'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) CFO roundup: CFOs of Prudential, TD Securities, and Zoetis on how their roles have evolved/latest data on CFO turnover, CFO succession process (internal v. external candidates), CFOs taking on new roles (and more)/the trend of?CFO transitioning to CEO/survey of treasury and finance professionals' compensation:?

? ? ? ? ? ? ? ? ?(a) Yanela Frias is CFO at Prudential Financial,?Xihao Hu is CFO at TD Securities, and Wetteny Joseph is CFO at NYSE-listed, ?global animal health company, Zoetis.?They all participated in a panel discussion at the Fortune 'Future of Finance' conference last Thursday in New York City "to share their perspectives on how their roles keep evolving." Excerpts of what they said is in Monday's Fortune CFO Daily Newsletter, "The CFOs of Prudential, TD Securities, and Zoetis on how their roles have evolved: ‘You’re in the middle of everything’" (video of the complete 18-minute panel session is here):

? ? ? ? ? ? ? ? ? ? ? ?"For modern-day CFOs, managing a company’s financial activities is just table stakes.....CFOs spend a lot of time on?“what the strategy and the direction of the company should be, and the execution of that strategy,” Frias said. And that includes everything from operational efficiency and implementing technology to spending time with investors and customers, she added. “We’re really becoming a second spokesperson for the organization,” she said. “You have the CEO, then there’s the CFO.”

? ? ? ? ? ? ? ? ? ? ? ? "Hu said at TD they’ve created a “finance blueprint” with four key expectations for any future finance person or CFO: deliver strategic advice, build strong capabilities and tools, provide effective challenge and effective control, and give a “rewarding experience to all of our colleagues in finance so we can grow together.”

? ? ? ? ? ? ? ? ? ? ? ? "From Joseph’s perspective,?“You’re in the middle of everything,” he said.?“And over time, I think it’s going to continue to evolve, but becoming a lot more like a COO.?“We’re operating in a world that’s so dynamic that you wake up every day to something that’s shifting and changing, whether it’s with your customer or the markets,” Joseph added. And CFOs, even when forced to shift or make changes themselves, also need to not lose sight of key objectives, like asking the right questions when a business case is presented—some of which will be more easily attainable as tech like AI plays a larger role in operations.

? ? ? ? ? ? ? ? ? ? ? ? ?"It’s a competitive edge now to win over customers, and also make your colleagues’ lives a little bit better,” Hu said. “In order to execute some of that technology, especially AI, you’ve got to have good quality data, and also [you] need to fetch that data more easily.”

? ? ? ? ? ? ? ? ? ? ? ? ?"Frias added:?“Technology has always been an aid and enabler, but now it’s a strategic enabler.” As finance and tech continue to become more closely intertwined, the CFOs also said they’re seeking talent with diverse skill sets. “We have data scientists within finance,” said Frias,?offering a sports analogy: “When we think about hiring people, we’re looking for athletes who can play different positions on the field.” ? ? ? ? ? ? ? ? ? ?(b) Some interesting data on CFOs in last Thursday's Fortune CFO Daily Newsletter,?with reference in particular to this report?by executive search firm Russell Reynolds Associates:

? ? ? ? ? ? ? ? ? ? ? "Finance chiefs are on the move: In just the first quarter, a total of 82 new CFOs were appointed at public companies—matching the record turnover seen in Q1 2021, according to executive search firm Russell Reynolds Associates’ quarterly index. Taking a look at the S&P 500, for example, 4.8% of CFOs left in the first quarter,?compared with 2.8% who did so at the same time last year, meanwhile the incoming figure of 5.8% was markedly higher than last year’s 3.8%.

? ? ? ? ? ? ? ? ? ? ? "CFO succession plans, according to RRA’s data, are coming to fruition: Overall, 55% of global incoming finance chiefs were internal candidates,?a figure that rises to 66% among the S&P 500.?Increasingly, businesses are looking closely at the CFO to provide succession potential for the CEO, Jenna Fisher, managing director and head of the CFO practice at RRA,?told me. However,?when a CFO eventually ascends to the CEO seat, there is usually an interim step?between CFO and chief executive, such as being the COO, president, or the general manager of a division. “These roles provide much-needed P&L leadership oversight and experience, which is frequently a non-negotiable technical requirement for CEO candidates,” Fisher said.......

