'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) Deloitte report on the 'evolving lines of responsibility between the board and management': In March, Deloitte,?in collaboration with the Society for Corporate Governance,?released the latest issue of its Board Practices Quarterly, "Evolving lines of responsibility between the board and management", based on a survey of "primarily corporate secretaries, in-house counsel, and other in-house governance professionals, representing 101 public companies of varying sizes and industries." A good summary of the key findings are in this Society for Corporate Governance?blog post last Monday, "Society Members Speak! Board and Management Roles & Responsibilities", and below are excerpts:

? ? ? ? ? ? ? ? ?"Establishing board v. management responsibilities: Nearly all companies (95%) rely on their governance documents (e.g., corporate governance guidelines) to establish a mutual understanding among the board and?management of their respective roles and responsibilities. A majority of companies also or instead rely on new director orientations, regular board performance evaluations, and director education. More than half of companies with a lead independent director use a lead director role description.?

? ? ? ? ? ? ? ? ? "Board approval authority: Among a robust list of enumerated activities, no board or board committee review or approval is typically required for C-suite travel and expense policies, stakeholder engagement policies or strategies, annual workforce health and wellness plans, interaction with workforce below the C-suite, or workforce vacation/PTO policies. By contrast, a majority of companies require full board approval for the annual budget (75%); C-suite and workforce code of conduct/ethics (69% and 64%, respectively); and C-suite selections, appointments, and terminations (51%). (The latter answer choice deliberately focused on non-CEO?selections, appointments, and terminations.)

? ? ? ? ? ? ? ? ? "Board involvement in strategy: Most boards are always or regularly involved in their company's multiyear strategic plan development/update (94%), M&A strategy development/update (85%), and sustainability strategy development/update (52%).

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? ? ? ? ? ? ? ? ? "Board involvement in human capital: More than two-thirds of boards are always or regularly involved in management (other than CEO) succession planning. ?(This answer choice deliberately focused on non-CEO?succession planning.)

? ? ? ? ? ? ? ? ? "Board involvement in operations: Regular board involvement in enumerated operations-related activities is rare or uncommon, as shown here: .......(see accompanying table)

? ? ? ? ? ? ? ? ? "Board involvement in risk management/mitigation: Most boards are always or regularly involved in the company's annual risk management plan development/update (79%), shareholder activism response (66%), and risk profile development/update (65%)....."

? ? ? ? ? ? ? (ii) what's in a nomenclature? the fading away of the title of 'chairman': As noted in this Bloomberg Businessweek article last Thursday, "Goodbye Chairman, Hello Chair. The Gendered Title Is Fading Away", several of the largest and most prominent U.S. companies have recently?amended their bylaws to replace the title "chairman" with that of "chair", among them: Advanced Micro Devices?(AMD)?this February (see the company's amended and restated bylaws here); Intel Corp. last November (see the company's amended and restated bylaws here), as well as JP Morgan, Ford Motor, Starbucks?and Netflix.?Below are excerpts from the Bloomberg article:

? ? ? ? ? ? ? ? ? ? ? "The day before Advanced Micro Devices Inc. approved Chief Executive Officer Lisa Su’s bonus in February, the chipmaker scrubbed the gendered title of chairman from its bylaws, part of “technical, modernizing, clarifying and conforming changes.” Su, who’s been CEO for almost 10 years, officially became chair, rather than chairman. AMD had already been calling her chair publicly, but she’d legally been chairman since she started leading the board in 2022. A few months before AMD’s title update, Intel Corp. did the same — but more explicitly: “Delete outdated references, utilize gender-neutral terms,” its filing said,?striking through each erasure in red font. JPMorgan Chase & Co., Ford Motor Co., Starbucks Corp. and Netflix Inc., among others,?have done the same.....

