under the Company’s Amended and Restated Directors' Compensation Policy?dated February 15, 2023, consisting of (i)?an annual grant of restricted stock units with a value of $175,000 and?(ii) an annual cash retainer of $100,000,?in each case subject to their continued service as a director.

? ? ? ? ? ? ? ? ? ? ? "Each of Mr. Blake and Ms. Clark Dougherty has entered into an indemnification agreement with the Company in the form filed with the Securities and Exchange Commission.as Exhibit 10.10 to the Annual Report on Form 10-K filed on February 23, 2022, which is incorporated by reference herein in its entirety....."

? ? ? ? ? ? ? ? ? This is the Indemnification Agreement referred to.

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? ? ? ? ? ? ? ?(ii) how some prominent companies are dealing with disruptive discussions of social and political issues in the workplace/how CHROs are dealing with divisive political issues that create tension in the workplace:?

? ? ? ? ? ? ? ? ? ? ?(a) A number of recent items have discussed how some companies are attempting to minimize disruptive discussions on social and political issues in the workplace: see item (i)(c) from July 9/24 and item (iii) from July 23/24. More on this in this Aug. 5 WSJ article, "It’s Getting Harder for Companies to Keep Politics Out of the Workplace", with reference, inter alia, to what such prominent companies as Google, Salesforce, Hilton and?Delta Air Lines are doing:

? ? ? ? ? ? ? ? ? ? ? ? ? ".....For much of this year, executives took pains to say as little as possible on presidential politics and other divisive topics, such as the continuing war in the Middle East. In one widely followed move, Google?Chief Executive Officer?Sundar Pichai?told employees in April that the office isn’t a place to debate politics,?noting “this is a business,” following ?protests at some of Google’s locations.

? ? ? ? ? ? ? ? ? ? ? ? ? "While that sentiment remains in many C-suites, a number of companies are now finding that ignoring political discourse altogether may be unrealistic in an election campaign that is proving to be so unpredictable—and all-consuming.....How employers deal with charged topics in the office continues to evolve. In recent weeks,?Salesforce created a new policy asking employees to stop talking about the war in Gaza?in its Slack channels, a move that came after the company felt some employees were spending too much time debating such issues. Executives were also presented with a hiring plan to add more human-resources staff to help moderate the internal discussions, an indication for some that the discussions had gone too far, according to a person familiar with the matter.?

? ? ? ? ? ? ? ? ? ? ? ? ? "Companies with front-line employees face their own challenges, particularly if customers try to draw workers into a political discussion. At Hilton, the hotel giant has expanded training programs for employees working at its properties to include de-escalation techniques designed to “lower the temperature” on a number of topics, including politics, said Laura Fuentes, the company’s chief human resources officer.

? ? ? ? ? ? ? ? ? ? ? ? ? ?"Delta Air Lines?in July banned its flight attendants from wearing non-U.S. flag pins on their uniforms after some customers expressed frustration at seeing flight attendants wearing pins of the Palestinian flag. The policy shift spurred its own complaints; some flight attendants advocating for union representation within the airline urged Delta to reverse its change, saying it restricted crew members’ ability to express themselves....."

? ? ? ? ? ? ? ? ? ? ?(b) Below is from the Aug. 15 Fortune CHRO Daily Newsletter, "Political issues can be a threat to company culture—here’s how CHROs are managing workplace tensions":

? ? ? ? ? ? ? ? ? ? ? ? ?".....HR leaders view “political issues in general” and “political issues tied to the upcoming election” as two of the top five threats to company culture over the next 12 to 18 months, according to a report?released today from the University of South Carolina’s Darla Moore School of Business. The report defines political issues to include?legal restrictions to abortion access, immigration, and DEI practices. The survey, which gathered responses from 153 CHROs, covered a wide breadth of topics but revealed one common thread: CHROs are afraid of political conflict creating a dysfunctional workplace.?

? ? ? ? ? ? ? ? ? ? ? ? ?"Some CHROs see this as being a tremendous threat to their culture,” Patrick Wright, associate dean of corporate relations at the University of South Carolina, tells Fortune.?“There’s been so much that’s happened over the last five years, from COVID, to George Floyd, to Israel. It’s event, after event, after event, that is creating these new conversations. It’s now becoming more front of mind.”.......

? ? ? ? ? ? ? ? ? ? ? ? ?"Although approaching politics in the office is often fraught with tension, CHROs have already laid out a game plan, according to the report. The most popular method to manage political conversations in the workplace is asking employees to be clear on social media that their posts are their personal opinion, and not the stance of their companies.....That’s followed by HR leaders outlining proper ways to discuss political issues in the office.... training managers in how to manage this dialogue....and establishing a formal policy regarding political discourse....

