'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) former American Express CFO and Cardinal Health CFO on the audit committee/CFO relationship: Jeff Campbell retired last August as vice chairman and CFO of American Express, and Aaron Alt is the current CFO?of NYSE-listed, health care services company, Cardinal Health, and on July 10/24 they met with the Audit Committee Leadership Network (ACLN) in New York, convened by Tapestry Networks, to discuss, inter alia, the audit committee’s relationship with the finance function. Also participating in the discussion were members or chairs of the audit committees of Boeing, Merck, Morgan Stanley, and Aon. An overview of the discussion is in this Tapestry Networks "Summary of Themes " posted on its website this July, and below are excerpts from the section, "The audit committee’s relationship with the finance function: a dialogue with CFOs":

? ? ? ? ? ? ? ? ? ?"One of the most critical relationships that audit committees have is with the finance function, especially as technology, sustainability, and risk landscapes continue to evolve.....Key themes included:

? ? ? ? ? ? ? ? ? ? ? ? ? – More than ever, CFOs must be a strategic partner to the CEO and board: Core financial functions like treasury, controllership, and tax remain essential priorities for CFOs, Mr. Alt and Mr. Campbell said, but both noted an increasing need for CFOs to also drive value creation. “I divide it into two halves,” Mr. Campbell said. “The first part is where you’re running the ‘factory,’ which?is the foundational finance function. That part is more complicated and regulated now, but that aspect has not changed a lot in the past 25 years. The second part is really driving value for the business,?which you do by being an extraordinary partner to the CEO and business team.” How a CFO drives value can look “radically different” depending on the company and industry, he said. A member added that CFOs must adapt to each CEO: “When I?was a CFO, I had to step up and do the things the CEO was not willing to do, so the?role changes depending on who you are working with.”?Close collaboration does not imply identical roles, said Mr. Campbell:?“The CEO and CFO have different roles and the best partnership is one where they both realize that.” He added, “CEOs?need to be comfortable enough in their skin to understand that they are managing people who have their own views.”......

? ? ? ? ? ? ? ? ? ? ? ? ? ?-- An effective CFO-audit chair relationship is built on trust, candor, and independence. Mr. Campbell and Mr. Alt both emphasized the importance of transparency and open dialogue. “There should be no surprises at audit committee meetings,” Mr. Campbell remarked.

? ? ? ? ? ? ? ? ? ? ? ? ? ?-- Audit chairs can help CFOs prioritize. “I rely on the audit chair to help me see the?forest for?the trees,” Mr. Alt said.?“My worry list is a mile long and our conversations?help me prioritize what is really important, and identify best practices compared to?our company’s practice. I get a lot of value from?that.” As an example, he cited enterprise risk management (ERM). “The?audit chair helped us realize we had a gap. When I became CFO, one of the first expectations of how we can make the company better was to look at ERM, not just in finance but across the company and start improving how we think about risk.”

? ? ? ? ? ? ? ? ? ? ? ? ? ? – Audit chair relationships?with other finance leaders are important. As an audit?chair, I really value building relationships beyond the CFO, such as with the?controller, head of internal audit, and external auditor,” Mr. Campbell said.?“There is?value for the CFO too.?When the CFO’s?peers and direct reports have the opportunity to be in front of the audit committee, it raises their game and creates?more shared accountability,” Mr. Alt said. Beyond finance, members said that coordinating across various functions can be challenging, but depending on a?company’s circumstances, different points of contact may be needed. “For example,?one company was dealing with a lot of legal issues, and I was talking with the?general counsel more than I was talking with the CFO,” a member said. Despite this, the CFO often plays a crucial role in bringing these elements together and assisting the audit chair in managing complex issues, ensuring a coordinated approach. “You need a quarterback. As an audit chair, I want to know the head of compliance and general counsel, but I still look to CFO to bring it all together or to help me?understand the internal dynamics,” Mr. Campbell said......."

