'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 memorandum on disclosure committees and refreshing them (including sample disclosure committee charter): Useful memorandum posted by?Deloitte on its website this month on disclosure committees, "Aligning the disclosure committee in the era of disclosure." As the memorandum notes, the origin of the common practice of setting up disclosure committees is an SEC recommendation in connection with the 2002 Sarbanes-Oxley?Act:

? ? ? ? ? ? ? ? ? ? ? "While not mandated by the SEC, disclosure committees rapidly became common from 2002 on with the adoption of SEC rules under Section 302 of the Sarbanes-Oxley (SOX) Act......In the commentary accompanying Securities Exchange Act rule 13a-15, prompted by Section 302, the SEC recommended that companies establish a management-level committee responsible for “considering the materiality of information and determining disclosure obligations” and reports to the CEO and CFO “who bear express responsibility for designing, establishing, maintaining, reviewing and evaluating the issuer’s disclosure controls and procedures.”

? ? ? ? ? ? ? ? ? ? ?As the memorandum also notes, the SEC suggests that companies have a specific disclosure committee charter, and has released this sample one:

? ? ? ? ? ? ? ? ? ? ? "Though the disclosure committee has been a widely adopted organizational practice for more than 20 years, some companies evidence its existence and performance through meeting materials, not a formalized charter. The SEC suggested the importance of a charter in the commentary accompanying the adoption of Securities Exchange Act rule 13a-15 and later with its release of a?sample charter.?Among the topics in the SEC’s sample charter?are:

? ? ? ? ? ? ? ? ? ? ? ?-- Committee purpose—the committee’s mission statement;

? ? ? ? ? ? ? ? ? ? ? ?-- Responsibilities—the scope of the committee’s purview, including reviewing and monitoring disclosure controls and?public filings;

? ? ? ? ? ? ? ? ? ? ? ?-- Disclosure control considerations—factors that will inform the disclosure committee’s assessment of controls;

? ? ? ? ? ? ? ? ? ? ? ?--?Membership and chair—how is the committee organized and led; and

? ? ? ? ? ? ? ? ? ? ? ?-- Meetings and procedures—how often does the committee meet, how, and on which agenda topics."

? ? ? ? ? ? ? ? ? ? The Deloitte?memorandum provides a number of "considerations for a disclosure committee refresh." Below are some of them:

? ? ? ? ? ? ? ? ? ? ?"Reassess disclosure committee owner(s) and membership: The disclosure committee charter should designate a committee chair who can drive meetings, agendas, and action items. Chairs or owners often include finance or legal; in some cases, it may be?helpful for more than one function to co-own committee leadership. As disclosure requirements and trends continue to target more?specific domains, more disclosure committees may consider?expanding membership to include additional subject-matter experts (e.g., executives/managers in sustainability, cyber, technology, and human resource roles)......

? ? ? ? ? ? ? ? ? ? ? "Enhance disclosure committee procedures, particularly those pertaining to memorialization of committee operations:?.........

? ? ? ? ? ? ? ? ? ? ? ? ? ?Meeting agendas:?While many disclosure committees review the same topics from quarter to quarter and year to year, the expansion of the audit committee’s scope.....may prompt disclosure?committees to make sure their meeting agendas include sufficient time for topics beyond review of specific filings (e.g., a deep dive on a particular disclosure or control, planning for anticipated or expected regulatory changes)?

? ? ? ? ? ? ? ? ? ? ? ? ? ?Checklists:?A standardized checklist may also be useful to help the disclosure committee stay on track with the disclosures and controls in its purview that need to be addressed or reviewed at any given?meeting. Additionally, records of draft filing markups may be made?more robust if accompanied by a checklist showing how the review was performed.

? ? ? ? ? ? ? ? ? ? ? ? ? ?Documentation: .....Some disclosure committees maintain formal minutes of meetings, but there are documentation alternatives, including:

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? – Maintaining records of agendas and calendar appointments to evidence that the meetings occurred;

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? – Maintaining records of financial report drafts marked up for the?committee meeting to illustrate the nature of the review;

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? – Maintaining records of checklists utilized by the disclosure committee to demonstrate the scope of review; and/or

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?-- Memorializing in audit committee minutes that the disclosure committee provided a report and any relevant details presented......"

