'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) * ISS publishes its final and complete Canadian?and U.S. proxy voting guidelines for 2025: On Dec. 17, ISS?published yesterday its?benchmark policy updates?for 2025 for both Canada and the U.S. (see item (i) from Dec.18/24). On Thursday, it published its "2025 Proxy Voting Guidelines for TSX-Listed Companies", and its "2025 United States Proxy Voting Guidelines", in both cases incorporating the said Updates. The policies apply to all AGMs held on or after Feb.1/25.

? ? ? ? ? ? ? (ii) HBR post on '6 ways AI changed business in 2024' (including establishing safeguards and guardrails to ensure responsible AI, and the rapidly emerging role of the chief AI officer): Randy Bean, the author of this Jan. 2 HBR post, "6 Ways AI Changed Business in 2024, According to Executives", is a "contributor to Harvard Business Review, Forbes,?and?MIT Sloan Management Review, and has been an advisor to Fortune 1000 organizations on data and AI leadership for nearly 4 decades." The post describes the finding of the "2025 AI & Data Leadership Executive Benchmark Survey", an annual "industry benchmark survey of Fortune 1000 and global business leaders" launched by the author in 2012. The six "big takeaways" from the report, each one discussed in the post, are the following:

? ? ? ? ? ? ? ? ? ? ? ? ? "Corporate investments in AI and data are growing......

? ? ? ? ? ? ? ? ? ? ? ? ? ?Organizations are reporting business value from their AI investments......

? ? ? ? ? ? ? ? ? ? ? ? ? ?Transformation due to AI will be gradual for most organizations......

? ? ? ? ? ? ? ? ? ? ? ? ? ?Organizations are focusing on responsible AI, safeguards, and guardrails.....

? ? ? ? ? ? ? ? ? ? ? ? ? ?Organizations are hiring chief AI officers as AI and data leadership roles evolve......

? ? ? ? ? ? ? ? ? ? ? ? ? ?AI and data leaders are joining the C-suite to drive business goals......"

? ? ? ? ? ? ? ? ? ?Below are excerpts from the last three takeaways:

? ? ? ? ? ? ? ? ? ?"Organizations are focusing on responsible AI, safeguards, and guardrails: Responsible AI — a term that encompasses AI ethics, governance, other risk-mitigation programs — is seen as an increasing priority for most organizations,?as they focus on establishing safeguards and guardrails to ensure responsible AI utilization. This year, 77.6% of organizations report having implemented responsible AI safeguards and guardrails,?up from 62.9% one year ago.?Companies continue to face challenges in establishing responsible AI, as 43.5% report that they still need to recruit the talent to implement and sustain responsible AI. The greatest concern for most firms is dangers resulting from the spread of misinformation and disinformation,?which was cited as the biggest risk factor by 53.2% of firms, up from 44.3% last year. Companies need to be cautious, for they have much to risk, having built brands and customer franchises over many decades?and generations, which can be irreparably harmed overnight by providing inaccurate information to their customers.

? ? ? ? ? ? ? ? ? ?"Organizations are hiring chief AI officers as AI and data leadership roles evolve: This year’s survey also captured some significant sea changes. For one,?AI and data leadership continues to be in high demand, with 84.3% of companies having hired a chief data and analytics officer,?up from just 12.0% when the survey was first launched in 2012. This year marked the appearance of the chief AI officer as a rapidly emerging role,?with 33.1% reporting having now filled this role, and 43.9% saying that a chief AI officer should be appointed at their organization.....Yet even as the demand for AI and data leadership increases, organizations struggle with the effectiveness of these roles, with 52.4% reporting that they struggle with turnover and that the role is still nascent and evolving. Not surprisingly, 51.3% report that the AI and data leadership roles are not well understood within their organizations, and 77.8% report that the average tenure has been less than three years.....

? ? ? ? ? ? ? ? ?"AI and data leaders are joining the C-suite to drive business goals: Even as organizations struggle with the AI and data leadership roles, there is good news to be found. An increasing percentage of companies (70.8%) see these roles as becoming permanent C-suite roles. A growing percentage of AI and data leaders (36.3%) now report to the most senior business leadership of their organization: the CEO, president, or COO. This signifies a recognition that reliance on data has become increasingly central to all aspects of corporate decision-making......"

? ? ? ? ? ? ? (iii) two more high-profile U.S, companies pull back on their DEI programs: Amazon and Meta Platforms (Facebook):?

? ? ? ? ? ? ? ? ? ? (a) Below is from this Bloomberg article last Friday, "Amazon Is Halting Some of Its Diversity and Inclusion Programs":

? ? ? ? ? ? ? ? ? ? ? ? ?"Amazon.com Inc. is halting some of its diversity and inclusion programs, a move that coincides with activist pressure on US companies to abandon efforts to build a more diverse workforce. In a memo to employees,?Candi Castleberry, a senior human resources executive, said last month that Amazon was “winding down outdated programs and materials” as part of a review of hundreds of initiatives,?including ones that had completed their work. The team expected to complete the consolidation by the end of 2024.