? ? ? ? ? ? ??(ii) corporate culture roundup: Deloitte on board oversight of culture/HBR?article on building a corporate culture/'board culture statements'/culture change at Uber: ?Several recent items have discussed the importance and other aspects of corporate culture: see, most recently, item (i) from July 24/24. More on corporate culture below:

? ? ? ? ? ? ? ? ? ? ?(a) In July, Deloitte,?in?collaboration with the Society for Corporate Governance,?released the latest issue of its Board Practices Quarterly, "Board Oversight of Culture ", which "looks at how boards oversee corporate culture" and "presents findings from a survey?of members of the Society for Corporate Governance that included questions pertaining to the board’s role in approving the company definition for culture; where primary oversight of culture resides; information being reported to the board—and how often and by whom; and shareholder engagement." A good summary of the?key takeaways of the survey appear in this Aug. 12 Society for Corporate Governance? blog post :

? ? ? ? ? ? ? ? ? ? ? ? ?"Among the takeaways:

? ?

? ? ? ? ? ? ? ? ? ? ? ? ? Defining corporate culture?—A plurality of companies?represented by respondents indicated that, to their knowledge,?their company does not have a definition of corporate culture. For those that have a definition, the absence of any board or board committee review was a close runner up. ? ? ? ? ? ? ? ? ? ? ? ? ? ?Primary oversight —A plurality (and nearly half) of respondents reported that corporate culture oversight is not expressly allocated within their board structure. The compensation committee or full board most commonly assumes primary culture oversight to the extent it is allocated. ? ? ? ? ? ? ? ? ? ? ? ? ? ?Management responsibility —More than three-quarters of companies look to their Chief Human Resources Officer (or similar role) to?oversee culture risk internally, although nearly half also or instead look to the CEO.?

? ? ? ? ? ? ? ? ? ? ? ? ? ?Board agenda?—Corporate culture topics are most commonly on the full board meeting agenda on an as-needed/ad hoc basis (61%)?as opposed to a regular cadence.?

? ? ? ? ? ? ? ? ? ? ? ? ? ?Board resources?—While boards and/or responsible committees rely heavily on management to stay current on corporate culture topics, about one-third also tap director expertise, professional associations such as the Society for Corporate Governance, and/or management-provided briefings and publications. ? ? ? ? ? ? ? ? ? ? ? ? ? ?Board information?—More than half of boards receive results from culture or engagement surveys, whistleblower hotline reports and complaints, the code of conduct policy, DE&I policies and reports, and attrition and turnover rates, to inform their monitoring and evaluation of corporate culture and behavior. ? ? ? ? ? ? ? ? ? ? ? ? ? ? Board involvement?—A majority of boards/responsible committees participate in the company’s culture and behavior by overseeing leadership development and succession planning beyond the C-suite, while one-third engage with employees below the C-suite outside of board and committee meetings. ? ? ? ? ? ? ? ? ? ? ? ? ? ?Culture & corporate strategy?—More than one-quarter of respondents noted that their board has increased its focus on corporate culture in relation to the company’s strategic priorities over the past one to two years, while half indicated no change over that time frame. ? ? ? ? ? ? ? ? ? ? ? ? ? ? Shareholder engagement —Nearly two-thirds of companies received no communications from their shareholders to engage on corporate culture-related matters with management and/or the board during the past year; however, 21% noted requests to communicate directly with company management.

? ? ? ? ? ? ? ? ? ? ?(b) In this article from the July-August/24 issue of the HBR Magazine, "Build a Corporate Culture That Works ", Erin Meyer, professor at world-renown graduate business school INSEAD, discusses building an effective corporate culture. ?Below is the headnote summary:?

? ? ? ? ? ? ? ? ? ? ? ? "Summary: There’s a widespread understanding that managing corporate culture is key to business success. Yet few companies articulate their culture in such a way that the words become an organizational reality that molds employee behavior as intended.?All too often a culture is described as a set of anodyne norms, principles, or values, which do not offer decision-makers guidance on how to make difficult choices when faced with conflicting but equally defensible courses of action. The trick to making a desired culture come alive is to debate and articulate it using dilemmas. If you identify the tough dilemmas your employees routinely face and clearly state how they should be resolved—“In this company, when we come across this dilemma, we turn left”—then your desired culture will take root and influence the behavior of ?the team. To develop a culture that works, follow six rules: Ground your culture in the dilemmas you are likely to confront, dilemma-test your values, communicate your values in colorful terms, hire people who fit, let culture drive strategy, and know when to pull back from a value statement." ?

