A few years ago, I shared observations as I was heading out on parental leaves for my son and my daughter. Now, I’m gearing up for a different reason – thoracic surgery. Medical leaves are a reality for many, yet they’re rarely discussed openly. Here are my learnings in case they’re helpful to anyone else out there:
1. There is no perfect time. I know my career will endure a 6-week pause. That said, it’s tempting to try to wait for the “perfect time.” Right now is inconvenient because my practice has momentum, everything is going well, there are lots of events I want to attend and people I want to see. When it comes to things like this, there is never an ideal moment. But when it comes to your quality of life, you’ve got to play to win. Which brings me to…
2. Don’t neglect your health. Although this is a condition I’ve had my entire life, years of running and yoga helped me mask (but not eliminate) my symptoms. I had planned to just make do. But earlier this year, a friend’s health scare prompted me to revisit medical results that I’d brushed off, and to get a second opinion. Things were more severe than I realized. I’m facing surgery now on my own terms, ensuring a healthier future.
3. Medical issues are not a sign of weakness. I worried people would think less of me – or maybe not want to work with me? – if I wasn’t the picture of perfect health. This was the case even though I know I’ve never felt that way about others. In fact, some of the strongest and most admirable people I know are the ones who have been dealt a difficult hand in life with their physical circumstances. Strength does not mean having everything go your way. That’s just luck. Luck eventually runs out for everyone – and that’s a good thing! Because it gives us all empathy. Which is a reminder that…
4. My colleagues and clients are wonderful (and yours are too). I hate imposing on people and for various reasons, I was nervous about sharing my need to take leave. Come to find out, my colleagues at Fredrikson and CCRcorp have given me nothing but authentic support and resounding well-wishes. They are selflessly jumping in to ensure that the trains keep running and that clients will be well-supported during my absence. My clients also have been incredibly understanding and do not seem to be writing me off. If you are facing a similar situation, I think you will find this to be true as well.
5. Redefine “balance” and “success.” A lot of us have a hard time stepping away from work when deadlines are looming or when we’re working on something interesting. When I returned to private practice last year, many folks in our community shared thoughtful advice about how to find a better balance, which I very much appreciated, and which I’ve been using to plan my days and my overall approach. I used to operate on the assumption that things would shake out, on balance, if I worked overtime whenever the work was there and focused on “life” when there was a break in the action. That strategy served me very well early in my career and has helped me learn and grow, so I’m not saying it’s wrong. But “balance” looks different in these middle years, and “success” currently means building up a team to deliver great results. That’s all fine for now, and maybe in 10 years there will be another round of new meanings.
I (still) know I’m not alone on this journey of balancing life & lawyering. I’d welcome more emails to liz@thecorporatecounsel.net with any experiences & “lessons learned” that you want to share. I’m extremely grateful to John, Dave, Meredith, all of our CCRcorp HQ folks, and all of my Fredrikson colleagues, for being very good at what they do, and willing to handle some “extras” for the next month or two. Thank you also to my clients and friends for their patience with me! See you all soon.
In this 21-minute episode of the “Women Governance Trailblazers” podcast, Courtney Kamlet & I interviewed Maryrose Sylvester, who is an Independent Director at Vontier Corporation, Flex, Waste Management, and Harley-Davidson and previously served in executive and leadership roles at General Electric for over 30 years. We discussed:
1. Maryrose’s transition from the corporate world to the public company board world, and how she evaluates board service opportunities.
2. What traits are essential to bring to the boardroom.
3. Methods for staying informed as a director on the latest industry trends and the broader business environment.
4. The most valuable lessons Maryrose has learned from board service.
Advice for women who aspire to become directors.
5. Effective approaches to communicating and collaborating with fellow board members and with management teams.
6. How directors can measure and evaluate their own performance and impact as a board member.
7. What Maryrose thinks women in the corporate governance field can add to the current conversation on the societal role of companies.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are “women governance trailblazers” whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Shoot me an email at liz@thecorporatecounsel.net.
Normally I spread out these podcast blogs, but since AI is moving at the speed of light and I am going out on a brief medical leave, I don’t want this episode to become obsolete before you see it. Check out this 17-minute episode of “Women Governance Trailblazers” – Courtney Kamlet & I interviewed Cassidy Donohue, who is Product Manager at Troop. Previously, Cassidy served as a Research Analyst for Engine No. 1 and as Lead Researcher for Accountable: The Rise of Citizen Capitalism. We discussed:
1. Cassidy’s background and career path – and what drew her to the field of corporate governance.
2. How Troop is setting out to change proxy voting through technology, including how the tools differ from traditional proxy voting recommendations and voting reports.
