'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) Norfolk Southern's board determines that its CEO had violated company policy by engaging in a consensual relationship with the?Chief Legal Officer/press release of the day: Last Sunday evening, Norfolk Southern Corporation issued this statement disclosing that its board had opened an investigation into allegations of potential conduct by its CEO, Alan Shaw, that was inconsistent with the company's Code of Ethics and company policy (see item (iii) from this Tuesday). Last evening, Norfolk Southern?announced in this press release? that "preliminary findings from its ongoing investigation had ?determined that Alan Shaw had violated company policies by engaging in a consensual relationship with the company's Chief Legal Officer", and that both the CEO and Chief Legal Officer had been terminated from their roles, with the CFO being appointed as the new CEO, as follows:

? ? ? ? ? ? ? ? ? ? ?"Norfolk Southern Corporation today announced that the?Norfolk Southern Board of Directors has by unanimous vote of the independent directors appointed?Mark R. George, the company's Executive Vice President and Chief Financial Officer, as President and Chief Executive Officer, effective immediately. George will also join the Norfolk Southern Board.

? ? ? ? ? ? ? ? ? ? ? ? "George's appointment follows the Norfolk Southern Board's unanimous decision to terminate?Alan H. Shaw?for cause, effective immediately. This change in leadership comes in connection with preliminary findings from an ongoing investigation that determined Shaw violated company policies by engaging in a consensual relationship with the company's Chief Legal Officer.......

? ? ? ? ? ? ? ? ? ? ? ? "In connection with George's appointment as Chief Executive Officer, Norfolk Southern announced that?Jason A. Zampi?will serve as acting Chief Financial Officer. Norfolk Southern also announced that Nabanita C. Nag has been terminated from her roles as Executive Vice President Corporate Affairs, Chief Legal Officer & Corporate Secretary,?effective immediately, in connection with the preliminary findings of the Board's ongoing investigation.?Jason M. Morris?will serve as acting Corporate Secretary."

? ? ? ? ? ? ? ? ? (ii) JP Morgan CEO Jamie Dimon on the title of chairman and AGMs: ?Jamie Dimon, chairman and CEO of JP Morgan,?spoke this week at a conference held in New York on Tuesday by the Council of Institutional Investors (CII), a group that "promotes shareholder rights and best practices in corporate governance." Here is some of what he said, as reported in this?Barron's article on Tuesday, "JPMorgan’s Dimon Would ‘Love’ Bank to Be Private, Slams Shareholder Meetings ":

? ? ? ? ? ? ? ? ? ? "Jamie Dimon, the chief executive and chairman of JPMorgan Chase,?again weighed in against annual shareholder meetings?while speaking at a conference held by an organization that promotes shareholder rights and best practices in corporate governance. “Let’s call it what it is. It’s a frivolous waste of time. They are hijacked by special interest groups,” he said on Tuesday morning at an event held by the Council of Institutional Investors in Brooklyn, New York.

? ? ? ? ? ? ? ? ? ? "Shareholder meetings don’t promote “serious conversations” about important company or societal issues, Dimon said.?He suggested regulations allowing anyone with a stake of at least $2,000 in a public company to submit proposals for voting at annual meetings are outdated. "I’d love to be private if I could,”?Dimon said later, during an interview with Bob McCormick who is CII’s executive director. “I don’t know of a public company who wouldn’t say that. Less litigation, less SEC, less frivolous shareholder meetings,”?Dimon said......

? ? ? ? ? ? ? ? ? ? "Dimon touched on another corporate governance issue: the debate over whether the roles of chair and CEO should be held by separate people?to promote accountability and offer a check on the power of corporate management. He said on Tuesday that he has wanted to get rid of the chairman title.?“Just get rid of it. Have a lead director and a CEO. Who cares?” he said....."

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? ? ? ? ? ? ? (iii) CFO transitions: the?trend at large companies away from 'cross-industry' hires/data on CFO tenure and the frequency of internal appointments:?

? ? ? ? ? ? ? ? ? ? (a) A number of recent items have noted the trend at large companies to hire new CFOs from outside the hiring company's industry: see, for example, item (ii) from July 11, and item (iii)(b) from July 2. But that trend seems to be reversing,?according to the July 25 Fortune CFO Daily Newsletter, "More Fortune 1000 firms want to hire CFOs from their own industry—a switch from past years. Here’s why ":

? ? ? ? ? ? ? ? ? ? ? "A trend is brewing this year where large companies are making a pivot away from hiring cross-industry CFOs, according to an analysis. New data from executive search firm Heidrick & Struggles reveals signs of a decline in a focus on cross-industry CFO hires. So far in 2024, about 61% of firms in the Fortune 1000 hired cross-industry CFOs. In 2023, 91% of firms?hired?a CFO from a different industry,?according to the analysis. I sat down with Alyse Bodine, Heidrick & Struggles’ global managing partner of the Financial Officers Practice, to find out more.