? ? ? ? ? ? ? ? ? ? ? (c) A recent item discussed corporate "core value statements", as well as distinguishing between these various corporate statements: "purpose statements", "value statements", "vision statements" and "mission statements"?(see item (ii) from July3/24). Ralph Ward is a governance consultant and a "globally recognized writer,?speaker?and trainer on boards of directors." As discussed in this July 24 thecorporatecounsel.net blog post, "What is a Board Culture Statement and Do You Need One? ", Ralph Ward argues in this recent LinkedIn post ?that boards should adopt a "board culture statement". Below is from the post:

? ? ? ? ? ? ? ? ? ? ? ? ? ?".... (H)ow does the board actually work together as a group, what are its behavioral norms and relations with management? Consider a board culture statement. This is a group contract on how the board behaves and its shared expectations.?A culture statement goes beyond such items as corporate mission or vision statements.?Instead, a board culture statement is a contract on the values your board itself should model. How does it work?

? ? ? ? ? ? ? ? ? ? ? ? ? ?"A board culture statement avoids generalities, and is unique to each board......(A) culture statement should be customized to the board’s chemistry, the good and the bad. Hot topics to cover include… directors talking over each other and bullying… going around the CEO to staff… talking with investors… how to respectfully express dissent… adequate meeting preparation and knowledge… pushing personal agendas… confidentiality.?Done right, a board culture statement gives clues on your board’s individual flash points, and how you’re fixing them.....

? ? ? ? ? ? ? ? ? ? ? ? ? ?"Vision and mission statements also tend to address vague qualities like respect, integrity, honesty, and other Boy Scout merit badge matters. A board culture statement?“avoids nebulous concepts and translates these into concrete, observable behaviors,”?notes Anthony Goodman, head of the board effectiveness practice at Korn Ferry......"

? ? ? ? ? ? ? ? ? ?(d) Interesting Fortune piece last Tuesday, "Uber CEO Dara Khosrowshahi pulled off a dramatic culture change that led to profitability. Here’s how it’s done , by Terence Mauri, being an excerpt from his just-released book, "The Upside of Disruption: The Path to Leading and Thriving in the Unknown ", on how Uber?changed its culture, and providing three leadership lessons to "unlearn a toxic culture and shape a better one". Below are excerpts:

? ? ? ? ? ? ? ? ? ? ? ?"..... Changing the Uber company culture:?Under the leadership of CEO Dara Khosrowshahi, Uber has evolved from a culture of?“move fast and break things” to?“move fast and do the right thing”?and is prioritizing the needs of its customers and employees alongside growth, scale, and profit.?

? ? ? ? ? ? ? ? ? ? ? ? ?"Through deliberate unlearning of a toxic culture over time, and despite operating at a loss for nearly 14 years, Uber 2.0 has led a significant overhaul of its culture and helped it reach its first operating profit. Uber’s story underlines the need for steep learning curves, difficult choices, and ethical leadership at every turn. Here are three leadership lessons to unlearn a toxic culture and shape a better one where trust, equity, and integrity are our North Star.

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? – Silence brakers: ....

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? – It takes a village: .....

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? – Make time to unlearn a culture: ......"

? ? ? ? ? ? ? (iii) stakeholder capitalism: an assessment 5 years after the Business Roundtable (BRT)?issued its revised statement on corporate purpose/BRT's statement 5 years after:?

? ? ? ? ? ? ? ? ? ?(a) This past Aug.19 marked the fifth anniversary of the Business Roundtable's issue of its (somewhat controversial, and certainly much discussed and debated) revised and updated "Statement on the Purpose of a Corporation " (see item (i) from Aug. 19/19; note that it was followed a few months later by the WEC's "Davos Manifesto 2020: The Universal Purpose of a Company. .."which emphasized the importance of a corporation's commitment to its "stakeholders", not just its shareholders: see item (i) from Dec. 6/19). The state of stakeholder capitalism five years on?is discussed in two recent HBR blog posts, this one on Aug. 19, "The Business Roundtable’s Stakeholder Pledge, Five Years Later" , by Lynn Paine, Professor of Business Administration, Emerita, at Harvard Business School; and this second one on Aug. 21, "Stakeholder Capitalism Still Makes Business Sense ", co-authored by?Paul Polman, former CEO of Unilever. Below is the headnote summary of the Aug. 19 HBR post:

