Hot Topics for Boards in 2022
Monday, June 20, 8:45 am – 10:00 pm PST
Boards face increasingly fractious controversies. When should corporations or CEOs speak out on controversial political and social questions? How, if at all, should corporations adjust their approach to political contributions and lobbying? How should boards respond to calls for increased diversity in the boardroom and throughout the corporation? More prosaic, but no less difficult, are a range of novel business challenges. What’s the best response to a ransomware demand? How should corporations address work-from-home and COVID safety concerns as workers transition back to the office? What are the implications of the expansive new ESG disclosure mandates promised by the SEC? This panel, in a focused, rapid-fire fashion, will address a series of contentious boardroom issues and describe emerging best practices that respond to these evolving pressures.
ESG Action Items for Corporate Directors
Monday, June 20, 4:15 pm – 5:30 pm PST
An increasing number of institutional investors, employees, and consumers are expressing interest in ESG (environmental, social, and governance) factors. President Biden has made tackling climate change an administration priority, and the pandemic and widespread racial justice movements have helped push social issues such human rights, labor and equality, and health and safety into the spotlight. Boards–and even individual directors–are facing heightened scrutiny on how they oversee ESG, with some institutional investors announcing that they will withhold votes for directors based on a company’s perceived ESG shortcomings, and a first-of-its-kind shareholder lawsuit seeking to hold a board personally liable for failing to prepare for the net zero transition. ESG impacts, risks, and opportunities can be difficult and costly to track, measure, and compare across industries, and an alphabet soup of reporting standards, frameworks and protocols further complicate the ESG disclosure process. With the term ESG embodying so many potential issues, where should boards focus their attention? What concrete steps should companies take to advance their ESG agendas in a meaningful way, and what obstacles do they face? How can companies achieve high-quality reporting on ESG impacts, risks, and opportunities? This panel will address some of the key governance challenges posed by the increased focus on ESG issues, and various action items that boards can take to respond constructively to these emerging trends.
Anticipating and Recovering from a Corporate Crisis
Tuesday, June 21, 2022, 8:45 am – 10:00 am PST
Every board has to be ready to deal with an existential crisis, but many boards have revealed themselves to be unprepared when faced with the challenge. This session will review best practices for identifying crisis-level risk exposures and for implementing effective, practical responses. The panel will focus in particular on patterns common to board-level crisis situations, communications and the delegation of responsibility, the potential value of tabletop exercises as a means of preparation, and the need to balance legal concerns with the required responses to public, consumer, and regulatory demands for information.
The Global Economy and Corporate Strategy
Tuesday, June 21, 2022, 3:30 pm – 4:45 pm PST
The global economy continues to be in an extraordinary state of flux. COVID, an unprecedented modern human tragedy, has continued to cause a massive shock to domestic economies and to the global supply chain. The United States’ powerful fiscal and monetary response creates a confluence of historic macroeconomic conditions with implications, including inflation concerns and potential asset bubbles, that are difficult to predict. Compound this domestic policy stimulus uncertainty with Brexit, the conflict in the Ukraine, increasing trade friction between the United States and China, and the possibility of increased corporate, personal, and capital gains taxes, and the challenge of macroeconomic forecasting becomes particularly fraught. How can a corporate director help set strategy and decide on capital allocations in an environment so bedeviled by profound uncertainty? This panel reviews the state of the global economy, highlights the major evolving risk factors, and connects macroeconomic trends to practical, bottom-line issues salient to corporate strategy oversight.
Accounting Fundamentals for Directors
This session is designed to provide “ordinary” and/or newly appointed board members with concrete suggestions to monitor potential issues related to financial reporting. The classroom-style presentation seeks to improve directors’ understanding of accounting principles in a way that cuts to the chase and de-emphasizes “traditional practices” in favor of more practical strategies. Time permitting, the session will conclude with a brief discussion of ESG reporting that builds on the parallels between ESG and financial reporting.
Successful Board Meetings: Tricks of the Trade
The details of boardroom management–how you write minutes, how you set board agendas, the cadence of “critical item” review, how to decide on what goes in the deck and what stays out, even the email addresses that independent directors use–are more important than ever before. This session offers a deep dive into the “tick tock” of boardroom operations by emphasizing recent judicial opinions with potentially profound consequences for “corporate hygiene.” It’s the particulars that every board needs to know, but that few boards address in a coherent, cohesive manner. Indeed, experience teaches that low-cost attention to small details can save many millions of dollars in litigation expense and can avoid significant corporate and personal reputational damage, yet these issues can unfortunately fall between the cracks. The session also addresses how directors can maximize their contributions during board meetings, best practices for director self-evaluations, Zoom board meetings, and the need for far more intrusive annual questionnaires designed to determine the level of independence of each corporate director, among many other issues.