? ? ? ? ? ? ? ? ? ?"As recently as 2020, 88% of the S&P 500 — 438 companies — officially used “chairman,” even if their board chief was a woman. The number using “chair” or “chairperson” has more than tripled to at least 185?since then, according to a Bloomberg News analysis of more than 2,000 regulatory filings spanning two decades. The review mainly looked at bylaws that set internal rules and are filed publicly with the Securities and Exchange Commission. About two-thirds of the 123 companies that updated the title since 2020 made the change without fanfare, either vaguely talking about “modernizing” like AMD or not noting it at all......

? ? ? ? ? ? ? ? ? ?"All companies mentioned in this story either declined to comment or didn’t reply to a request for comment, except for Ford which said the change to “chair” provided clarity about its?“inclusive and equitable culture.” Despite the initial rush, adoption of gender-neutral language has declined steadily since early last year. Those using chair remain the minority, and January was the first month since June 2022 when no S&P 500 company ditched chairman. Some now list DEI as a "risk factor" in their annual reports, saying taking too much or too little action could hurt their business......

? ? ? ? ? ? ? ? ? ?"The more valuable a company is, the more likely it is to have jettisoned the chairman moniker. Only 37% of the S&P 500 have made the change, but six of the so-called Magnificent 7 have done so.?The exception: Nvidia Corp., which kept chairman when it updated its bylaws last month. Of the 15 largest publicly traded companies in the US, all but four — Berkshire Hathaway Inc., Walmart Inc., Exxon Mobil Corp., and Nvidia?— use “chair” or “chairperson.”......(T)he three largest banks — JPMorgan, Bank of America Corp.?and Wells Fargo & Co.?— have all adopted “chair.” Citigroup Inc., with a female CEO, still uses “chairman,” as do Morgan Stanley?and Goldman Sachs Group Inc....."

? ? ? ? ? ? ? (iii) C-suite trends: the dropping of the CMO title/role of COO/GE's CMO and former CMOs at Prudential and Visa on building relationships with other executives and the board/(more on) from CFO to CEO:?

? ? ? ? ? ? ? ? ? ?(a) As reported in Fortune article earlier this year, "Fortune 500 companies are eliminating chief marketing officer roles as the position loses C-suite clout"?(see item (ii)(b) from Jan.23/24), many prominent U.S. companies are scrapping the separate position of CMO, and instead having that function ?performed by another C-suite member, often the COO. This trend is highlighted in this Fortune article last Monday, "As companies drop CMO titles, marketers may want to consider the COO role":

? ? ? ? ? ? ? ? ? ? ? ?"....Companies are scrapping the position (of CMO), not to replace it with close cousins like chief revenue officer or chief growth officer but to position ultimate responsibility for the marketing function under COOs and like-minded CEOs-in-waiting.?Following the departure of former Etsy?CMO Ryan Scott in December, for example, COO Raina Moskowitz took charge of marketing at the online marketplace, and the company eliminated the standalone marketing role. Walgreens, UPS, and?Wells Fargo?have all made similar shuffles recently, casting off their CMOs and assigning marketing oversight to executives in strategy, operations, and head of business unit jobs. This month, Starbucks announced that Brady Brewer, the coffee giant’s CMO, would become CEO of Starbucks International while his old title would be retired.?The next person to lead its marketing will be the “global brand chief leader”—a fine position, to be sure, but lacking the gravitas of 'CMO'........"

? ? ? ? ? ? ? ? ? ? ? The article also discusses the evolving role of COO:

? ? ? ? ? ? ? ? ? ? ?"The COO job, too, has evolved and expanded to become “more transformative than ever,” writes Darryl Piasecki, a St. Louis-based managing partner for McKinsey?who specializes in strategy and operations.?Specifics vary depending on company size and sector, but COOs are often considered a CEO’s second-in-command and a top candidate for the corner office. More recently, as CEOs have increasingly become externally facing brand representatives, more companies have turned to COOs to take over internal affairs, says Piasecki. In 2022, 40% of Fortune 500 companies had a COO?in their C-suite, an increase of eight percentage points since 2018.?