3. How Troop ensures that recommendations are correct.
4. Communication suggestions for companies and their advisors as investment stewardship teams enhance their use of AI to analyze proxy statements and make voting decisions.
5. Cassidy’s predictions for the fields of corporate governance and asset stewardship.
6. What Cassidy thinks women in the corporate governance field can add to the current conversation on the societal role of companies.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are “women governance trailblazers” whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Shoot me an email at liz@thecorporatecounsel.net.
John blogged earlier this month about the governance implications of the DOJ’s fraud enforcement initiatives. A report issued last week by the U.S. Government Accountability Office signals that federal agencies’ focus on fraud is not going to diminish anytime soon. Here’s why:
No area of the federal government is immune to fraud. We estimated that the federal government could lose between $233 billion and $521 billion annually to fraud.
Given the scope of this problem, a government-wide approach is required to address it. The Office of Management and Budget, working with agencies and the oversight community, should develop guidance to improve fraud-related data—providing a more uniform approach to what data is collected and how.
Also, Treasury should identify methods to expand government-wide estimates of fraud—prioritizing higher-risk program areas.
When it comes to Artificial Intelligence, the report notes:
Artificial Intelligence Creates Opportunities for Improved Fraud Detection but Also for Fraud. We have previously reported that artificial intelligence has created opportunities for improved oversight and fraud detection. Artificial intelligence can use algorithms and models to reveal anomalous patterns, behaviors, and relationships—with speed, at scale, and in depth—that was not possible previously. Despite these opportunities, artificial intelligence can also pose new risks to agencies and others, such as by creating fake images to assist with developing falsified documentation or to create fake audio to assist in impersonation schemes.
Here’s important news that Meredith blogged yesterday on CompensationStandards.com (also see John’s blog on DealLawyers.com about the M&A aspects): Yesterday at an open meeting, the FTC voted 3-2 to approve an expansive ban on the use of non-competes. The WSJ reported that this was particularly historic rulemaking.
[It] marks the first time in over 50 years that FTC officials have issued a regulation to mandate an economywide change in how companies compete. The commission has historically operated like a law enforcement agency, investigating and suing individual companies over practices or deals deemed to violate the law.
Proposed in January 2023, this rulemaking received upwards of 26,000 comments. Here are the 570-page final rule and fact sheet. This excerpt from the fact sheet summarizes the basics:
– The final rule bans new noncompetes with all workers, including senior executives after the effective date.
Specifically, the final rule provides that it is an unfair method of competition—and therefore a violation of Section 5 of the FTC Act—for employers to enter into noncompetes with workers after the effective date.
– For existing noncompetes, the final rule adopts a different approach for senior executives than for other workers. For senior executives, existing noncompetes can remain in force. Existing noncompetes with workers other than senior executives are not enforceable after the effective date of the final rule.
Fewer than 1% of workers are estimated to be senior executives under the final rule.
Specifically, the final rule defines the term “senior executive” to refer to workers earning more than $151,164 annually who are in a “policy-making position.”
While not addressed in the fact sheet, the final rule contains an exception (expanded from the rule’s proposed form) for non-competes entered into in connection with a bona fide sale of a business entity. John described this exception in today’s blog on DealLawyers.com.
The SEC EDGAR Communications Office recently issued this reminder:
Filers are reminded to confirm that internal links in their EDGAR filings are working properly prior to submitting the filings on EDGAR. In addition, filers should check whether existing filings have broken internal links and fix any such links.
It is permissible for electronic filers to include links to different sections within a single HTML document, for example, in exhibits filed pursuant to Item 601 of Regulation S–K. Filers should be aware, however, that incorrect internal links will result in errors surrounding those links when the filings are disseminated.
I didn’t add that emphasis, it’s from the SEC. Most filing agents have a validation function to check internal links – so it’s a good idea to confirm that this step is being performed on your filings. And don’t forget, links have consequences.
A decade ago, Broc blogged about a “robot director.” That seemed far-fetched at the time. But since then, some boards have expanded the use cases for AI in the boardroom – for example, in director recruitment.