? ? ? ? ? ? ? ? ? ? ? ? ?“Rather than have individual groups build programs, we are focusing on programs with proven outcomes — and we also aim to foster a more truly inclusive culture,” wrote Castleberry, Amazon’s vice president of Inclusive eXperiences and Technology. Her prior title, vice president of global diversity, equity and inclusion, changed with the name of the organization in 2023.....

? ? ? ? ? ? ? ? ? ? ? ? ? "Amazon’s “Our Positions” web page – a clearinghouse of the company’s stances on social and political issues – recently eliminated specific sections titled Equity for Black people and LGBTQ+ rights. The Information reported those changes earlier Friday.?The updated page collapses these topics into a single paragraph on diversity, equity and inclusion, saying Amazon is committed?“to creating a diverse and inclusive company that helps us build the best range of products and services for our broad customer base.” The statement says inequitable treatment of anyone is unacceptable.

? ? ? ? ? ? ? ? ? ? ? ? ? ?"Specific references to Amazon’s support for legislation to combat racial bias in policing, efforts to expand voting rights, and codify protections for transgender people were eliminated from the web page.?"We update this page from time to time to ensure that it reflects updates we’ve made to various programs and positions,” spokesperson Kelly Nantel said in an emailed statement."

? ? ? ? ? ? ? ? ? ? ?(b) Below is from this Bloomberg article last Friday, "Meta Retreats From Diversity and Inclusion, Appeasing Trump":

? ? ? ? ? ? ? ? ? ? ? ? ? "Meta Platforms Inc. is disbanding many of its diversity and inclusion efforts,?telling employees they will no longer be required to interview candidates from underrepresented backgrounds for open roles, or look to do business with diverse suppliers. The note to employees, reviewed by Bloomberg News, represents a significant undoing of diversity, equity and inclusion priorities at the company. Maxine Williams, Meta’s chief diversity officer and highest-ranking black woman, will be reassigned to a new role, the memo states....."

? ? ? ? ? ? ? ? ? ? ? ? ? And note these two related Business Insider articles on Friday, "Meta's chief diversity officer says the company's employee resource groups survive DEI cull: memo", and "Meta employees react after the rollback of DEI programs — both for and against"

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? ? ? ? ? ? ? ?(iv) Canada's 100 highest paid CEOs/latest data on CEO pay at the S&P 500 companies:?

? ? ? ? ? ? ? ? ? ?(a) Each year, the independent Canadian think tank (generally described as "left leaning"), the Canadian Centre for Policy Alternatives (CCPA), releases?a report on CEO pay in Canada,?and, as announced in this?CCPA news release?last Thursday, it has now released its latest report, "Company men: CEO pay in 2023", which, note, includes as Table 1 a list of the 100 highest paid CEOs in 2023. The report is discussed in this Jan. 2 Globe and Mail article "Canada’s 100 highest-paid CEOs earned $13.2-million on average in 2023, report shows", and this Ja. 2 National Post article, "Check your watch — Canada's highest-paid bosses have already made more than the average Canadian makes all year." Below is from the former:

? ? ? ? ? ? ? ? ? ? ? ? ?"Canada’s 100 highest-paid CEOs earned $13.2-million on average in 2023?from salaries, bonuses and other compensation, according to the Canadian Centre for Policy Alternatives. It was the third biggest year for CEO pay since the CCPA began tracking the data in 2007, but a decline after 2021 and 2022 broke records. “It’s still well up from where it has stood historically,” said David Macdonald, report author and senior economist at the CCPA. Factors leading to the decline included lower profits in 2023 and workers making wage gains after the most recent bout of inflation, he said......

? ? ? ? ? ? ? ? ? ? ? ? "Salaries were generally not the main source of CEOs’ total compensation, with most of it coming instead from other forms of compensation like share-based awards and option-based awards.?“Salaries make up an ever smaller proportion of their overall compensation,”?said Macdonald, adding that sometimes an executive will even take a salary of just a dollar – including Tobi Lütke of Shopify?and Murray Edwards of Canadian Natural Resources Ltd., both on 2023’s list.?

? ? ? ? ? ? ? ? ? ? ? ?"The average cash bonus for these CEOs was $2.3 million in 2023, the CCPA said, adding that though in theory bonuses are meant to be tied to the company’s performance, in reality bonuses tend to rise regardless of whether the company is having a good year. The three main types of non-salary compensation are direct share awards – where a person is paid in shares instead of dollars – cash bonuses, and stock options,?said Macdonald......