? ? ? ? ? ? ? ? ? ? ?"Part of the reason for the CFO shakeup is?more finance chiefs ascending to the top spot at public companies.?Additionally,?RRA noted, many new CEOs like to quickly appoint their own CFOs after taking over,?and retirement rates for finance chiefs rose post-pandemic.?

? ? ? ? ? ? ? ? ? ? ?"Another factor is CFOs increasingly taking on new roles at their current firms. Some recent CFO changes come to mind. Dave Stephenson, who joined Airbnb?as CFO in 2019, was promoted to the newly created role of chief business officer,?which he started in January. He’s charged with spearheading strategy and driving international expansion.....At tech giant Alphabet,?parent of Google, Ruth Porat, the company’s longest-serving CFO, was promoted to the newly created position of president and chief investment officer.?Porat began the role in September and is staying on as CFO until her successor is in place......"

? ? ? ? ? ? ? ? ?(c) Last Tuesday, Marathon Petroleum Corp.?(MPC) announced today in this press release?that its president, Maryann T. Mannen, would succeed Michael J. Hennigan as CEO, effective Aug. 1. (see item (v) from last Tuesday). Mannen joined Marathon as CFO in 2021, serving in that role until her promotion to president in Dec./23, ?thus continuing the trend of former CFOs becoming CEOs that has been discussed in a number of previous items (see, most recently, item (iii)(c) from April 10/24; see also (b) above). The appointment of Mennen, as a former CFO, to the CEO role, is discussed in last Wednesday's Fortune CFO Daily Newsletter, "Marathon Petroleum’s CEO search concludes with a familiar face":

? ? ? ? ? ? ? ? ? ?"Maryann T. Mannen, president since Jan. 1, is set to succeed Michael J. Hennigan as CEO, effective Aug. 1. In doing so, she’ll become the firm’s first female CEO—after previously becoming its first female CFO at the company.......

? ? ? ? ? ? ? ? ? ? "As chief executive, Mannen’s CFO experience should prove quite beneficial.?“In most companies today, the CFO is viewed as the clear No. 2 to the CEO,” Scott W. Simmons, co-managing partner of executive search firm Crist Kolder Associates, told Fortune. “This expansion of responsibility, coupled with the unique vantage point from which a CFO operates, better positions CFOs as CEO successors.” Based on the firm’s data from 674 Fortune 500 and S&P 500 companies,?last year 8.4% percent of CEO roles were filled by CFOs; in 2013, that figure was just 5.8%......"

? ? ? ? ? ? ? ? ?(d) As reported in today's Fortune CFO Daily Newsletter?(under, "Big Deal"), the Association for Financial Professionals (AFP) released yesterday the "2024 Association for Financial Professionals (AFP) Compensation and Benefits Survey Report", based on "responses from more than 1,200 financial professionals located in the U.S." ?Key findings are summarized in the Newsletter:

? ? ? ? ? ? ? ? ? ? ? ?"The 2024 Association for Financial Professionals (AFP) Compensation and Benefits Survey Report?finds that, on average, treasury and finance professionals realized a 4.4% gain in their base salaries in 2023, down from a 5% increase in 2022. Executive-tier professionals and staff-tier professionals earned an average increase of 4.2%, while management-tier professionals again saw an increase of 4.6%.

? ? ? ? ? ? ? ? ? ? ? ? "The survey also found that 68% of organizations awarded bonuses to their employees in 2023. And 89% of organizations awarded cash bonuses, meanwhile 41% awarded their employees stock options. The reuslts of the survey “demonstrate the importance of offering employees a competitive compensation and benefits package as well as focusing on upskilling talent,” Jim Kaitz, president and CEO of AFP, said in a statement......."