? ? ? ? ? ? ? (ii) C-suite trends: (more on) the growing prominence of the CHRO: There have been a number of articles in the business press recently noting?the growing importance of the CHRO, most recently this Fortune article last month, "Workplace expert Nick Bloom says CHROs are rising stars of the C-suite after ‘a huge increase in HR importance’" (see item (iii) from April 16/24.) More on this in this Fortune article last Thursday, "How HR chiefs went from ‘lepers’ to C-suite power players":

? ? ? ? ? ? ? ? ? ? ?"......HR was once considered a sleepy backwater of the C-suite, a lesser-than role akin to a paper-pushing hall monitor. But a combination of the pandemic, a period of social upheaval, and a tight labor market?has coalesced to turn it into a new kind of powerhouse position, with CHROs wielding never-before-seen clout and importance in the C-suite. “I think there may have been a bias against HR because of the perception that it is a softer field. And I think HR has come a long way in showing that that’s not the case,” Liana Passantino, a senior principal at Gartner’s human resources practice,?tells Fortune. “HR and workforce issues have become a greater priority to CEOs, to boards, and to company strategy in recent years.”

? ? ? ? ? ? ? ? ? ? ?"CHROs weren’t always in the limelight. HR leaders have historically been some of the lowest-paid executives, excluded from the C-suite level, and relegated to focus on nonstrategic issues like payroll, hirings, firings, and benefits.....But those days are over. Jennifer Wilson, who leads Heidrick & Struggles’s global human resources officers practice, says 2020 and 2021 were “record-breaking years” for hiring CHROs.....“Every big issue on the CEO’s agenda, basically, is a people issue, and that has made the CHRO role more prominent,” she tells Fortune. “We’ve seen more work than ever for us in that sector.”

? ? ? ? ? ? ? ? ? ? ?"CHRO salaries have skyrocketed, and around 13% of HR executives at S&P 1500 companies were among the top five highest-paid C-suite positions at their organizations in 2022, up from 0.5% in 1992. Some CHROs now earn as much as $8 million annually. And many HR leaders are becoming CEOs in their own right, with General Motors chief executive Mary Barra serving as the most famous example of an HR head taking the top job. “Good companies always highly valued HR and gave them a place at the table. Other companies may be coming to that or are being forced to come to it,”?says Andy Gold, CHRO of enterprise shipping firm Pitney Bowes. “HR really does help drive business results.”

? ? ? ? ? ? ? ? ? ? ? "Those changes follow a fundamental evolution of the role itself over the past few years. Once considered purely operational, the CHRO role has taken on new strategic responsibilities and expanded within an organization. “During COVID, many HR leaders became part of cross-functional teams to respond to this evolving situation,” says Passantino.?'That has elevated their position and, maybe to some extent, the connections with other functions like finance, real estate, IT, and so on.'....."

? ? ? ? ? ? ? ? ? ?Additional commentary on the CHRO role?in the related Fortune CFO Daily Newsletter last Friday, "CHROs are more powerful than ever—but they’ll have to fight to hold onto their new status":

? ? ? ? ? ? ? ? ? ?"........CHROs still have a long way to go?before they’re paid the same as CFOs, but a?dawning awareness that the role is strategically important to business has led to a mad dash for CHRO talent, higher salaries, and a power shift within the C-suite.?The rise of AI will make the position even more important,?as companies look to incorporate the technology in their operations and increase productivity without alienating their existing workforce.?

? ? ? ? ? ? ? ? ? ?"It’s not just that HR is kind of the fun crew, organizing picnics and engagement surveys,” Tom Wilson, managing director at Frederickson Partners, an executive search firm, tells Fortune. “They’re doing real, proper business work.” But will CHROs be able to hold onto their new power? To keep a seat at the table, they’ll have to do three things, according to Steve Patscot, leader of?Spencer Stuart’s human resources practice: Stay on their CEO’s radar, continue to learn new aspects of business, and deliver on the AI revolution.?But that’s a tall order. “If you took a survey of who thinks HR is blowing it away right now, I think the results would be reasonably mixed,” he says."

? ? ? ? ? ? ? (iii) Unilever CEO on 'realism' in environmental targets/CEO of the world's largest sovereign wealth fund on ESG, and the fund's updated expectations for its investee companies on climate:?