? ? ? ? ? ? ? ? ? ? "Given the weight of their roles, today’s COOs are expected to have a clear cross-functional understanding of every C-suite function and a deep familiarity with the markets. As they’re managing supply chain and labor strategies, for example, COOs are also immersing themselves in a company’s customer experience, the marketer’s domain. ? Piasecki argues that what matters most for companies now is bringing the CMO and COO roles closer together,?whether through organizational chart changes or collaboration.?

? ? ? ? ? ? ? ? ? ? ?"Companies that are looking for a competitive edge have already optimized within individual job functions; the next place to look for cost savings or opportunities for more impactful spending is in areas where two functions overlap. For instance, with consumers and business clients now demanding exceptional and personalized service, CMOs can work with COOs to pinpoint where spending on the customer experience will offer the best bang for their buck and, inversely, where precious capital would be wasted. Piasecki says his team’s research illustrates that investments in the customer can boost revenues ?by 10% to 15%, cut costs by up to 20%, and improve customer retention rates by more than 30%......"

? ? ? ? ? ? ? ? ?(b) At the WSJ's CMO Network Summit held yesterday, among the attendees were Linda Boff, CMO of General Electric; Susan Somersille Johnson, former CMO of?Prudential Financial?and board member at Constellation Brands; and Lynne Biggar, former CMO at Visa and now senior adviser at?Boston Consulting Group and board member at Anheuser-Busch InBev.?They are all quoted in this?WSJ?article yesterday, "Marketers Are Still Juggling ESG and Scrutiny":

? ? ? ? ? ? ? ? ? ? ? ?"......Marketers at the summit.....discussed outlasting the notoriously short average tenure of CMOs, rising to CEO roles and joining boards. A long run as a CMO depends in part on a good start, said?Linda Boff, CMO of General Electric.?Boff said she spent nearly her first six months in the role visiting marketing leaders of the company’s various business units. “All we did was listen,” Boff said. Marketers should build relationships not only with other executives, Boff said, but with their company’s board of directors as well.?That helps prevent CMOs from coming off in board meetings like just that “person with a sandwich board that says marketing,” she said.

? ? ? ? ? ? ? ? ? ? ? "Becoming a board member partly requires visibility with people you don’t know, said Susan Somersille Johnson, former CMO of Prudential Financial ?and a member of the board ?for National Vision previously Constellation Brands. “You don’t find the board,” she said. “The board finds you.” Marketers on a board don’t get to manage the company, but they do have a lot of influence, executives said. Your job is to support management,” not to run the company, said Lynne Biggar, senior adviser at Boston Consulting Group and former CMO at Visa, and a board member at Anheuser-Busch InBev?during the Bud Light boycott...."

? ? ? ? ? ? ? ? ? ?(c) A number of recent items have discussed the trend of the CFO transitioning to CEO (see, most recently, item (ii) from March 21/24). Yesterday, Fortune?announced that its current CFO and chief strategy officer,?Anastasia Nyrkovskaya, would take over as CEO,?and this is from today's Fortune?CFO Daily Newsletter:

? ? ? ? ? ? ? ? ? ? ? ?".....Her ascension to the CEO spot is part of a larger trend:?Looking solely at the S&P 500, a study?by Russell Reynolds Associates?found that CFOs were three times more likely to transition into the top seat in 2023 than they were in 2021. And according to the most recent volatility report?from Crist Kolder Associates,?based on 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 5.8%.

? ? ? ? ? ? ? ? ? ? ? "As CFO, and as chief strategy officer, experience Anastasia shares with other finance chiefs making the same leap to chief executive is broadening skill sets, being a strategic partner to the CEO and board, understanding the stakeholder landscape, and looking into the future of the industry. But also the ability to focus on longer-term organizational goals and make decisions sometimes with incomplete information when the data isn’t yet available. “Operating in that universe of unknowns is probably the biggest skill,” Anastasia said.?'It’s not enough just to look forward or just to look backward, you actually have to look at today, the past, and the future, and then try to make the best guess based on that.'...."