? ? ? ? ? ? ? ? ? ? ? "Oftentimes, the skill sets of finance chiefs can be fungible across industry sectors, Bodine said. Over the past few years, many organizations have looked for a nuanced perspective or are reevaluating their business model, so they had a desire to bring on a CFO from outside the sector. However, one reason this practice is starting to decline is market uncertainty this year,?and factors like the upcoming U.S. presidential election, and elections worldwide. The board wants a CFO who can make an immediate impact, Bodine said.?

? ? ? ? ? ? ? ? ? ? ? "Some of the firm’s large clients are even considering CFOs who’ve worked in the same sector at smaller-scale companies, she said. The ability for the CFO to come up to speed and make an impact would arguably happen in a shorter time period compared to someone coming outside the industry, Bodine said.?“Anecdotally, even clients that we’re working with in the private equity sector, or even those at smaller entities that we don’t track, are following a similar trend,” Bodine said.?

? ? ? ? ? ? ? ? ? ? ? "There are also many instances where an organization runs an external search, but discovers there’s an internal candidate who is “absolutely the right one to step up into that lead role,”?she said.....Regarding signs of a decline in cross-industry hiring, “outstanding CFOs” who have demonstrated an ability to work across industries and do so successfully, are seemingly an exception, as companies want to hire them, Bodine said. Overall, when organizations do wish to hire talent working outside of the sector, they look at industries that have similar qualities and characteristics,?she said. This could be an exec who is well-versed in heavy?R&D or regulatory focus, for example......Does Bodine expect the slowdown in cross-industry CFO hires to continue??“I do think that similar industry hiring this year is probably something that we’re going to continue to see,” she said."

? ? ? ? ? ? ? ? ? ? (b) On Aug. 12, leadership advisory and executive search firm Russell Reynolds Associates posted on its website this report? with the latest data on CFOs, including CFO turnover, CFO tenure and the frequency of CFO internal appointments. Below is some of that data:

? ? ? ? ? ? ? ? ? ? ? ? ?"CFO tenures are becoming shorter: The average tenure of an outgoing CFO has reached a five-year low of 5.7 years in H1. When we looked at the reasons why CFOs departed the role, more CFOs are choosing to retire, with 54% of H1 outgoing CFOs retiring or moving to board roles exclusively, up 15 percentage points year-over-year—a five-year high.?CFOs approaching retirement may not seek another CFO role due to factors like burnout, financial security, or simply deciding that retirement seems the more attractive option. Instead, many are leveraging their finance expertise in various board roles.

? ? ? ? ? ? ? ? ? ? ? ? ? "Over half of CFOs are internal appointments: CFO succession plans are coming to fruition, with 56% of H1 global incoming CFOs being appointed internally. But, certain indices are more successful at promoting internal CFO talent than others. The Nikkei 225 and Hang Seng’s CFO appointments were almost exclusively internal, but in more western indices, there was a greater reliance on external appointments.?For those externally appointed, experienced CFOs have been increasingly favored—H1 2024 has seen the highest percentage of experienced CFOs being recruited into the role in the past five years,?as organizations continue to navigate complex economic markets....."

? ? ? ? ? ? ? ? ? ? ? ? The report is discussed in the Aug. 15 Fortune CFO Daily Newsletter, "The Great CFO Turnover: Why more top finance leaders are retiring or changing jobs ":

? ? ? ? ? ? ? ? ? ? ? ? ?"....Taking a look at H1, from Jan. 1 to June 30, CFO turnover reached 8.9% globally, outpacing levels in 2022 and 2023, according to?leadership advisory firm Russell Reynolds Associates (RRA). In?H1 2023, turnover reached 8.3%, while the number for the same period in 2022 was 8.5%. RRA’s Global CFO Turnover index is a composite of several indexes such as the S&P 500, FTSE 100, and ASX 200 that is updated quarterly........

? ? ? ? ? ? ? ? ? ? ? ? "When looking particularly at the S&P 500, more than half (54%) of outgoing CFOs moved to new roles, according to RRA. CFOs are also getting promoted, where they’re moving into chief operating officer or president roles, even CEO roles in some cases,?and that’s creating a constraint on the supply side of CFOs, Fisher?(Jenna Fisher, managing director and head of the CFO practice at RRA) said....."