? ? ? ? ? ? ? ? ? ? (a)?Unilever?CEO Hein Schumacher spoke to journalists after a recent "Q1 trading update" about, inter alia, the company's "more focused ESG strategy", as reported in this FT article last Monday, "Unilever says new laxer environmental targets aim for ‘realism’":

? ? ? ? ? ? ? ? ? ? ? ? "The chief executive of consumer goods giant Unilever has admitted the company underestimated how hard it would be to meet environmental targets, saying the company’s new laxer ESG goals aimed for “realism” instead. Unilever announced last week that it was introducing a more “focused” ESG strategy,?which included extending deadlines and reducing the scale of environmental targets. A previous goal to reduce use of virgin plastics by 50 per cent by 2025 was changed to a 30 per cent cut by 2026, while a plan to use 100 per cent reusable, recyclable or compostable plastic packaging by 2025 was also extended to 2030 and beyond.

? ? ? ? ? ? ? ? ? ? ? ? ?"Talking to journalists following a first quarter trading update on Thursday, chief executive Hein Schumacher said that far from being a cost-cutting exercise, the new strategy was about adjusting targets to what the company could achieve, and admitted that in some cases,?“we were simply not ready”. “When the initial targets were set, we may have underestimated the scale and complexity of what it takes to make that happen,” he said. “We are now in a better position to give you a feasible target on plastic. It doesn’t mean we are reducing our investment on the matter. 'We believe it is important to bring realism to [our strategy]. If you focus more in your approach, you can make a greater difference in the areas we consider important.'....."

? ? ? ? ? ? ? ? ? ? (b)?Nicolai Tangen is CEO of Norway's $1.6 trillion oil fund, Norges Bank Investment Management?(NBIM), the world's largest sovereign wealth fund, and he spoke last week with?CNBC on ESG investing, as reported in this CNBC article last Monday, "World’s largest sovereign wealth fund says green backlash is a chance for it to ‘phase in’ — not out":

? ? ? ? ? ? ? ? ? ? ? ? ? "Norway’s $1.6 trillion sovereign wealth fund says it will continue to advocate for investments based on environmental, social and governance (ESG) factors, brushing off the impact of a green political backlash......Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), told CNBC that the country’s wealth fund continued to advocate for the ESG agenda.?

? ? ? ? ? ? ? ? ? ? ? ? ?“We think it is part of long-term investing. You really need to care [about] the impact that companies have on the environment otherwise you’re not going to make good long-term investing. So that’s important,” Tangen told CNBC’s “Squawk Box Europe” on April 23. 'And we think the fact that some other people are pulling away gives us a better opportunity to kind of phase in. So, really interesting times.'....."

? ? ? ? ? ? ? ? ? ? ? ? ?As noted in the CNBC article, NBIM "has put money in more than 8,800 companies in over 70 countries around the world, making it one of the largest investors across the globe", and last Thursday, it posted on the Harvard Law School?corporate governance blog this article, "Sharpened Expectations on Climate", which it summarizes as follows:

? ? ? ? ? ? ? ? ? ? ? ??"In September 2023, Norges Bank Investment Management published a revised set of expectations on climate change to further support companies in managing the evolving climate related risks and opportunities. We present six core expectations, which apply to all companies, and provide further direction on good practices we encourage companies to adopt. This blog post provides an overview of our updated expectations on climate change, and how the expectations inform our voting decisions as we enter the 2024 AGM season."

? ? ? ? ? ? ? (iv) press releases/precedent of the day (CFO employment offer letter):?

? ? ? ? ? ? ? ? ? ?(a)?The Goldman Sachs Group, Inc.?announced today in this press release the appointment of a Vice Chairman and member of the Management Committee, as follows:

? ? ? ? ? ? ? ? ? ? ??? "The Goldman Sachs Group, Inc.?today announced that Rob Kaplan will rejoin the firm as Vice Chairman of Goldman Sachs and a member of the Management Committee. He will be a member of the Executive Office.....In this role, Rob will engage our clients around the world, working closely with our teams across Global Banking & Markets and Asset & Wealth Management to offer strategic advice.?Rob will also draw on his experience in the public and private sectors to offer perspectives to our clients and other stakeholders on the US and global macroeconomic landscape. In addition, Rob will focus on mentoring, leadership development, and the firm’s culture, working with our people across all levels and around the world to help further develop and advance their careers.....