? ? ? ? ? ? ? (iv) Macy's settlement with activist/press release and precedent of the day (settlement agreement with activist): In Feb./24, investment firm Arkhouse Management, a significant?Macy's Inc. shareholder, launched a proxy campaign to nominate 9 directors to the Macy's board (following an unsolicited bid to acquire the company rejected by Macy's: see item (ii)(a) from Feb. 27/24). Today, Macy's Inc. announced in this press release?that it had entered into a Settlement Agreement with Arkhouse, ending the proxy fight, as follows:

? ? ? ? ? ? ? ? ? ? "Macy’s, Inc. today announced the appointment of two new independent directors, Richard (Ric) Clark and Richard (Rick) L. Markee, to its Board of Directors, effective immediately. The appointments of Clark and Markee follow the Board’s engagement with Arkhouse Management Co. LP, resulting in the withdrawal of its director nominations.

? ? ? ? ? ? ? ? ? ? ?"The Company is also implementing previously announced changes to its Board,?effective immediately. Tony Spring, chief executive officer and chairman-elect of Macy’s, Inc., has assumed the chairman role. In addition, Douglas (Doug) W. Sesler, whose nomination to stand for election to the Board at the 2024 annual meeting of shareholders was announced on March 14, 2024, has been appointed as an independent director. These changes follow the planned retirements of Jeff Gennette and Frank Blake from the Macy’s, Inc. Board......

? ? ? ? ? ? ? ? ? ? ?"In connection with the Clark and Markee appointments, the Company has entered into an agreement with Arkhouse and its affiliates that provides for the withdrawal of Arkhouse’s director nominations, among other customary provisions.?Clark and Markee will join the Board’s Finance Committee, which in addition to its existing responsibilities, will oversee the evaluation of and make recommendations to the full Board regarding the acquisition proposal submitted by Arkhouse and Brigade Capital Management, LP......Following today’s Board appointments and retirements, the Macy’s, Inc. Board comprises 15 directors, 14 of whom are independent."

? ? ? ? ? ? ? ? ? ? This is the Settlement Agreement entered into between Macy's and Arkhouse, as summarized in the related Current Report?filed with the SEC.

? ? ? ? ? ? ? ?(v) (other)press release of the day: Nasdaq-listed, gene sequencing company Illumina, Inc.?announced yesterday in this press release?the appointment of a new CFO from outside the company,?as well as a new Chief Strategy and Corporate Development Officer, as follows:

? ? ? ? ? ? ? ? ? ?"Illumina, Inc., a global leader in DNA sequencing and array-based technologies, today announced that?Joydeep Goswami?has decided to leave Illumina. He will stay on in an advisory role through?June 30?to support two new executive management team appointments. Ankur Dhingra?is joining Illumina as Chief Financial Officer (CFO), leading Illumina's financial planning and analysis, accounting, investor relations, internal audit, tax, and treasury functions. Dhingra?brings a breadth of experience from the life sciences tools, diagnostics, and pharmaceutical industries. He formerly was CFO at Summit Therapeutics Inc.....

? ? ? ? ? ? ? ? ? ? ?"Jakob Wedel?has been named Chief Strategy and Corporate Development Officer.?Wedel joined Illumina in?November 2023?as CEO Chief of Staff, leading strategic transformation initiatives. In his new role, Wedel is responsible for driving Illumina's strategic planning, partnerships, and acquisitions......Dhingra and Wedel.....succeed Goswami, who held both the CFO and Chief Strategy and Corporate Development Officer roles?since early 2023.Goswami?joined Illumina in 2019 to lead strategy and corporate development. He will continue as an advisor to the company starting?April 15?and through?June 30. He departs the organization on?July 1......."

? ? ? ? ? ? ? ? ?Compensation arrangements with the new CFO, and terms of the Retention Agreement with the departing CFO, are disclosed in the related Current Report?filed with the SEC.

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