? ? ? ? ? ? ? (ii) capital allocation: dividends: Earlier this month, the WSJ featured this article on share buybacks, "Buybacks Are Back: Corporate America Is on a Spending Spree" (see item (iii) from last Tuesday). Last Thursday it featured this article on dividends, "Big Companies Remain Dividend Holdouts Four Years After Pandemic Began." Below are excerpts:

? ? ? ? ? ? ? ? ? ? "Nearly 200 U.S.-listed companies stopped paying a dividend in 2020, but most have restored them. Four years later, almost 50 are holding off?as inflation and higher interest rates slow their path to full recovery. Call them the dividend holdouts. Companies including?Boeing and Carnival?for example, have placed other financial priorities ahead of reviving their dividend, such as reducing leverage, addressing production problems and making capital investments.

? ? ? ? ? ? ? ? ? ? "In 2020, 187 companies suspended or canceled their dividend to preserve cash as the Covid-19 pandemic pressured their balance sheets, according to S&P Global Market Intelligence, a data provider. Thirty-nine restored their dividend that same year, followed by 53 in 2021 and 31 in 2022. That pace has since slowed, with nine companies, including Disney, Delta Air Lines and Hyatt Hotels,?reviving the investor payouts in 2023 and so far one, commercial printer Quad/Graphics, this year.

? ? ? ? ? ? ? ? ? ? "That leaves 47 companies, or roughly a quarter, that haven’t revived their dividend,?with seven other companies delisting in recent years. These holdouts include some of America’s largest listed companies?—American Airlines Group, Aptiv, Boeing, Carnival, Expedia Group, Royal Caribbean Cruises and?Western Digital— which are all in the S&P 500. Household names like Abercrombie & Fitch and Dave & Buster’s?also haven’t brought back their dividend.......

? ? ? ? ? ? ? ? ? ? ?"The extent of resumed dividends raises the question of whether or not the companies that haven’t done so can fully bring themselves back, said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, a unit of?S&P Global.?“Is this the equivalent of long-term Covid, where you’re not going to recover?” Silverblatt said. “This is what you are now.”

? ? ? ? ? ? ? ? ? ? ?"More broadly, companies are continuing to step up their dividend payouts?despite higher interest expenses. S&P 500 companies are expected to collectively pay a dividend of?$75.09 a share this year, up 6.8% from $70.30 in 2023, which was up 5% from 2022, according to S&P Dow Jones Indices.?If companies choose to pay dividends to shareholders, they typically do so quarterly,?meaning executives must have visibility into future cash flows and allocate sufficient capital to cover payments. Some companies also issue special dividends on a one-time basis.?Cutting or canceling a dividend is often a sign that worries investors and may hurt a company’s stock price. That is in contrast with another type of shareholder distribution, share buybacks, which companies generally can turn on and off with a smaller impact on their stock price.

? ? ? ? ? ? ? ? ? ? ? "Companies pay dividends often to communicate their confidence in the business’s future, and also at times to eliminate excess cash. Nearly 70 S&P 500 companies have raised their dividends annually for at least 25 years.?Mature companies such as big banks and utility providers usually pay dividends, unlike growth companies, which are inclined to hold on to their earnings to make investments or pursue acquisitions. But more tech giants have become dividend payers: Google parent Alphabet?last month authorized its first dividend, at 20 cents a share, kicking off quarterly cash payouts that are set to begin on June 17. Likewise, Facebook parent Meta Platforms in February announced its first dividend, at 50 cents, and began the first payout on March 26....."

? ? ? ? ? ? ? (iii) human capital management:?the state of the performance review at the largest companies: The state of the performance review is discussed in this FT article last Monday, "Tesla’s Technoking gives lessons on performance reviews":

? ? ? ? ? ? ? ? ? ?"......Big companies often turn to performance reviews to provide a structured way to give feedback, help employees understand their strengths and weaknesses and provide career development advice. In theory, they are a chance to recognise and reward good work while motivating staff and boosting morale. Employees too can air grievances.?

? ? ? ? ? ? ? ? ? ?"But they can be time-consuming and stressful, particularly if they are not used to think meaningfully about future development. While a company may strive to be meritocratic, these reviews can be highly subjective and often reflect personal biases. Different managers have their own ways of conducting them, which can lead to inconsistencies across a workforce.??

? ? ? ? ? ? ? ? ? ? "New Gallup data is revealing. Only 2 per cent of human resources chiefs from Fortune 500 companies that were surveyed by the polling and consulting group strongly agreed their performance management system inspired employees to improve.?Employees were just as negative, with only one in five saying the reviews were transparent, fair or led to better performance......