? ? ? ? ? ? ? ? ? ? ? "Summary: Five years ago, the Business Roundtable issued a statement pledging to “lead their companies for the benefit of all stakeholders.” In the past five years, stakeholderism has gained wider acceptance and helped many corporate leaders see the value of taking the interests of their stakeholders seriously when planning, developing strategy, making decisions, assessing risks, allocating resources, and so on. But that is a far cry from replacing shareholder capitalism as the central organizing principle for U.S. companies. For that to happen, much more is required. Proponents will need to define more clearly what stakeholder capitalism is, strengthen its theoretical foundations, and develop a playbook for implementing it, including metrics for measuring performance and guidelines for making tradeoffs. They will also need to build an ecosystem of investors, executives, directors, advisors, and other professionals (lawyers, bankers, accountants, analysts, and so on) who understand and support it, embed its precepts in law and regulation, and educate future leaders in its tenets and practices."

? ? ? ? ? ? ? ? ? ? ? Below is the headnote summary of the Aug. 21 HBR post:

? ? ? ? ? ? ? ? ? ? ?"Summary: ?Five years ago, 181 CEOs issued a new statement on the purpose of a corporation, pledging to serve five stakeholders: customers, employees, suppliers, communities, and shareholders. but even then, it lagged behind what’s needed.?Their commitment mattered and drove progress. But more recently, especially in the U.S., enthusiasm for many stakeholders’ sustainability priorities — such as climate change or DEI (diversity, equity, and inclusion) — has seemingly stalled. The authors reflect on what has happened since the statement, and where we’re going. Ultimately, they argue, that given the stress on our largest natural and societal systems, we need accelerated?action — deeper work to build better, more regenerative businesses — and bold, decisive leadership to ensure a sustainable and equitable future for all."

? ? ? ? ? ? ? ? ?(b) As reported in this FT article on Friday, "The stakeholder doctrine is flourishing despite attacks on ESG ", on Aug. 16 the?BRT issued this new statement on its 2019 corporate purpose statement, "Five Years On: Corporate Purpose and Profit" :

? ? ? ? ? ? ? ? ? ? ? ?"(L)ast month 14 Republican state treasurers asked the BRT to “abandon the fatally flawed” stakeholderism mantra and “return to the purpose of maximising value [for] shareholders”. But what is most notable about this letter is how rarely today we hear such explicit calls for a return to the Friedmanite framework. And the BRT currently shows no sign of bowing to these demands. Instead, it issued?a new statement which stressed that companies “can and must” pursue both profits and purpose and “invest in their workers, suppliers and communities” —?their stakeholders, in other words....."

? ? ? ? ? ? ? ? ? ? ? ?Below is from the new BRT statement:

? ? ? ? ? ? ? ? ? ? ? "Next week marks five years since Business Roundtable updated its Statement on the Purpose of a Corporation , declaring that companies should aim to deliver long-term value to all of their stakeholders — customers, employees, suppliers, the communities in which they operate, and their shareholders. Five years on, we are taking stock of how Roundtable members have progressed in delivering both purpose and profit.

? ? ? ? ? ? ? ? ? ? "Background: ......

? ? ? ? ? ? ? ? ? ? "Since 2019: Countless undertakings by America’s most successful companies demonstrate that a company’s commitment to stakeholders and to profit go hand in hand. Business Roundtable member companies have been engines of prosperity, growth and economic opportunity — collectively supporting one in four American jobs and almost a quarter of U.S. GDP.

? ? ? ? ? ? ? ? ? ? ?"There are many more examples of Business Roundtable member companies investing in their stakeholders, including through the Roundtable’s Corporate Initiatives . In each case, Roundtable member companies have in important ways supported their employees and customers, served as good partners to their suppliers, enhanced their communities, and thereby increased value for their long-term shareholders. When the Business Roundtable statement was announced in 2019, Fortune ran a headline,?“Profits and Purpose: Can Big Business Have it Both Ways?” The answer is yes — companies can and must."

