'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) *'best practices' for corporate minute taking: Leo E. Strine Jr. was?chief justice of the Delaware Supreme Court from 2014 to 2019, and he is the author of this useful forthcoming article in the Fordham Journal of Corporate and Financial Law on corporate minute taking, "Minutes Are Worth the Minutes: Good Documentation Practices Improve Board Deliberations and Reduce Regulatory and Litigation Risk ." Below is from his Harvard Law School corporate governance blog post ?last Thursday, based on the article (and with the same title as the article), and which in particular provides "best practices" for corporate minute taking:

? ? ? ? ? ? ? ? ? "Using the cases as a basis to identify recurrent themes and best practices to take advantage of the benefits of documenting corporate conduct in a timely and effective manner, and avoid the considerable downsides of failing to do so, the article makes these key suggestions:

? ? ? ? ? ? ? ? ? ? ? ?-- Have a general protocol for minuting meetings and be thoughtful when deviating from that protocol;

? ? ? ? ? ? ? ? ? ? ? ?-- Transform the minuting approval process into an active, iterative part of a reasoned, deliberative process;

? ? ? ? ? ? ? ? ? ? ? ?-- Ideally, minutes for the prior meeting should be approved at the very next meeting;

? ? ? ? ? ? ? ? ? ? ? ?– Ideally, key minutes should be approved at meetings, not by written consent;

? ? ? ? ? ? ? ? ? ? ? ?-- Make sure minutes and advisor presentations cover key evolving issues and tie up loose ends;

? ? ? ? ? ? ? ? ? ? ? ? -- Use approved minutes to craft important documents, such as preliminary proxies and committee reports, in the most careful, credible manner; and

? ? ? ? ? ? ? ? ? ? ? ?-- Realize the connection between quality documentation practices, integrity in corporate decision-making, and the judicial perception of both corporate fiduciaries and corporate lawyers.

? ? ? ? ? ? ? ? ? ?"Documenting the basis for corporate action in a timely, credible way will never be sexy. But, with a recognition that promptness, not procrastination, is both more efficient and effective, it can become less, not more, burdensome. By seeing crafting and approving minutes, resolutions, and other decisional information as integral to an iterative, active process of thinking in a business-like way about important issues, a more lively and active deliberative process emerges in which it is more likely that all reasonable perspectives will be vetted, and the board’s eventual decision is well-grounded. Using this approach will result not just in lower legal, regulatory, and reputational risk; it will also lead to better business decisions, more ethical behavior, and a stronger company?that is well-positioned to create sustainable value for its investors and treat all its key stakeholders with respect."

? ? ? ? ? ? ? (ii) Fortune feature interview with Cisco CEO (discussing inter alia the state of stakeholder capitalism): Chuck Robbins is Cisco CEO and the recently appointed chair of the Business Roundtable. He was recently interviewed by Fortune?in the latest episode of?its?"Leadership?Next" series of podcasts, discussing several topics including?"the state of stakeholder capitalism."?Below are excerpts from the wide-ranging interview:?

? ? ? ? ? ? ? ? ? ??"Fortune?(Alan Murray): ......(W)hat the Business Roundtable did in 2019.....(t)he redefinition of the purpose of the corporation, the whole stakeholder capitalism movement. We’ve now been through two years of pretty intense political pushback there. A lot of people in this room can testify to what some of that pushback has been. Where is stakeholder capitalism today, in your view?

? ? ? ? ? ? ? ? ? ? ?Chuck Robbins: Well, I still think it’s important. What I struggle with is the following: If we create an environment that’s good for our employees, that’s a good thing. If we create an environment that creates healthy communities, that’s a good thing. If we also create an environment that has positive returns for our shareholders, positive outcomes for our customers, positive outcomes for our partners, what’s bad about that? I just don’t understand. No, I think the question of how you go about it is what’s being challenged, and the question of quotas and things of that nature, I think are legitimate discussions to have. But focusing on ensuring that, I mean our purpose statement as a company is to power an inclusive future for all. And we live it, and we believe it, and we walk it and it’s through our technology where we connect people around the world who have never been connected before, and they find themselves with an opportunity to be educated, to actually receive certain types of health care to, and now after the pandemic, they can actually get jobs where they are and work from where they are. And then the community service stuff that we do, we think, why would we not want a healthy community?

? ? ? ? ? ? ? ? ? ?"Fortune: ....Cisco year after year is number one or number two on our list of best companies to work for. Consistently. So you focus a lot on your employees and obviously on your customers. And when you look at the Business Roundtable or the broader business community, do you see companies backing off those kinds of commitments because of the political pressure?

? ? ? ? ? ? ? ? ? ? Chuck Robbins: No, I think what you see is, let me give you an example. When when we started focusing on gender diversity, what we did is, we just wanted to make sure we had a slate of candidates that was representative of the population. And then we wanted to have interview panels that were representative of the population. And then the best candidate has to win, right? And we never said like, well, we got to get to 35% of something. And I think that’s where the problem comes in because I actually believe, let’s say we’re focused on trying to increase our gender diversity at the leadership level, if you start letting numbers drive your decisions, it’s a disservice to the actual gender population. The people that you’re actually trying to help, it’s a disservice because people look and say, “Well, they all got in because there’s a 35% number you’re trying to hit.” And that’s just that doesn’t help. And so I think you have to go about this in a way that’s practical and that’s constructive, and I think that’s the key. And at Business Roundtable we’re actually trying to help our member companies just think through how to do that in a responsible way and still focus on doing the right thing."

