'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) when to have a chief AI officer (CAIO) officer, and 3 roles to consider beyond a CAIO: Not surprisingly in this new age of AI (generative of otherwise) that a number of major companies have added a CAIO to their C-suite positions (see item (ii) from Feb. 8/24), and a number of articles have discussed the usefulness of such appointments, most recently this MIT/Sloan Management Review article, "Do You Really Need a Chief AI Officer?" discussed in this Fortune?CFO Daily Newsletter, "Is it time to appoint a Chief AI Officer? Not so fast say experts." (see item (ii) from Aug.29/24). More on this issue in this client memorandum of leadership advisory and search firm Russell Reynolds Associates?which it?posted on its website on Oct. 30, "When You Should (and Shouldn’t) Have an AI Leader in the C-suite." Below are excerpts:

? ? ? ? ? ? ? ? ? ?"....Developing a successful AI strategy is an issue that hasn’t gone unnoticed in boardrooms. CEOs are being asked about their approach, covering business model assessments, productivity improvements, and radical product innovation, as new technologies are being rolled out to just about every function in the business. Some are looking to the Chief Information Officer (CIO) for a tech solution, while others are turning to their Chief Data Officer for answers. And while leadership teams grapple with an enterprise-level strategy that connects the dots, the easy answer might just be: hire a Chief AI Officer.?

? ? ? ? ? ? ? ? ? ?"But?when it comes to AI strategy, does it require a dedicated C-suite role??The answer, of course, is that it depends.?

? ? ? ? ? ? ? ? ? ? ? ? — If AI is an enabling technology for your organization, and will be focused on improving productivity across departments, then hiring an AI leader in the technology or operations function might be a better approach.

? ? ? ? ? ? ? ? ? ? ? ? -- ?If your key focus for using AI is on improving customer experience and interaction, then having AI leaders in the commercial function will help you achieve that.

? ? ? ? ? ? ? ? ? ? ? ?— If your AI ambition is bigger, there’s great value in having a dedicated AI leader with deep expertise to work with the CEO to drive the strategy forward......

? ? ? ? ? ? ? ? ? ?"3 roles to consider beyond a Chief AI Officer: So, if you’re looking for an AI leader that suits your organization’s ambitions, there are different roles you can consider beyond a straightforward Chief AI Officer. Here are three that can form part of a multi-faceted team to drive your goals forward.

? ? ? ? ? ? ? ? ? ? ? ? ?1. AI Transformation leader:?If an enterprise-wide view is essential to meet your wide-reaching AI strategy goals, you need someone on your team who has an enterprise-wide mandate. This person might be a broader transformation leader who isn’t necessarily deep in AI—but they do have to know the business really well, have experience in leading, and be trusted within the organization. They can also hire AI leaders supporting them to make the transformation happen, working across the various functions.

? ? ? ? ? ? ? ? ? ? ? ? 2. AI Product leader: If you want radical product innovation using AI, you need someone with a strong product background to get into the weeds of how AI can connect to your offering. This person will connect the voice of the customer to the technical realities of what is possible, and help bring new innovation to market, making the best of emerging technologies.

? ? ? ? ? ? ? ? ? ? ? ??3. AI Innovation leader: If you’re looking for someone to push the organization’s thinking in terms of the art of the possible, you need someone at the very top who understands the business, as well as the possibilities AI can accomplish to elevate your entire organization. This could be one or two people, and they might already exist internally—it might even be your CEO. But they need a nuanced understanding of the practical possibilities of AI and what it can achieve for your company, so sometimes it’s better to fill that role from someone on the ground. This could be a business leader or, if it’s the right fit for your organization, this is where a Chief AI Officer comes in...."

? ? ? ? ? ? ? (ii) JP Morgan's chief information security officer (CISO) on cybersecurity trends at the bank: Pat Opet is the CISO at JP Morgan, and he recently spoke with Fortune about cybersecurtiy at the bank. Below are excerpts of the conversation appearing in this Fortune article last Thursday, "JPMorgan CISO says three trends play a role in how he protects the banking giant":

? ? ? ? ? ? ? ? ? "Pat Opet, the global chief information security officer at JPMorganChase, says three trends today play a role in how his team protects America’s biggest bank. The first?is that the bad actors have gotten savvier. “Every time the defenders continue to innovate, you’ve got attackers who are doing so in parallel,” says Opet......“The most significant change to the ecosystem is the sophistication of the ransomware actors,”?says Opet, adding that there’s even been some coordination between nation-state adversaries and cybercriminals that can make it difficult to decipher between the two.