? ? ? ? ? ? ? ?(iv) M&A press releases of the day: On Aug.19, TSE-listed Seven & i Holdings?Co., Ltd.?confirmed in?this press release ?that?it had received an acquisition proposal from Alimentation Couche-Tard Inc.,?and on the same day Alimentation Couche-Tard confirmed in this press release ?that it had submitted a "friendly" proposal to?Seven & i Holdings (see item (vii) from Aug.26/24). On Friday, Seven & i Holdings?announced in this press release that it was rejecting the Alimentation Couche-Tard proposal, the press release reproducing a letter by the company's chair, and chair of the Special Committee, to Alimentation Couche-Tard's board, as follows:

? ? ? ? ? ? ? ? ? ?"Regarding the matter announced in the "Seven & i Holdings Comments on News Reports Regarding Acquisition Proposal" dated August 19, 2024, where we received a confidential, non-binding acquisition proposal from ACT, the Board of Directors of Seven & i Holdings Co., Ltd. has today sent the following letter to ACT responding to the proposal....

? ? ? ? ? ? ? ? ? ?"I am writing on behalf of the board of directors of Seven & i Holdings Co., Ltd (“7&i”) to follow up on our phone conversation earlier today and to officially respond to your confidential, non-binding and preliminary proposal to acquire all outstanding shares of 7&i for US$14.86 per share in cash. As I shared with you in my message of August 15 acknowledging your proposal, the 7&i Board promptly formed a Special Committee comprised solely of independent outside directors to review your proposal. I have served as chair of the Special Committee. The Special Committee, assisted by our financial and legal advisors, conducted a careful and comprehensive review of your proposal over the course of multiple meetings.......

? ? ? ? ? ? ? ? ? ? "After a thorough review and discussion of your proposal, the 7&i?Board has unanimously concluded, based on the unanimous recommendation of the Special Committee, that the proposal is not in the best interest of 7&i shareholders and other stakeholders. We are open to engaging in sincere discussions should you put forth a proposal that fully recognizes our standalone intrinsic value and addresses our concerns regarding certainty of closing in the current regulatory environment. However, we do not believe, for several critical reasons, that the proposal you have put forward provides a basis for us to engage in substantive discussions regarding a potential transaction.

? ? ? ? ? ? ? ? ? ? ?"First, the Special Committee believes that your proposal is opportunistically timed and grossly undervalues our standalone path?and the additional actionable avenues we see to realize and unlock shareholder value in the near- to medium-term.......

? ? ? ? ? ? ? ? ? ? ? "Second,?the 7&i Board believes that even if you were able to improve the value element of your proposal very significantly, your proposal does not adequately acknowledge the multiple and significant challenges such a transaction would face from U.S. competition law enforcement agencies in the current regulatory environment and provides no certainty to closing.

? ? ? ? ? ? ? ? ? ? ? "Third, while you acknowledge the crucial role that 7&i plays in everyday life in Japan across food retail, banking and other services,?this is clearly an area that would require further discussion should we reach that point.

? ? ? ? ? ? ? ? ? ? ?"As we discussed, although we would have preferred to keep both your proposal and our response private and confidential, given that the fact of your proposal is already in the public domain, in the interest of transparency with our shareholders and other stakeholders, we are making this letter public......"

? ? ? ? ? ? ? ? ? ?Alimentation Couche-Tard responded last evening in this press release , as follows:

? ? ? ? ? ? ? ? ? ?"Alimentation Couche-Tard Inc., a global leader in convenience and mobility, today issued the following statement regarding the response letter sent by the Board of Directors of Seven?&?i Holdings Co., Ltd. in response to Couche-Tard's friendly, non-binding proposal:

? ? ? ? ? ? ? ? ? ? "Couche-Tard?has?deep respect for 7&i and the business?it has?built in?Japan?and around the world, including?its?operating model, franchisee network and brand.?We?continue to have strong conviction that?a combination?with 7&i has clear strategic and financial benefits for both companies' customers, employees, franchisees and shareholders. We believe that, working together, we can successfully reach and complete a mutually agreeable transaction. We believe a combination would significantly enhance the important roles our companies play in our customers' daily lives. Together, we would create a leading global retail platform with over 100,000 sites spanning?Asia-Pacific,?North America,?Australia, and?Europe......