Corporations and Politics
CEO and corporate activism–the practice of CEOs taking public positions on environmental, social, and political issues not directly related to their business–has become a hotly debated topic in corporate governance. Following the events of January 6 and the 2020 U.S. presidential election, many corporations either halted their political giving programs or made permanent changes to their approach. How should a board handle these areas? How should a board respond when a traditionally political question suddenly becomes a matter of corporate policy? Should CEOs and boards take positions on matters as diverse as voting rights legislation, gun safety laws, immigration, content control (for media platforms), gender issues, geopolitical conflicts, and presidential politics? How should boards measure the costs and benefits of political activism, particularly when state governments may retaliate? How do customer, investor, and employee preferences play into that equation? This session will present a framework that boards can use to assess the pros and cons of corporate advocacy, and discuss how boards can be prepared to respond to resulting criticism in the face of companies or CEOs taking public positions or remaining silent.
The Board’s Role in Navigating Climate Risk and Sustainability
Description coming soon.
The New Antitrust Challenge
The Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) have recently sought public comment on how to update the merger review and enforcement process to reflect “current learning about competition based on modern market realities.” The merger boom of 2021 has led both agencies to warn that concentrated market structures can harm consumers and workers while also stifling innovation. Any resulting revisions to the merger guidelines would likely result in an increase in the number of merger challenges, with novel theories of harm and renewed skepticism of efficiency claims asserted to support the merger. In addition, there have been calls from Washington, D.C. to “do something” about large technology platforms and their audience reach, financial power, and outsized influence. Elected officials, regulators, and advocates from both the left and the right of the political spectrum have expressed growing concern. Complaints about the major technology companies and platforms have ranged from perceived anti-competitive market power, election influence and misinformation, hate speech, misuse of customer data, to stifling free speech. Will antitrust laws and the enforcement process undergo a sea change in light of the concerns about big tech and the operation of modern markets? This panel will discuss the modern antitrust challenges that companies face, and how boards should plan for potential outcomes in this space.
Demystifying Cryptocurrency and the Blockchain
Businesses are discovering that blockchain has applications beyond cryptocurrency, bitcoin and finance. More and more organizations across multiple industries are leveraging blockchain technology to improve existing business processes. Moreover, an increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes.
How can boards understand the most advantageous use cases for blockchain technology, as well as the risks and implementation challenges that may arise from its use? What is the board’s role in understanding and evaluating the opportunities and challenges of using digital assets to conduct business? And what are the skill sets needed to oversee, implement, and maintain these new strategies, both at the board and management level? Join a distinguished panel of experts to examine how boards can effectively stay ahead of technological change and oversee blockchain and cryptocurrency initiatives at their organizations.
Shareholder activism is not going away, but it is evolving in directions that demand high level boardroom attention. This session will review the state of the art in aggressive activist techniques and best practices for effective corporate defense. The panelists will pay particular attention to last year’s unprecedented proxy battle at Exxon, where an insurgent activist fund with a miniscule stock position has mounted an effective and aggressive threat to the board of one of the world’s largest corporations. The Exxon battle is also the first major proxy contest to conflate climate concerns with a battle for corporate control – a trend likely to gain support among institutional investors. Boards often compromise with activists by agreeing to place at least one activist director on the board. But is this the smartest approach? When will institutional investors support a board who pushes back against activist proposals? This panel will analyze best practices in activist defense, how boards can assess their vulnerability to activist campaigns, and steps that can pre-empt activist campaigns. The session will also address the growing tendency for passive investors to withhold votes for directors on issues such as board diversity, compensation, and other governance matters.
Current Issues in Compensation
This session will review the latest trends on key issues facing compensation committees, including the current practices on tying pay to performance; the shifting focus of incentive pay from traditional performance metrics to emphasize other key strategic initiatives, such as meeting diversity, equity, and inclusion (DEI) or other environmental, social, and governance (ESG) objectives; best practices for compensation committee process; clawback provisions; and the changing opinions (and power) of institutional investors and others on matters of executive compensation. The panelists will examine changes to incentive structures that some boards have adopted to constrain or “re-align” executive pay, particularly in response to the global pandemic and the resulting economic uncertainty. Additionally, should boards revisit CEO clawback provisions and potentially expand the definition of “cause” beyond traditional financial misconduct to include more types of reputational harm to the company? This discussion will provide directors with additional tools and insights to engage in more effective strategic thinking and execution on compensation and related human capital management matters.
Board Refreshment, Boardroom Culture, and Director Performance
Focus on board composition, director performance, and succession planning has never been greater. With legislation and listing standards mandating diversity on boards, the rise of activist investors, the complexity of operating in a global marketplace, the disruption of many industries, and increasing attention to directorial independence, corporations are under increasing pressure to assemble a board with the right mix of experience, specialized skills, industry-specific expertise, international exposure, and gender, racial, ethnic, and age diversity. Many shareholder advisory firms and institutional investors argue that director tenure should be scrutinized more heavily, with some advocating term limits or mandatory retirement ages to refresh boards with entrenched directors or stale skill sets, and to accelerate the turnover of board seats. In addition, uncertainty can abound as to whether and when directors qualify as independent, and new procedures may be necessary to address that uncertainty. Taken together, these pressures can force nominating and governance committees to reconsider the process by which they assess board composition, identify board candidates, onboard new directors, and evaluate individual director performance and board dynamics. This session will discuss successful strategies for ensuring that companies are building and developing the best performing board of directors given the company’s current and projected needs.
