Director's Domain June 20, 2022

The great rethink. Succession planning has new meaning in a world forever altered by the Covid-19 pandemic. Boards that value diversity may reevaluate progress as a new study shows that white male voices continue to dominate in diverse boardrooms. Increasing stakeholder demands for transparency and progress around ESG issues have more corporations considering the relationship of corporate goals and ESG metrics. Meanwhile, in a push to attract top talent and to get ahead of state regulations, Microsoft will disclose salary ranges for open positions. And amid an uptick in public companies going private, regulators consider governance changes to increase transparency.

BOARDS ADD VALUE: At Boardspan, we spend a lot of time talking to board members about the ways they add value and the many challenges they’re facing. Check out this?two-minute video?that highlights what we’ve learned.

In the Spotlight

Survey: Boards Increasingly Tie ESG Metrics to Corporate Goals

“Customers, employees, shareholders, and other stakeholders, are increasingly expecting companies to tackle environmental, social, and governance (ESG) issues. That includes the American public…. Shareholders have filed a record number of ESG proposals this proxy season, with U.S. companies facing over 500 resolutions on ESG issues. This increased momentum comes alongside a push from the U.S. Securities and Exchange Commission (SEC) to mandate climate-related disclosures, a move the majority of the American public (86%) JUST Capital recently polled support. In fact, our survey found that Americans overwhelmingly want greater transparency from companies on ESG metrics—and this holds true across the political spectrum as backlash against ESG grows more prominent.”?HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

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Across the Board

Boards Rethink Succession Plans Due to Pandemic

“A number of boards at the largest companies – though perhaps fewer than some governance observers might expect – have updated their succession plans as a result of the pandemic, according to new research from Corporate Secretary…. Approaching a third (29 percent) of respondents at mega-cap companies say their board revised its approach to succession planning due to the pandemic, Corporate Secretary’s study finds. By comparison, 17 percent, 19 percent and 8 percent of those at small caps, mid-caps and large caps, respectively, say their board had a rethink as a result of the crisis. It should be noted that, globally, more than a fifth (23 percent) don’t know whether this has been the case.”?CORPORATE SECRETARY?

CEOs Face An Updated Job Description

“Today’s challenges, from the pandemic to ESG to ongoing efforts to address racial inequity, have only woven business and society more tightly together. Indeed, 86% of CEOs and board members see business and society becoming more interconnected, and two thirds of the American public want CEOs to take a stand on social issues…. If CEOs are to deliver against their new job description, they must become a different type of CEO: an enterprise leader who also stewards the ecosystem in which their business operates, including customers, suppliers, partners, competitors, governments, and their local community.”?HARVARD BUSINESS REVIEW

Ahead of State Requirement, Microsoft to Disclose Salary Ranges

“Microsoft said it would soon start to disclose salary ranges for all job postings in the U.S., becoming one of the first major employers to take such a step amid new requirements from some local officials for pay transparency… the software giant said it would publicly disclose salary ranges for internal and external postings across the country starting no later than January 2023. Last month, the company promised to boost merit raises and stock awards this year as it battles for talent…. The move comes after its home state of Washington adopted a law earlier this year requiring such disclosures on job postings starting next year.”?WALL STREET JOURNAL?

Governance Expectations Are Changing For Private Companies

“With more companies leaving the public markets, executives and board directors of these newly private companies should expect governance changes as regulators push for more transparency from certain nonpublic companies. … [They] face less regulatory scrutiny, including filing fewer reports to the Securities and Exchange Commission, and can focus more on long-term strategic goals as opposed to meeting quarterly earnings expectations. This may change, though, if the SEC moves forward with plans to require more routine filings on private companies’ finances and operations, …. Private company directors also operate with fewer external pressures, but can feel more of a squeeze from a smaller number of shareholders, who—with larger, more concentrated stakes—may wield more influence on a private company.”?WALL STREET JOURNAL

Study: Even On Diverse Boards, White Men Dominate Discussions

“Research shows that heterogeneity in groups boosts the quality of decision-making. Yet little evidence has persuasively linked increased board diversity with improved firm outcomes. A new study explores why and suggests conditions that can help…. Researchers worked with the auditors of 54 U.S. public companies to code the transcripts of every board meeting from 1994 to 2006 to determine the number of minutes each director spoke.… Controlling for the differing sizes of corporate boards, each white man spoke, on average, for 11% of the total annual board meeting time, whereas each Black man spoke for just 4% and each woman just 8% of the time.….”?HARVARD BUSINESS REVIEW

What Boards Need to Know About Cryptocurrencies

“Digital assets are disrupting the entire financial market, driving changes in the financial ecosystem…Digital assets—including cryptocurrencies, stablecoins, tokens, and non-fungible tokens (NFTs)—are items of value that exist only in digital form…. Given their duty to oversee strategy and risk, boards have a responsibility to understand this dynamic new market to grasp the opportunities and risks that are swiftly evolving for the companies they oversee…. With an understanding of the broad opportunities digital assets portend, boards should also understand the scope of risks. Strong governance over risk and controls is critical. Boards should be prepared to engage with senior leaders on a number of risk areas.”?HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE

From the Boardspan Library

How to Talk to Your Board About Risk

“Board members and company managers today need to have a clear and informed view of risk. The business world is fraught with risks to strategy that emerge more quickly and pack a bigger punch than ever before. Moreover, there are new sources of risk—for example, fast-moving innovations in technology… scientific breakthroughs, and the ever-evolving realm of social media…. The first step in having meaningful conversations with the board about risk is collecting the right information to share… When leaders set the tone that risk management is everyone’s business and put structures in place to support it, the data emerges effectively.”?S+B via BOARDSPAN

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Seat at the Table

• Outdoor sports and recreation product company American Outdoor Brands elects to its board?Luis G Marconi, former group vice president of grocery products at food processing company Hormel Foods
• Yahoo elects six new members to its board:?Jessica Alba, founder and CEO of lifestyle brand The Honest Company;?Aryeh Bourkoff, founder and CEO of independent investment and merchant bank LionTree;?Fouad ElNaggar, co-founder and CEO of software development company Array;?Michael Kives, founder and CEO of investment firm K5 Global;?Cynthia Marshall, CEO of the Dallas Mavericks; and?Katie Stanton, founder and general partner of seed stage firm Moxxie Ventures
• Ticketing platform Eventbrite elects to its board?April Underwood, co-founder of angel investor collective #ANGELS
• Insurance company Hanover Insurance Group welcomes to its board?Francisco Aristeguieta, special adviser at State Street
• FedEx appoints two members to its board:?Amy Lane, former managing director at Merrill Lynch; and?Jim Vena, former COO at transport company Union Pacific

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About Boardspan

Learn more about?Boardspan?and schedule a complimentary strategy call with our team.

Boardspan?is the leading provider of digital governance solutions for boards across all sectors. Our cloud-based assessments, dashboards, benchmarking analytics, and governance education programs complement our board search and advisory services to deliver a holistic approach to governance. Boards of all sizes and stages rely on Boardspan to deliver analytics, insights, and outcomes that improve their effectiveness and performance. Clients include KKR, The Kellogg Foundation, Ingersoll Rand, Farfetch, McAfee, Beyond Meat, Box, e.l.f. Beauty, Satellite Healthcare and the U.S. Olympic & Paralympic Committee.