? ? ? ? ? ? ? ? ? "Secondly, there’s the increased reliance on cloud-based, software?as a service (SaaS) applications, which have proliferated in popularity in recent years and saw an especially strong surge of adoption as companies embraced remote work during the pandemic. “All these changes in technology creates the opportunity for weakness or failure if companies aren’t diligent in how they mature these capabilities to make them available to employees,” says Opet.?And lastly, JPMorganChase has itself become a much more technology-centric organization,?embracing machine learning, public and private clouds, and newer technologies like generative artificial intelligence.......?

? ? ? ? ? ? ? ? ? ?"As new tools are rolled out and employees get access to more forms of technology, Opet deploys a “federated” approach to cybersecurity. The CISO has a team of security architects and engineers who are embedded?into the development teams?to build the necessary safety controls of the latest generative AI tools or cloud platforms. “The workforce, of course, also has a responsibility,” says Opet.?“But even there, we build a lot of security technology into the ecosystem to ensure we can offer that level of resilience and that a mistake doesn’t lead to some sort of cyber event.”?If an employee were to erroneously click a malicious link in a phishing email, for example, the web page would open on an isolated container that’s separate from the rest of the computer. This would prevent the malware from infecting the PC.

? ? ? ? ? ? ? ? ? ?"JPMorganChase buys some cyber solutions from third-party vendors,?which Opet declined to name, though he said?the company generally believes that if?“there’s either a scale problem or there’s a capability gap that we don’t believe we can get from the market, then we’ll build.” Across the cybersecurity industry, Opet says some work must be done to make multi-factor authentication more resilient. That is a security method that requires users to provide more than one form of authentication to access an application or online account. Known as MFA, this line of defense has been adopted widely, giving attackers more motivation to figure out loopholes to exploit. The hackers have made inroads exposing MFA in recent years......"

? ? ? ? ? ? ? (iii) director compensation at Nvidia/precedents of the day (the Nvidia Equity Incentive Plan and the Nvidia Indemnity Agreement): Nasdaq-listed NVIDIA Corporation (currently the world's most valuable company with a market cap of $3.62 TRILLION) announced last Thursday in this press release?that it had named to its board of directors Ellen Ochoa, former director of NASA’s Johnson Space Center in Houston, thereby expanding its board to 13 members. Compensation for the new director is disclosed in the related Current Report?filed with the SEC, with reference to the company's Amended and Restated 2007 Equity Incentive Plan?and the NVIDIA Corporation Indemnity Agreement,?as follows:

? ? ? ? ? ? ? ? ? ?"In connection with her appointment to the Board, Dr. Ochoa will be granted pursuant to our Amended and Restated 2007 Equity Incentive Plan,?or the 2007 Plan: (a) an initial equity grant of 1,848 restricted stock units, vesting approximately semi-annually over three years, and (b) a pro-rated annual equity grant of 1,321 restricted stock units, all of which will vest on May 21, 2025. Additionally, she was granted a pro-rated annual cash retainer of $53,800, payable starting on November 7, 2024.....In addition, we have entered into an indemnity agreement with Dr. Ochoa in connection with her service as a member of the Board......"

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

? ? ? ? ? ? ? ? ? ? (a) On Aug.13/24, Chipotle Mexican Grill, Inc.?announced in this press release?the?appointment of the Chief Operating Officer, Scott Boatwright,??as interim CEO, with the then Chairman and CEO, Brian Niccol,?having accepted the role as Chairman and CEO of?Starbucks?(see item (viii)(b) from Aug.26/24). Yesterday,?Chipotle announced in this press releasethe appointment of the interim CFO, Scott Boatwright, as permanent CEO,?as follows:

? ? ? ? ? ? ? ? ? ? ? ? "Chipotle Mexican Grill?today announced that after a robust and thorough process, its Board of Directors has appointed?Scott Boatwright?as chief executive officer and a member of the board, effective immediately.?Prior to being named Interim CEO in August, Boatwright served as chief operating officer,?reporting directly to the company's CEO since 2017......Scott Maw, Chipotle's chairman of the board, added:?"We conducted a thorough and rigorous external search process that confirmed Scott is absolutely the best person to lead the next stage of growth at Chipotle......"

? ? ? ? ? ? ? ? ? ? (b) Nasdaq-listed, online travel company Expedia Group, Inc. announced last Thursday in its Q3/24 earnings press release a "CFO transition", as follows:

? ? ? ? ? ? ? ? ? ? ? ? "Expedia Group and Julie Whalen have agreed that she will step down from her role as Expedia Group’s Chief Financial Officer, effective upon the appointment of her successor, which is expected to occur before February 17, 2025. Ms. Whalen has agreed to remain with the Company through February 17, 2025 to facilitate a smooth transition.?Ms. Whalen has also resigned as a member of the Board of Directors of the Company, effective today....."

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