Defend Your Company, Defend Yourself: Private Litigation and Government Investigations
Litigation risks facing directors, officers, and corporations are inevitable and increasingly complex. The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) have stated their intention to pursue, punish, and deter the individuals who are responsible for corporate misconduct, and both agencies are increasingly focused on cooperation and self-reporting from target companies. Although private securities class action filings declined in 2021, the plaintiffs’ bar continues to develop new legal theories and causes of action designed to maximize corporate and individual director liability. And the SEC’s ambitious rulemaking agenda may lead to more filings in the future when the final rules are adopted. What can you do to make your company—and yourself—more defensible from lawsuits? How should you navigate the complexities and challenges of government investigations? What protections are available through risk transfer instruments like indemnification agreements and D&O insurance, and under what conditions do these risk-transfer mechanisms fail? This panel will explore a series of cutting-edge litigation issues that can threaten corporations, directors, and senior executives, with an emphasis on practical strategies for minimizing and insuring against these risks and responding to an investigation or litigation if the challenge arises.
CEO Succession Planning and Execution
Many experienced directors and governance experts believe that hiring and firing the CEO is the board’s most important function. But little attention has been paid to the size and quality of the CEO market and how this talent market influences performance evaluation, compensation, succession planning, and talent development within an organization. This session will review strategies that boards can adopt to help ensure that they know when it is time to look for a new CEO and will offer advice about conducting an efficient and intelligent search in light of data suggesting that the labor market for outstanding CEO talent is significantly tighter and more competitive than most experts realize. The panel will also explore the practical strategies for CEO succession planning and execution, including practices for growing internal CEO succession candidates, the merits of giving preference to internal candidates over outside hires, and related issues.
Ransomware and Cybersecurity: Be Prepared
In the wake of the global pandemic and corporate workforces being distributed in remote locations, cyber attacks and ransomware risks have multiplied. Attacks on fundamental enterprise software systems and national energy infrastructure providers have highlighted new vulnerabilities for boards and corporations to address. This session will not transform you into a cyber-security expert. But it will help you become a more knowledgeable corporate director, better informed about state-of-the-art approaches that corporations can deploy to reduce the risk of damage from a significant cyber-attack. It will also highlight the techniques that boards and corporations can deploy to better identify an incident and help minimize the damage once an attack has been discovered. The session will review steps that boards can implement to help assure that management is responding appropriately to these threats. The panelists will discuss and share practical lessons and risk mitigation techniques regarding prominent recent cyber-breaches, remote or hybrid workforces, the value of cyber-insurance, and when and how companies might cooperate with law enforcement or government agencies, and with other firms in the industry, among other matters.
Corporate Governance and Proxy Trends and the New SEC
Description coming soon
Mergers and Acquisitions
After taking a short break following the emergence of COVID, the M&A market rebounded with a vengeance. In this environment, every publicly traded corporation needs an M&A strategy. Is it a buyer or a seller? Is it prepared to respond to an adequately priced offer from a credible bidder? What’s the smartest way to deploy a poison pill, if at all, and how can the board intelligently try either to fend off an attack or negotiate for a higher price? Also, how can a board be sure that it’s getting the best legal and investment banking advice for the challenge that it’s facing? This session will convene leading experts to discuss best practices in board engagement with M&A strategy and implementation, from both the buy and sell side. The session will explore current at-market bidding practices, director fiduciary responsibilities in M&A transactions, implications of shareholder activism, the importance of Delaware’s reliance on independent committees and on majority of minority approval in M&A transactions, potential investment banker and law firm conflicts, and how boards can build a record that will withstand inevitable litigation scrutiny.
Human Capital Management and Modern Workforce Challenges
Human capital is a critically important value driver for corporations in today’s economy, where a corporation’s most significant assets walk out the door each evening. In response, boardroom attention has begun to focus on “human capital management,” which includes topics ranging from employee health and safety to workplace diversity to employee recruitment, training, development, and retention. With the onset of the global pandemic, boards have been confronted with unprecedented challenges in navigating the remote or hybrid work environment, issues with returning to the office safely, vaccine mandates, and related disruptions. Most of these human capital issues have traditionally been viewed as topics for management and outside the scope of the board’s responsibilities. But increasingly, and now accelerated by the pandemic, investors are calling on companies to disclose more information about workforce diversity and human capital development and risks, while calling on boards to be more engaged in oversight of a company’s human capital management strategies. At the same time, corporations are facing enormous changes and disruption in the workplace with the growing efficiency of machine learning and automation. This session will examine how board members should be thinking about and working with management on these risks and opportunities.
Creative Risk Management and Oversight
Description coming soon.