? ? ? ? ? ? ? ? ? ? ? ?"(M)ore than three-quarters of the CEOs on the list got the job from within the company, working at their firms for an average of 21 years......"

? ? ? ? ? ? ? ? ? ?(b) In December, executive compensation consulting firm Meridian?Compensation Partners released, in its series of "insights" posted on its website, posted this one on CEO compensation at the S&P 500 companies, "S&P 500 CEOs’ Reported Compensation: 2021-2024", ?which "considers CEO pay among S&P 500 companies and changes in value between 2020 and 2023 based on proxy statements filed in 2021-2024." Below are some of the "key takeaways":

? ? ? ? ? ? ? ? ? ? ? ?"Median total compensation in 2023 was $15M: The median compound growth rate of CEO total compensation dropped from 5.4% prior to 2021 to 2.8% since 2021 with the pandemic decreasing pay outcomes. CEO pay grew only modestly above inflation levels over this period.

? ? ? ? ? ? ? ? ? ? ? ??"Overwhelming majority of CEO pay is delivered in long-term incentives (LTI): Salaries grew more slowly at ~3% annually while grant values of LTI grew 7%-8% annually; since LTI is reported at its grant date value, realized values can be higher or lower than reported."

? ? ? ? ? ? ? (v) press releases/SEC filing of the day:?

? ? ? ? ? ? ? ? ? ?(a) NYSE-listed The Hershey Company announced on Friday in this press release?a "CEO succession plan", the company's board having appointed a special committee to direct the search for the next CEO, following the current CEO's informing the board of her intention to retire effective June 30, 2026,?as follows:

? ? ? ? ? ? ? ? ? ? ? ? "The Hershey Company today announced that?Michele Buck, Chairman of the Board of Directors, President and Chief Executive Officer, has informed the Board of her intention to retire from the Company effective?June 30, 2026. Ms. Buck intends to serve in her existing roles until her successor is appointed, at which time she plans to resign from the Board and transition to a senior advisor role until her retirement.

? ? ? ? ? ? ? ? ? ? ? ? ? ?"The Board has appointed a special committee to direct the search for the Company's next CEO and will consider external and internal candidates, in partnership with a nationally recognized search firm......Victor Crawford, Lead Independent Director of the Board, said.....'Succession planning is a matter the Board and Michele have been discussing and with Michele's continued guidance and leadership, we are confident we will execute a seamless transition.'......."

? ? ? ? ? ? ? ? ? ? (b) Southwest Airlines Co. announced last Thursday in this press release?"leadership changes", including that the CFO would be retiring effective April 1/25, and that a search will begin for his replacement, as follows:

? ? ? ? ? ? ? ? ? ? ? ? "Today?two longtime Leaders at Southwest Airlines Co announced plans to retire from their executive officer positions. Executive Vice President & Chief Financial Officer Tammy Romo?and Chief Administration Officer Linda Rutherford will retire from their positions effective?April 1, 2025.....

? ? ? ? ? ? ? ? ? ? ? ? "Tammy Romo: Romo joined Southwest Airlines??in 1991?and has held many Leadership roles in the past 33 years, including Head of Investor Relations, Controller, Treasurer, and Senior Vice President Planning....Southwest will begin a search for Romo's replacement......"

? ? ? ? ? ? ? ? ? ? (c) Nasdaq-listed Warner Bros. Discovery, Inc.?(WBD) announced on Friday in this news release?posted on its website the appointment as its new Chief Legal Officer, in charge of company’s legal and compliance functions and reporting to the CEO, the current Chief Legal Officer of American Airlines (see (d) below), as follows:

? ? ? ? ? ? ? ? ? ? ? ? "Warner Bros. Discovery today announced that?Priya Aiyar has been appointed Chief Legal Officer, leading the company’s legal and compliance functions globally. She will officially start in February and report to David Zaslav, Chief Executive Officer.....Aiyar joins WBD from American Airlines,?where she served as Chief Legal Officer since 2022 and was responsible for the company’s legal affairs and strategies globally......"

? ? ? ? ? ? ? ? ? ? ? (d) American Airlines Group Inc. disclosed in this Current Report?filed with the SEC last Friday the resignation of its Chief Legal Officer "to pursue another opportunity" (see (c) above), as follows:

? ? ? ? ? ? ? ? ? ? ? ? ? ?"On January 6, 2025, Ms. Priya R. Aiyar, Executive Vice President and Chief Legal Officer of American Airlines Group Inc., notified the Company that she is resigning from her role effective on or about February 21, 2025 to pursue another opportunity."

? ? ? ? ? ? ? ? ? ? ? ? ? ? Attached to the Current Report is this memo from?the company’s CEO to all employees of the Company announcing the departure of the Chief Legal Officer.

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