? ? ? ? ? ? ? (iv) latest C-suite data: Crist Kolder's 2024 mid-year 'Volatility Report' on?CEOs, CFOs and COOs at the S&P 500 and Fortune 500 companies: Executive search firm Crist Kolder Associates?annually publishes a "Volatility Report" with the latest data on CEOs, CFOs and COOs at the S&P 500 and Fortune 500 companies, and it recently published its 2024 ?mid-year report, "Volatility Report Summer 2024 ". Below is some of the data which, note, in the report itself is accompanied in each case by a related chart or graph containing more detailed information:

? ? ? ? ? ? ? ? ? ? ? "-- External Hiring of CFOs Hits 10-Year High ? p.11

? ? ? ? ? ? ? ? ? ? ? ? – Over the Past Decade, Roughly 35% of Companies Have Utilized a COO Position ? p.13 ? ? ? ? ? ?

? ? ? ? ? ? ? ? ? ? ? ? – 38% of COO Turnover This Year Resulted in Internal Promotion to CEO ? p.14 ?

? ? ? ? ? ? ? ? ? ? ? ? – Promotions from CFO to CEO Dipped in the First Half of 2024 ? p.17?

? ? ? ? ? ? ? ? ? ? ? ? – Nearly Half of Sitting CEOs Were Promoted Directly from a COO or President Position ? p.18

? ? ? ? ? ? ? ? ? ? ? ? – 75% of Sitting CFOs Came from a Number Two Position ? p.19

? ? ? ? ? ? ? ? ? ? ? ? – 75% of Sitting CFOs Came from a Number Two Position ? p.21

? ? ? ? ? ? ? ? ? ? ? ? – Roughly 15% of Sitting CFOs Spent Time in Investment Banking ? p.22

? ? ? ? ? ? ? ? ? ? ? ? – The Age at Hire for New CEOs Has Decreased ? p.23

? ? ? ? ? ? ? ? ? ? ? ? – The Average Age of CEOs and CFOs Has Remained Constant Over the Past Decade ? p.24

? ? ? ? ? ? ? ? ? ? ? ? – 35% of Sitting CEOs and CFOs Hold at Least One External Public Board Seat ? p.39"

? ? ? ? ? ? ? (v) HBR post on the co-CEO, co-leadership structure: 8 reasons why they often fail, and how to make them work/co-CEOs at KKR:?

? ? ? ? ? ? ? ? ? ?(a) A number of items over the past few years have discussed the co-CEO management structure, most recently item (iii) from July 11 in which the co-CEOs of Netflix?and NYSE-listed, online eyewear retailer?Warby Parker discussed the co-CEO structure. Anand Joshi?is a former managing director at Goldman Sachs, and is the founder of Future Proven, a "global leadership advisory firm that specializes in working with CEOs, co-CEOs and Executive Boards." He is the author of this July 25 HBR post, "8 Reasons Why Co-Leaders Fail ", in which he identifies "eight mistakes I see all too frequently when companies opt for a shared leadership approach", and then discusses how to avoid them. Below is from the opening paragraphs of the post:

? ? ? ? ? ? ? ? ? ? ? "Splitting a leadership role between two executives is an increasingly popular practice in companies, often at the divisional and departmental level — and sometimes by naming two people as co-CEOs.?Success has been mixed, and failures are often blamed on a bad fit or lack of preparation. A suitable fit and preparation do matter, but boards and leaders often act as though the challenge is mostly in setting up the arrangement.

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? ? ? ? ? ? ? ? ? ? ? ?"I’ve worked with leaders for 20 years, including many co-CEOs and other leadership partnerships, in Europe, Asia, and the United States. From this work, I’ve found that initial preparation is not enough — co-leaders need to keep working on this unusual structure over time.?When the process works well, the partner-leaders can create extraordinary value for?the organization.?But without sustained focus, co-heads often fall into the worst aspects of power-sharing, with conflicts and hesitations that undermine the business.

? ? ? ? ? ? ? ? ? ? ? ? "The best way to understand why co-leadership arrangements can devolve in this way is to describe the wrong ways companies approach this challenge — and why setting up the structure alone isn’t enough. Here are eight mistakes I see all too frequently when companies opt for a shared leadership approach: ......"

? ? ? ? ? ? ? ? ? ? ? ? And here is the closing paragraph:

? ? ? ? ? ? ? ? ? ? ? ? "Co-leadership arrangements aren’t for everyone, and boards or CEOs need to make sure their proposed leaders are willing, able, and ready to complement each other. This isn’t something that happens only at the beginning; effective co-heads need an ongoing process to keep from settling into separate fiefdoms that destroy value in the business. By avoiding eight common mistakes, companies can create new kinds of value impossible under unitary leaders."