? ? ? ? ? ? ? ? ? ? "But even when organisations have scrapped performance ratings, they have found a need for some form of annual documented evaluation to help them make decisions on issues such as promotions and pay raises, research by McKinsey shows. This means that in large organisations particularly, there is no way to avoid them entirely.??

? ? ? ? ? ? ? ? ? ? “This is probably the most important thing to fix when it comes to managing people,” says Tomas Chamorro-Premuzic, an organisational psychologist and expert in people analytics. “If you really cannot without some degree of objectivity evaluate the performance of an individual, you cannot do anything else meaningful in terms of running a company well.”? He rattled through a list that included hiring and promoting the right people, handing out bonuses, figuring out the next generation of leaders and building successful teams. An objective system is also essential for workplace diversity as people from non-traditional backgrounds may find an informal structure harder to navigate......?

? ? ? ? ? ? ? ? ? ? "It is also important to encourage a feedback environment where discussions with staff happen more frequently than at the end of the year or quarter.?Managers need to be empathetic, curious, open to critique and use reviews as a way to change their own practices. Traditional performance management never worked, where you set goals at the start of the year and review them at the end. We are in a dynamic world where things are changing constantly,” says Ben Wigert, director of research and strategy at Gallup’s workplace management practice. Bosses should aim for?“one meaningful feedback conversation a week”, he suggests. Managers can discuss an employee’s priorities, what support they might need, recognise good work, check in on their wellbeing or have a difficult conversation to ensure a problem does not get worse.?

? ? ? ? ? ? ? ? ? ? ?“This is the key to doing well. It’s an ongoing process and conversation where constant adjustments are made to goals. All of this then ends up in the end of year review where nothing should be a surprise.” Readers may balk at the idea of such frequent interactions, but if managers are more in tune with their employees, perhaps workplace relationships and team performance would improve. And if things are not working out, there is earlier warning......."

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

? ? ? ? ? ? ? ? ? ?(a) NYSE/TSX-listed CGI Inc. announced this morning in this press release the appointment of a new CEO from inside the company, as follows:?

? ? ? ? ? ? ? ? ? ? ? ?"The CGI Board of Directors announced the appointment of Fran?ois Boulanger as President and Chief Executive Officer?and a member of the Board of Directors, effective?October 1, 2024. Mr. Boulanger is currently President and Chief Operating Officer for CGI's operations in?Canada,?U.S. Commercial and State Government, Asia Pacific Global Delivery Centers of Excellence, and Global IP Solutions.?

? ? ? ? ? ? ? ? ? ? ? ?"George D. Schindler, currently President and Chief Executive Officer, will retire effective?September 30, 2024. Mr. Schindler will continue to serve on the Board and, for a transition period, will serve as strategic advisor to?Serge Godin, Founder and Executive Chairman of the Board. "On behalf of the Board and CGI consultants worldwide, I want to congratulate Fran?ois on his appointment to lead CGI," said?Serge Godin.?"The Board and I have been planning for a seamless CEO succession for several years......"

? ? ? ? ? ? ? ? ? ?(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 (see item (iv)(a) from Oct.2/23). Today Pitney Bowes?announced in this press release that the current interim CEO was stepping down, to be replaced by a board member as a second ?interim CEO,?as follows:

? ? ? ? ? ? ? ? ? ? ? ? "Pitney Bowes Inc., a global shipping and mailing company that provides technology, logistics and financial services, today announced the appointment of Lance Rosenzweig as the Company’s interim Chief Executive Officer (“CEO”), effective immediately. Mr. Rosenzweig will continue to serve as a member of the Board of Directors . In connection with today’s appointment, Jason Dies has stepped down from the role of interim CEO and retired from the Company?following years of valued service in various executive roles.....

? ? ? ? ? ? ? ? ? ? ? ?"Update on CEO Search Process: The process run by the prior Board did not result in Pitney Bowes appointing its next permanent CEO. Given the recent reconstitution of the Board and the establishment of the aforementioned priorities, a new process is commencing. The Board will retain a new nationally recognized search firm to support this process......"

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