Of course, now there are conversations about directors having the type of expertise around artificial intelligence that would allow them to oversee AI risks & opportunities. That’s an appropriate consideration. But why not cut out the middleman? Should we start talking about “AI Directors” instead of directors with “AI expertise”? An Abu Dhabi company is taking the plunge with a non-voting board observer named “Aiden Insight”:
Aiden Insight is a virtual entity with sophisticated AI capabilities that aims to revolutionise the way IHC navigates the complexities of the global investment landscape. The groundbreaking initiative by IHC has been powered by the leading AI capabilities of G42 in collaboration with Microsoft, setting a new benchmark for excellence in AI development in the business and investment sector.
Here’s what Aiden is going to do for the board:
The role of Aiden Insight will encompass a wide range of responsibilities, including continuous data analysis, risk assessment, strategic planning support, innovation tracking, and ethical and compliance monitoring. Aiden will attend IHC Board meetings as a non-voting observer, offering real-time insights to inform discussions and guide decisions.
It sounds kind of appealing, to be honest, but still not a full-fledged board member. That’s because corporate law and the fiduciary duty framework only contemplates directors as natural persons. This HLS blog says that we are getting very close to the era of AI directors – and we really need to be expanding our legal framework to work with that:
As a result, global and national governance standard-setters have until now not been forced address the implications of AI board members. Neither the OECD governance principles nor national standards address the role of AI apart from the expectation that boards consider technology risks. In order for market regulators not to be caught by surprise – as their peers have been in the face of cryptocurrency or car-sharing innovations – the potential role of AI board members needs to be considered now.
This consideration should focus not only on legal responsibility of AI board members but also on aspects of their work that can help companies create value. AI board members may, for instance, be required to participate in board risk or technology committees. The latter are still not required by most regulators and are consequently rarely present even in IT companies which is a governance risk in itself.
The role of AI board members such as Aiden or Vital would need to be clearly defined not only in a sense of fiduciary duty but also from a broader philosophical perspective that would allow for creation of a governance framework in which they would be embedded. The relevant questions, ranging from AI directors’ potential contribution to board diversity to their role in board committees, are only now starting to surface. The latest announcement from Abu Dhabi highlights that there is no time to waste.
We’ve talked around here about the perils of the Audit Committee becoming the “kitchen sink” of the board. Part of the conundrum is that the Committee’s risk oversight role makes it a natural launching pad for new oversight responsibilities. However, the ever-growing list of responsibilities may be contributing to a rise in enforcement activity around financial reporting errors, according to a recent report that John shared. So, it’s more important than ever to review the Committee’s charter & scope with a critical eye, and to keep tabs on developing practices.
Wachtell Lipton’s annual “Audit Committee Guide” can help with this. It dissects the Audit Committee’s oversight duties, lays out the charter & committee membership requirements for NYSE and Nasdaq companies, and gives reminders on prohibited auditor activities, internal controls issues, and more. There are model charters and policies, as always. Lots of good “bread & butter” reminders.
The Guide also reinforces reports that many audit committees are taking on cybersecurity oversight. And it includes a new section on artificial intelligence:
With the recent explosion of artificial intelligence, matters pertaining to artificial intelligence are top of mind for companies, consumers and regulators alike. While the potential benefits of artificial intelligence are being explored, it is important for companies to simultaneously consider the risks, including those related to cybersecurity and privacy concerns.
Legislators and regulators around the world, including in the United States, are currently contemplating, discussing and, in certain instances, passing significant legislation and regulation of artificial intelligence. In notable legislation coming out of Europe in March 2024, the European Parliament approved the Artificial Intelligence Act, which contains regulatory restrictions of artificial intelligence that increase in relation to perceived risks to health, safety and individual rights, and which, among other things, creates a new AI Office within the European Commission. The requirements of the act will be phased in, with the earliest requirements coming into force later in 2024.
