Welcome to your weekly corporate governance briefing. There is plenty to talk about this week from hybrid working to a $735m settlement involving Tesla’s board. Our autumn schedule of exclusive member events is open for business. Here are two dates for your diary: October 18 | Generative AI: How will the new era of machine learning impact your business? Join the FT’s artificial intelligence editor Madhumita Murgia and guest to discuss how companies can seize the opportunities and minimise risks.
November 30 | Managing conflict in the boardroom This peer-to-peer workshop will explore how to handle conflict so that it becomes a force for good — stimulating creativity and protecting against groupthink.
As always, the latest stories and resources are on ft.com/board-network-members. If you have any membership queries, email [email protected]. Feel free to forward this newsletter to other directors. They can join FT Board Network via ft.com/board-network. Thanks for reading. We can’t move on – yet
Balancing expectations: two to three days in the office is now the norm © ANDY CARTER Two to three days in the office is now the norm. Friday is the most popular work-from-home day. Democratising decisions about how, when and where to work improves staff engagement with any policy. Doing hybrid well is hard, and requires more training and management attention. Those were some of the headline conclusions from an analysis of the state of play in hybrid working that my colleague Emma Jacobs and I published this week. The article attracted a swarm of comments. The one most recommended by readers laid out the advantages and pitfalls and concluded: “Can we move on to talk about more important stuff now?” Well, no. One reason is that getting working policies right remains important – and it ought to be a board-level concern, for three main reasons. Cost: where staff work and in what sort of configuration has profound implications for companies’ spending on real estate and travel, to name just the most obvious budget lines. Sustainability (in the broadest sense): companies that make the wrong bet on flexible working may find they cannot recruit new staff easily, or retain existing staff. Nick Bloom of Stanford university has estimated that the offer of flexible work is equivalent to about an 8 per cent pay increase. Productivity: in the same way that forced lockdown accelerated digitisation, it challenged companies to examine the way in which certain tasks were habitually carried out.
That last point goes as much for boards as it does for operational teams. One director told me during the pandemic that his chair had decided that as soon as lockdown restrictions lifted the board would resume in-person meetings for all matters. He urged the chair to reconsider. The board had learnt that directors could carry out some tasks, such as tracking plans and targets, more efficiently by meeting online. Other tasks – involving, say, strategy setting or discussion of culture – were better carried out face to face. Forward-thinking companies have an opportunity to reassess behaviour that was engrained until the pandemic hit. As one executive told us: now, “the problems are ‘how to work’ problems, not ‘where to work’ problems”. Once those are solved, we can move on. Chart of the weekThere was a rush of excitement about generative AI when ChatGPT was launched by OpenAI in November. But with the hype came calls to regulate AI. The problem is that each region has its own ideas about how best to do that — and experts warn that, as the technology spreads rapidly, time is running out to find a consensus. This presents a challenge for tech companies too: figuring out compliance between regions will prove tricky if no common regulatory ground is found. | BP’s board started fresh probe into Bernard Looney’s conduct last week | People and workplace: The allegations that prompted Looney’s resignation were made as recently as last week. This rapid unravelling will leave the board scrambling to find a successor | | | PwC to curtail consulting work for US audit clients to reduce conflict risk | Audit: After EY axed plans to spin off its consulting arm, PwC has laid down a challenge to rivals with plans to stop offering some advisory services to US audit clients to reduce the risk of conflicts of interest | | | | | Former Alibaba chief Daniel Zhang steps down from cloud unit | Succession: This was a surprise move. Zhang had been expected to continue to lead the company’s cloud business into a spin-off as the ecommerce group starts carving up its empire | | | | Best from elsewhereActivist settlements: fiduciary questions for boards | Harvard Law School Forum on Corporate Governance Giving activists a board seat is one way to head off or settle proxy fights. “Yet boards in general seem to be remarkably lax in analysing whether they have fulfilled their fiduciary duties in making such a trade,” this author argues. It offers questions directors should answer before making the move. 2023 S&P 500 new director and diversity snapshot | Spencer Stuart Financial expertise is the main recruitment priority for boards, according to the findings of this analysis of 2023 proxy statements and a survey of nomination or governance committee chairs. Digital and cyber skills are also increasing priorities. Compensation clawback policies – what the board needs to know | PwC This neat guide gives an overview of the SEC’s rule about listed companies having “clawback” policies. It takes directors through the requirements, alongside tips for preparing for the change and questions they should ask.
From FT Specialist’s AgendaExpensive Tesla settlement brings attention to non-executive director pay A $735m settlement involving Tesla’s board has highlighted the conflicts in non-executive directors setting their own pay, and forced the electric carmaker to tighten its governance. Any other businessThere are tensions at Australian mining company Fortescue over decarbonisation. The deputy chair was commenting on the recent executive exodus. This includes both the chief executive and chief financial officer of its metals division who left after just six months and two months respectively. Have words of wisdom to share? Email me. |