? ? ? ? ? ? ? ? ? ? ? ? ?“CHROs are trying to stay away from acting like Big Brother, dictating what you can’t say or what opinion you can’t have. So their initial salvo is to say, ‘Just be careful what you do with social media,’”?he says. Notably, however, Wright has seen a shift in the way that CHROs approach politics at work. Rather than shying away from the topic altogether, they’re leaning more towards transparency.?“They are trying to be very cautious in how they approach it, yet see the need to be much more proactive and more vocal about it,” he says."

? ? ? ? ? ? ? (iii) a follow-up to item (ii) from yesterday on DEI: Below is from this WSJ article yesterday, "Molson Coors Rolls Back DEI Initiatives":

? ? ? ? ? ? ? ? ? ? "Molson Coors, the maker of Coors Light and Miller beers, is the latest company to pull some of its diversity policies and initiatives. The brewer said it would no longer participate in a scoring system by the Human Rights Campaign, an advocacy group that gives scores to companies based on LGBTQ+ inclusion in their workplaces. In addition, Molson Coors said it would no longer have supplier-diversity goals,?which typically aim to buy supplies from companies owned by minorities or women.......

? ? ? ? ? ? ? ? ? ? "The changes at Molson Coors were laid out in an email to employees from the company’s leadership and viewed by The Wall Street Journal.?A Molson Coors spokesman declined to comment beyond the company’s internal email. Molson Coors’s human-resources team has been working on changing its culture since March to evolve from?“our work focused on DEI to a broader view in which all our employees know they are welcome,” the company said in the email.?“The driving force behind this shift,” the email said, 'was the understanding that when all our people know they are welcome, they are more engaged, motivated and committed to our company’s collective success.'?....."

? ? ? ? ? ? ? ? ?See also this Bloomberg article yesterday, "Coors Beer Maker Joins Ford, Lowe’s in Diversity Retreat."

? ? ? ? ? ? ?(iv) hedge fund activist campaigns: a recap of the largest ones in the first half of 2024 (at Disney, Macy's, Starbucks, Gildan Activewear, JetBlue, Crown Castle)/portrait of a significant shareholder activist group in Canada:?

? ? ? ? ? ? ? ? ? ?(a) A number of recent articles and reports have discussed the state of hedge fund activist campaigns, including this Reuters article, "Activist investors mount record number of campaigns but win fewer board seats" (see item (iii) from July 8), and this report by global consulting firm?FTI Consulting, "Are Boards Settling With Activists Too Quickly? What Settlement Data Says About the Evolution of Activism" (see item (iv) from July 23).?A good recap of the most prominent activist campaigns in the first half of 2024, including the saga in Canada at Gildan Activewear, as well as those at Disney, Macy's, Starbucks, JetBlue and Crown Castle,?is in this Law360 Aug. 2 blog post, "Corporate Battles Thrust Activist Investing Into The Spotlight", with inter alia reference to this report released at the end of July by board?governance software provide Diligent, "Shareholder Activism Annual Review 2024", which notes that:

? ? ? ? ? ? ? ? ? ? ? ?"The number of U.S. companies subject to shareholder activist demands in the first half stood at?449, marking?a 9% jump from 412 in the first half of last year and an 11.4% increase compared to 403 in the first half of 2022...."

? ? ? ? ? ? ? ? ? ? ? ? The Diligent report is also discussed in this July 29 Fortune article, "Activist investors have sharper claws—and they want board seats":

? ? ? ? ? ? ? ? ? ? ? ? ?"In the first half of the year, 449 U.S. companies were subject to demands from activist investors, a 9% jump compared to the first half of last year. And hedge funds are taking swings at big targets. More than half the demands made to companies in the first half were at large-caps with market values of $10 billion and up......“This year, proxy contests have been big, front-page events, whereas in previous years they have taken place largely in the background,” said Stephanie Hill, head of index at Mellon Investments......'This means companies cannot ignore this space; there is the potential for an activist to target your company and make it onto the front page.'....."

? ? ? ? ? ? ? ? ? ? ? ?(b) Note this Aug.9 Globe and Mail article, "Meet the man using shareholder activism to hold Canada’s biggest companies accountable for climate pledges", on the shareholder advocacy group, "Investors for Paris Compliance"?(I4PC), and its executive director, Matt Price. As reported in the article:

? ? ? ? ? ? ? ? ? ? ? ? ? ?"I4PC is part of a growing global movement of increasingly sophisticated activists putting emissions-reduction and energy-transition demands in front of shareholders of oil and gas companies, banks and insurers, among others. In this year’s proxy season, the group got seven resolutions onto meeting agendas, targeting Power Corp., Suncor Energy Inc., Toronto-Dominion Bank and Enbridge Inc."