? ? ? ? ? ? ? ? ? ?(b) Joe Bae and Scott Nuthall are the co-CEOs of NYSE-listed KKR & Co. Inc . (Kohlberg Kravis Roberts & Co, the world’s third-largest alternative asset manager), having been promoted three years ago?from being the company's co-COOs. A feature on them and their tenure at KKR in this Fortune article ?last Tuesday, with a brief discussion of how they handle the co-CEO structure at the end of the piece:

? ? ? ? ? ? ? ? ? ? ? "....Kravis (Henry Kravis, co-founder of KKR) adds that the tendency to battle each other for power is the undoing of most co-CEO experiments. Adds Pick (Ted Pick, CEO) of Morgan Stanley: “Many of us would question if their arrangement is doable, except that they’ve been together from the earliest days, with Joe playing the role in extension of products and Scott in innovation. They can speak from the same hymnbook on what KKR should look like in 10 years.”

? ? ? ? ? ? ? ? ? ? ? "According to an insider, Bae and Nuttall honor an informal code that prevents bottlenecks and clashes. If either one strongly favors a project and the other is moderately negative or neutral, the proposal goes forward. But if one is passionately pro and his fellow captain adamantly con, they agree to scrap the proposed program...."

? ? ? ? ? ? ? (vi) from chief legal officer/GC to CFO?: Salesforce, Inc. announced last Wednesday in its Q2/25 earnings press release , and in the related Current Report , that the company's CFO, Ann Weaver, would be stepping down (see item (iv) (b) from last Tuesday.) As discussed in last Tuesday's Fortune CFO Daily Newsletter, "Departing Salesforce CFO pulled off an ‘extremely rare’ C-suite move ", in Dec./20,?Salesforce?announced in its Q3/21 earnings release ? and this Current Report ? filed with the SEC that it had promoted Amy Weaver, the Company’s President and Chief Legal Officer since January 2020, to the position of CFO. More on the "rare" transition" from chief legal officer to CFO in the said Newsletter:

? ? ? ? ? ? ? ? ? ? "Longtime Salesforce executive Amy Weaver is stepping down from her role as president and CFO after a three-and-a-half-year tenure in the position.....Weaver joined Salesforce, the cloud-based software?giant, in 2013 as SVP and general counsel.?In January 2020, she became president and chief legal officer. The company announced on Dec. 1, 2020, that Weaver would become president and CFO in February 2021, succeeding CFO Mark Hawkins, who was retiring.....

? ? ? ? ? ? ? ? ? ?"I asked Scott W. Simmons, co-managing partner of Crist Kolder Associates, a senior-level executive search firm, what he’s seen regarding general counsels moving into CFO roles.?“It is not at all common", Simmons told me. The legal route to CFO?“doesn’t even register as a path”?in the firm’s most recent Volatility Report , he said. The firm’s report is based on data from 671 Fortune 500 and S&P 500 companies through Aug. 1. The research finds that three-quarters of CFOs came directly from a number two finance position,?such as a corporate finance executive, controller, and chief accounting officer.??

? ? ? ? ? ? ? ? ? ? "Simmons also conducted a search on S&P Capital IQ of 1,478 publicly traded companies in the U.S. earning over $1 billion in revenue. Less than 3% of CFOs in that data set have a JD degree?(Doctor of Law). Even taking into account a margin for error in this data, “it does prove the point that it is extremely rare for CFOs to also be lawyers,” he said. However, Simmons noted that the most important trait for any CFO position is strong leadership......"

? ? ? ? ? ? ? (vii) (other) press release of the day: In early April, NYSE/TSX-listed Royal Bank of?Canada announced in this press release ?the internal appointment of Katherine Gibson as interim CFO to replace the current CFO whose employment had been terminated following an internal review for an "undisclosed close personal relationship", in breach of RBC's code of conduct (see item (ii) from April 8/24). This morning, RBC?announced in this press release ?the?appointment of Katherine Gibson? as permanent CFO,?as follows:

? ? ? ? ? ? ? ? ? ? "Royal Bank of?Canada today announced that Katherine Gibson?has been appointed Chief Financial Officer, effective immediately. Ms. Gibson has served as Interim Chief Financial Officer since?April 5, 2024. Prior to this, she was Senior Vice President, Enterprise Finance & Controller with global responsibility for head office Finance, including all external, board and management reporting, accounting policy and financial management systems......

? ? ? ? ? ? ? ? ? ? ?"As CFO, Ms. Gibson is responsible for finance for all businesses and functions, enterprise financial planning, analysis and reporting, as well as Taxation, Corporate Treasury, Investor Relations, Performance Management and Corporate Development.?Ms. Gibson joined RBC 22 years ago....."

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