? ? ? ? ? ? ? ? ? ?"Highly Confident Discussions Would Lead to Increased Value: Given the mutual benefits of a combination, we are disappointed in 7&i's refusal to engage in friendly discussions. We are highly confident that collaborative discussions would lead to our ability to find increased value for 7&i shareholders. We requested to have our advisors engage in discussions with the advisors to 7&i which was rejected. We offered to enter into a Non-Disclosure Agreement ("NDA") to enable both sides to share information to find more value, and this request was also rejected.?We remain ready and willing to enter into an appropriate NDA to advance friendly discussions.....

? ? ? ? ? ? ? ? ? ?"Proposal Not Subject to Financing: Based on substantial work and preparation, we are highly confident that we have sufficient capacity to finance the transaction in cash and that financing would not be a condition to closing a transaction.?Couche-Tard?has a very strong balance sheet?and?strong?investment grade credit ratings. We are a sophisticated and disciplined user of the capital markets and have well-established relationships with major financial institutions and investors who are willing to support us in this transaction. We have secured a letter from our financial advisor stating that it is highly confident that it is able to arrange the financing for the proposed transaction, subject to customary conditions.?Our acquisition history reflects a high level of discipline and execution excellence on behalf of our stakeholders, and we plan to take the same approach in this situation.

? ? ? ? ? ? ? ? ? ? "In summary, we remain highly focused on consummating a transaction with 7&i that is in the best interests of all constituencies. We stand by prepared to enter into collaborative and friendly discussions with 7&i to focus on finding greater value for 7&i and its shareholders, providing regulatory certainty and ensuring that the combined entity continues to be the leader and provider of premier offerings in the markets we both serve."

? ? ? ? ? ? (v) (other) press releases of the day:?

? ? ? ? ? ? ? ? (a)?Eli Lilly and Company announced today in this press release ?the?appointment of a new CFO from inside the company,?as follows:

? ? ? ? ? ? ? ? ? ? ?"Eli Lilly and Company today announced?the appointment of Lucas Montarce as executive vice president and chief financial officer (CFO) and member of the company's Executive Committee, effective immediately. Since joining Lilly in 2001, Montarce has held a range of finance leadership roles.....He most recently served in the role of Lilly president and general manager for the?Spain,?Portugal?and?Greece?hub. "We are excited to announce Lucas as Lilly's next CFO, following a competitive search across health care, tech and general industries," said?David A. Ricks, chair and CEO......."

? ? ? ? ? ? ? ? ? ? ?Compensation arrangements with the new CFO are disclosed in the related Current Report filed with the SEC.

? ? ? ? ? ? ? ? ?(b) Nasdaq-listed The Wendy’s Company announced on Friday in this press release a chair succession,?with the departing chair being named Chairman Emeritus, as follows:

? ? ? ? ? ? ? ? ? ? ?"The Wendy's Company today announced that its Board of Directors has appointed?Arthur B. Winkleblack?as non-executive Chairman of the Board. He succeeds?Nelson Peltz, who has been named Chairman Emeritus?in recognition of his long-time leadership, counsel, guidance and contributions to the Board and the Company.

? ? ? ? ? ? ? ? ? ? ? "Winkleblack has served as Lead Independent Director since?October 2023?and has been a member of the Board since 2016. He also serves as Chairman of the Nominating and Corporate Governance Committee and as a member of the Audit Committee,?where he is a past Chairman. Mr. Winkleblack has also been appointed as Chairman of the Executive Committee.

? ? ? ? ? ? ? ? ? ? ?"Peltz has served as non-executive Chairman of the Board since 2007. He is stepping down to devote more time to his other board commitments and Trian's future activities......Peltz, CEO and a Founding Partner of Trian Fund Management, L.P., a multi-billion asset firm which, with its affiliates, beneficially owns approximately 15.3% of the outstanding shares of Wendy's......"

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