? ? ? ? ? ? ? ? ? ? ? ? ? ?Of particular interest, note the discussion of?I4PC's negotiations regarding proposed shareholder resolutions with both?Enbridge, inter alia quoting Enbridge’s chief sustainability officer Pete Sheffield, and with Manulife Financial.

? ? ? ? ? ? ? (v) some data on the prevalence of different types of 'private investor meetings': This July 31 post on the Columbia?Law?School?blog on corporations and the capital markets, "Reg FD’s Dilemma: The Unseen Edge in Private Investor Meetings", is by the authors of, and summarizes, this study, "Behind Closed Doors: Preferential Disclosure in Private Meetings." Below is from the "Background" section of the study:

? ? ? ? ? ? ? ? ? ? "IROs?(investor relations?officers) frequently meet privately with institutional investors..... Durney (2023) provides complementary survey evidence that IROs hold an average of over 200 private meetings per year.?The most common meeting types are phone?calls (57%), followed by private meetings at conferences (26%), private office meetings (10%), roadshows (7%), conference presentations (2%), informal meetings (2%), and investor days (<1%)......In terms of the content of these meetings, IROs can privately confirm recent?management forecasts, review investors’ financial models, and disclose individual pieces of?immaterial information that could complete a?“mosaic”?that is collectively material......"

? ? ? ? ? ? ? (vi) SAP senior executive to depart for 'inappropriate behavior'/press release of the day: As reported in this Bloomberg story yesterday, "SAP’s CTO Mueller to Leave Over ‘Inappropriate’ Behavior", the?Chief Technology Officer of NYSE-listed SAP SE is leaving the company for "inappropriate behavior". Below is from the?SAP press release yesterday announcing the departure:

? ? ? ? ? ? ? ? ? ? ?"SAP SE today announced that the SAP Supervisory Board has reached a mutual agreement with Chief Technology Officer and Executive Board Member Dr.-Ing. Juergen Mueller to leave the company’s Executive Board, effective?September 30, 2024. Mueller stated:?“I want to address an incident at a past company event where my behavior was inappropriate. I regret being inconsiderate and sincerely apologize to everyone affected. ?I recognize my behavior at that moment did not reflect our values at SAP. I take full responsibility and believe stepping down is best for the company. I wish the team continued success.”.....In the interim, SAP CEO Christian Klein will assume responsibility for most of the Technology & Innovation Board area that Mueller leads......"

? ? ? ? ? ? ? (vii) disclosure of a cyber incident: Halliburton's?update/SEC filing of the day: On August 23, NYSE-listed, oil service company Halliburton Company?disclosed in this Current Report?filed with the SEC that it had experienced a cybersecurity incident,?and had activated its cybersecurity response plan (see item (i)(b) from last Thursday. Yesterday, Halliburton provided this update?in this Current Report filed with the SEC, as follows:

? ? ? ? ? ? ? ? ? ? "As previously disclosed in a Current Report on Form 8-K, on August 21, 2024, Halliburton Company became aware that an unauthorized third party gained access to certain of its systems.?When it learned of the issue, the Company activated its cybersecurity response plan and launched an investigation internally with the support of external advisors?to assess and remediate the unauthorized activity. The Company’s response efforts included proactively taking certain systems offline to help protect them and notifying law enforcement. The Company’s ongoing investigation and response include restoration of its systems and assessment of impacted data.?

? ? ? ? ? ? ? ? ? ? ?"Likewise, the Company has been and is communicating with its customers and other stakeholders regarding the incident.?The Company is following its process-based safety standards for ongoing operations under the Halliburton Management System and is working to identify effects of the incident. The Company continues to provide its products and services to customers globally.

? ? ? ? ? ? ? ? ? ? "The incident has caused disruptions and limitation of access to portions of the Company’s business applications?supporting aspects of the Company’s operations and corporate functions. The Company believes the unauthorized third party accessed and exfiltrated information from the Company’s systems. The Company is evaluating the nature and scope of the information, and what notifications are required.?

? ? ? ? ? ? ? ? ? ?"The Company has incurred, and may continue to incur, certain expenses related to its response to this incident. As of the date of this Current Report on Form 8-K, the Company believes that the incident has not had, and is not reasonably likely to have, a material impact on the Company’s financial condition or results of operations. The Company remains subject to various risks due to the incident, including the adequacy of processes during the period of disruption, diversion of management’s attention, potential litigation, changes in customer behavior, and regulatory scrutiny.

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