? ? ? ? ? ? ? (iii) against 'corporate political posturing' (ie. corporations taking public positions on political and social issues): Below is from the abstract of a paper to appear in a forthcoming issue of the University of Chicago Business Law Review, "How Did Corporations Get Stuck in Politics and Can They Escape? ", which is discussed and summarized by its authors in last Wednesday's Havard Law School corporate governance?blog post ?(with the same title as the paper):

? ? ? ? ? ? ? ? ? ? "Corporations have always been involved in politics, but today is different. They are publicly taking positions, either directly or indirectly, on contested political and social issues unrelated to their businesses. In contrast to the conventional wisdom, we argue that this practice, which we term “corporate political posturing,” is problematic. First, it is of dubious value to the corporation and its stakeholders. Corporate political posturing often backfires, it does so unpredictably and potentially catastrophically, and it is particularly susceptible to agency costs.?Second, it is harmful to society.?The fundamental problem is that corporations are institutionally ill-equipped to take center stage in policy debates. They are inherently self-interested economic actors with goals that often conflict with those of society. This manifests in statements that tend to polarize rather than enlighten and actions that undermine the positions that they back publicly.

? ? ? ? ? ? ? ? ? ? ?"We surmise that corporations themselves are ambivalent about taking policy positions but are caught in a feedback loop in which customers, employees, and investors demand political involvement.?Corporations thus engage in response to competitive pressure, which normalizes the conduct and leads to escalating expectations for further engagement. We see several ways to break this cycle. One possibility, which we consider and reject, is to subject political posturing to distinctive governance rules. A second option is voluntary disarmament. Borrowing from the Business Roundtable Statement on Corporate Purpose, we suggest that corporations could voluntarily and publicly commit to refrain from political posturing. A third option is for corporations to provide greater transparency, either voluntarily or in response to regulatory requirements. If corporations disclosed the extent to which their actions were consistent with their public positions, we predict that fewer corporations would engage in posturing and those that do would back their statements with conduct that matches."

? ? ? ? ? ? ? (iv) on stock splits: Some commentary on stock splits in this FT article last Friday, "Stock splits: slicing the burrito ", with reference to the humongous 50-for-1 stock split?recently announced? by Chipotle?Mexican Grill, Inc. (see item (iv)(a) from March 20/24) and to this recent academic paper, "The information content of stock splits ":

? ? ? ? ? ? ? ? ? ? "Stock splits are back with a vengeance. US-listed Mexican eatery Chipotle plans a whopping 50-for-1 split. Japan racked up nearly 200 in the past fiscal year, a record. Divvying up shares into smaller bites has zero impact on fundamentals and does nothing to alter value. Owning 50 shares at $2 apiece is no different to holding 100 shares at $1 each — or, in the case of Chipotle, one at $2,900 versus 50 at $58. Nor does it do anything to performance. A trio of academics — Huang Gow-Cheng, Kartono Liano and Pan Ming-Shiun — found no improvement in operating performance relative to non-splitting companies in the four years post-split. So much for the theory.?

? ? ? ? ? ? ? ? ? ? "Punters, more excitable than economists, sent Chipotle shares 4.5 per cent higher in the two days following its announcement, well ahead of the market. Tesla shareholders were even more carried away, adding $46bn to the EV maker’s market cap — more than General Motors was then worth — when it announced a stock split in August 2020. A subsequent split two years later delivered a $72bn bump.

? ? ? ? ? ? ? ? ? ?"One explanation favoured by proponents is liquidity. Lower prices put shares in the hands of more retail investors, and are especially helpful for those trading options.....In the US too some academics have found slight increases in trading activity. But the impact on liquidity is broadly found to be shortlived. Besides, the availability of fractional shares and, in the US, single stock ETFs already offers access to high-cost shares. Splits more likely serve as what Brad Cornell, emeritus professor of finance at UCLA, dubs “behavioural catalysts” or what the academic trio?call the "attention grabbing hypothesis"........

? ? ? ? ? ? ? ? ?"The US’s big splits at the likes of Apple, Alphabet and?Amazon typically follow rampant run-ups in the share price......Then again, plenty of US companies also spurn splits.?Veteran investor Warren Buffett is one naysayer. His Berkshire Hathaway?B class shares, at $420, offer a relatively cheaper entry. But the A class shares trade at $634,030....."

? ? ? ? ? ? ? (v) press releases of the day: On April 3/24, TSX/NYSE-listed TC Energy Corporation announced in this press release that it had appointed Sean O’Donnell, currently Senior Vice-President, Capital Markets and Corporate Planning, to succeed Joel Hunter as Executive VP and CFO "following Mr. Hunter’s decision to leave the Company to pursue another opportunity in the energy sector." This morning, TSX/NYSE-listed TransAlta Corporation announced in this press release ?the appointment of Mr. Hunter as its new CFO,?as follows:

? ? ? ? ? ? ? ? ? ?"TransAlta Corporation?announced today?the retirement of Todd Stack, Executive Vice-President, Finance and Chief Financial Officer from the Company, effective June 30, 2024......TransAlta also announced today that the Board has appointed Joel E. Hunter as Executive Vice-President, Finance and Chief Financial Officer, effective July 1, 2024. Mr. Hunter is a seasoned energy executive with over 26 years of finance, capital markets and strategic planning expertise. Mr. Hunter currently serves as Executive Vice-President and CFO with TC Energy....."

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