In October 2023, an executive order by President Biden laid out certain guiding policy principles and a timeline for artificial intelligence-related action by various sectors of the U.S. federal government. The priorities identified in the executive order are: (1) addressing key security risks, including by developing clear indicators of when content is AI-generated; (2) promoting innovation, competition, and collaboration by investing in AI education and development and addressing novel intellectual property issues; (3) protecting workers’ rights and the quality of workplace life; (4) protecting civil rights; (5) protecting consumer rights; (6) protecting privacy and civil liberties; (7) managing the use of AI in the federal government and any associated risks; and (8) ensuring that the United States is an international leader in AI development and risk management. And regulators have already signaled increasing scrutiny of artificial intelligence-related corporate disclosures, including warning against “AI washing,” which is the practice of overstating or misstating corporate artificial intelligence activity.
Given this emerging tool that comes with both new risks and heightened attention from many different stakeholders, it is important for boards and relevant committees to engage in active oversight of artificial intelligence risk management and to stay apprised of updates in the rapidly-evolving space.
Although a recent survey said that AI was not getting a lot of attention in meetings quite yet, this Guide plants the seed that is another risk that may fall in the Audit Committee’s lap.
This resource is posted along with heaps of other helpful resources in our “Audit Committees” Practice Area. If you aren’t already a member of TheCorporateCounsel.net, start a “no-risk trial” today! Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. If you have any questions, email sales@ccrcorp.com – or call us at 800.737.1271.
When it comes to the “Airing of Grievances” between companies and shareholder proponents, people seem skeptical that it will cause any big change to the shareholder proposal dynamic that we have all grown to know & love. But maybe we shouldn’t jump so quickly to that conclusion. I had actually overlooked that in addition to ICCR, Wespath & Mercy Investment Services (which are both linked with faith-based investment principles and are also ICCR coalition members) have filed this separate notice of exempt solicitation. And this one is more directly framed as a “Vote No” campaign in response to Exxon’s recent actions. Here’s an excerpt:
Exxon’s lawsuit sets a negative precedent that we believe will have a chilling effect on future efforts by shareholders pursuing consideration of proposals seeking to improve corporate sustainability. Hence, we believe investors should vote AGAINST board members with primary responsibility of oversight of the decision to use company funds to litigate rather than pursue standard Securities and Exchange Commission (SEC) procedures.
We see the lawsuit as akin to a “SLAPP suit” – a “Strategic Lawsuit Against Public Participation.” Exxon’s announcement that it intends to continue to litigate its lawsuit despite the proponents’ withdrawal of the proposal further indicates that Exxon is pursuing an intimidation tactic. Nicolai Tangen, the chief executive of Norway’s $1.5 trillion oil fund and owner of 1.4% of Exxon’s stock, told the Financial Times: “We think it is very aggressive and we are concerned about the implications for shareholder rights.”
Who would have predicted this turn of events just three years after Engine No. 1 won multiple dissident seats in an “ESG” framed proxy contest at this same company? Not me! That is why I’m not making any predictions about the final outcome of this saga.
We’re exactly 8 months out from Festivus 2024 (for those who celebrate) – but it is never too early for the Airing of Grievances. Yesterday, the Interfaith Center on Corporate Responsibility filed a notice of exempt solicitation in response to the “scorching diatribe” (John’s words) against shareholder proposals & proponents that Exxon included in its proxy statement earlier this month. ICCR’s statement is also strongly worded. It concludes:
Shareholder proponents fully recognize the challenges an authentic commitment to decarbonization presents for the oil and gas sector, and are eager to work with companies like Exxon Mobil to help make the inevitable transition a smoother one for everyone involved. What is not helpful, however, is the company’s adoption of an aggressive stance towards its investors through litigation and disparaging remarks in its proxy statement to silence dissent. Given the existential stakes for both the business and its stakeholders, it is disappointing that leadership has chosen tactics of intimidation rather than embracing a more open and productive route forward.
As part owners, investors have the right, and indeed the obligation, to engage management and the board on corporate governance concerns or harmful societal impacts that may flow from a company’s operations or strategy. Investors are concerned with corporate impacts that may translate to systemic financial risks to their portfolios in the future and they utilize the proxy process to voice these concerns as is their right. Strong corporate leaders will not find this give-and-take “obstructive or abusive” but will recognize it for the important private ordering mechanism it is intended to be.
ICCR obviously has a dog in this fight – it exists as a coalition of 300+ active institutional investors who regularly submit shareholder proposals. ICCR’s membership ranks include Arjuna Capital, who is one of the proponents Exxon sued earlier this year when seeking a declaratory judgment to exclude a proposal from its proxy statement. Time will tell whether other coalitions and/or proponents join the fray.