? ? ? ? ? ? ? ? ? ? ? ? ?"Most recently, Rob served as President and CEO of the Federal Reserve Bank of Dallas?from 2015 to 2021.....Rob’s prior roles at Goldman Sachs include?serving as Global Co-Head of the Investment Banking Division beginning in 1999, and Global Co-Chief Operating Officer of the division in 1998....."

? ? ? ? ? ? ? ? ? ?(b) American International Group, Inc. (AIG)?announced on April 29 in this press release the appointment of a new Chief Human Resources & Diversity Officer, reporting to the CEO,?as follows:

? ? ? ? ? ? ? ? ? ? ? ? ?"American International Group, Inc.?today announced that?Kelly Lafnitzegger will join AIG as Executive Vice President and Chief Human Resources & Diversity Officer (CHRO),?effective June 1, 2024.?Ms. Lafnitzegger will report to Peter Zaffino, AIG Chairman & Chief Executive Officer, and will be a part of AIG’s Executive Leadership Team.

? ? ? ? ? ? ? ? ? ? ? ? ?"As CHRO, Ms. Lafnitzegger will lead AIG’s global human resources organization with responsibility for aligning AIG’s talent strategy with the company’s strategic and operational objectives. In this role, Ms. Lafnitzegger will oversee talent acquisition and management, learning and development, compensation and benefits, diversity, equity, and inclusion, and global corporate citizenship......

? ? ? ? ? ? ? ? ? ? ? ? ? "Ms. Lafnitzegger joins AIG from GE Vernova,?where since 2022, she led the separation management office to support the company’s spin-off from GE....Ms. Lafnitzegger succeeds Rose Marie Glazer, who has served as AIG’s Chief Human Resources & Diversity Officer since January 1, 2022, and has transitioned to AIG’s General Counsel."

? ? ? ? ? ? ? ? ? ?(c) United Parcels Services, Inc. (UPS)?announced yesterday in this press release?that its CFO was leaving the company "to focus on his health", as follows:

? ? ? ? ? ? ? ? ? ? ? ?"UPS announced today that?Brian Newman, executive vice president and chief financial officer, will leave the company?on June 1. UPS will evaluate internal and external CFO candidates to identify Newman’s successor......“I am honored to have served as CFO of such a storied company with so many great leaders around the world,”?said Newman. “I am confident in the company’s continued success and growth trajectory. My near-term priority is to focus on my health.”

? ? ? ? ? ? ? ? ? ? ? ? As disclosed in the related Current Report?filed with the SEC,?UPS and the departing CFO "intend to enter into a Separation Agreement?memorializing the terms of his departure from the Company", and described in the Current Report as follows:

? ?

? ? ? ? ? ? ? ? ? ? ? ? "......The Separation Agreement requires a general release of claims in favor of the Company and contains certain customary protective covenants in favor of the Company, including certain confidentiality, employee and customer non-solicitation, non-competition, and non-disparagement provisions. The Separation Agreement also provides, subject to Mr. Newman’s timely execution and non-revocation of a supplemental release of claims in favor of the Company, for compensation?to be paid consistent with the terms and conditions of the previously approved UPS Key Employee Severance Plan as follows: ........"

? ? ? ? ? ? ? ? ? (d) Nasdaq-listed, casual footwear company Crocs, Inc. announced today in this press release the appointment of a new CFO from outside the company, as follows:

? ? ? ? ? ? ? ? ? ? ? "Crocs, Inc., a global leader in innovative casual footwear for all, today announced the appointment of?Susan Healy?as Executive Vice President and Chief Financial Officer of Crocs Inc.,?effective?June 3. Ms. Healy, 58, succeeds?Anne Mehlman, who was recently appointed President of the Crocs Brand. Ms. Mehlman will continue to serve as Chief Financial Officer until Ms. Healy's start date. Ms. Healy will join the executive leadership team and report directly to?Andrew Rees, Chief Executive Officer.......

? ? ? ? ? ? ? ? ? ? ? "Ms. Healy will have responsibility over?financial planning and analysis, accounting, investor relations, tax, internal audit, and corporate development. She joins Crocs, Inc. from?IAA, Inc., a global marketplace for automotive buyers and sellers, where she served as Chief Financial Officer......"

? ? ? ? ? ? ? ? ? ? ?In connection with the appointment, the company and the new CFO entered into this Employment Offer Letter, as summarized in the related Current Report filed with the SEC.

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