BDO in the Boardroom

Join BDO’s Hitesh Shah, leader of our San Jose Board Roundtable series, in discussion with Raj Sisodia, Co-founder of Conscious Capitalism movement, as they discuss the importance of the board’s role in supporting conscious leadership and building a conscious business. Key Takeaways:The board’s role is critical in helping management define the purpose of the company to build and support a conscious organization – without it, C-suite efforts are likely to fail.Under the traditional business paradigm, companies invest much less in their futures and tend to take on massive risk when primarily focused on shareholder primacy, fiduciary duty and financial performance. A conscious business is set up to hit both purpose and performance benchmarks far into the future.Conversations at the board level around culture, purpose, and core values that align all stakeholders send a very strong signal to management and lead to a successful business strategy.ESG is an increasingly important topic in the boardroom but often seen as a compliance exercise or obligation rather than as an opportunity to build a conscious business with a defined purpose to truly generate and sustain long-term value creation for many stakeholders. Boards can play a very important role in helping their companies tackle the largest existential threats like climate change, income inequality and inclusion by being informed and being active in the conversations on these topics with company management.Succession planning is a critical role of the board especially when you’ve built a conscious business - selecting the wrong leader for a conscious company can destroy decades worth of work. Additional Resources:To learn more, BDO has partnered with Raj Sisodia and Neha Sangwan, MD to create the Conscious Business Leadership Academy (CBLA) to support leaders looking to maximize their personal potential while optimizing value and benefits for their organizations and stakeholders.Raj Sisodia - Co-founder of the Conscious Capitalism movement

Join BDO’s Hitesh Shah, leader of our San Jose Board Roundtable series, in discussion with Raj Sisodia, Co-founder of the Conscious Capitalism movement, as he introduces the concept of Conscious Capitalism and the potential impacts of embracing the movement in your organization.Key Takeaways: Conscious Capitalism is a philosophy based on the belief that a better form of capitalism is emerging that holds the potential for enhancing corporate performance while simultaneously advancing quality of life for people globally.Conscious Capitalism is grounded in four tenets: higher purpose, stakeholder integration, conscious leadership and conscious & caring cultureConscious Capitalism explores the possibility of embracing all the positives of capitalism while simultaneously reducing the negative impacts of business in the support and advancement of humanity.There are many benefits of being a conscious business that can counter some of the more significant issues facing companies today: increased employee engagement in the attraction and retention of talent; promotion of customer loyalty/advocacy; development of stronger supplier relationships; uplifting of communities, etc. While you may be successful operating your business in the traditional manner of maximizing profit and share price, broader stakeholders are increasingly demanding more and companies who do not embrace a conscious model increase the risk to their future business strategies and competitiveness.Additional Resources:To learn more, BDO has partnered with Raj Sisodia and Neha Sangwan, MD to create the Conscious Business Leadership Academy (CBLA) to support leaders looking to maximize their personal potential while optimizing value and benefits for their organizations and stakeholders.Raj Sisodia - Co-founder of the Conscious Capitalism movement

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Amanda Shpiner, Managing Director at Gasthalter & Co. LP, to discuss considerations for board communications as part of an overall governance strategy in the face of numerous disruptions impacting the business. Key Takeaways:• Boards have the responsibility to continuously monitor vulnerabilities and hold management accountable to address these via strategy and consistent, transparent communications with stakeholders• Communication to stakeholders needs to be thoughtful and clear – don’t underestimate the power of the varied traditional and social media channels, engagement and stakeholder polling – to differentiate from your industry peer set• Just because you may not have a complete plan in place to address an issue, it should not hold you back from communicating objectives and your thinking on the actions to undertake to achieve them• Activist positions are usually very well thought out with significant research and analysis behind them; company boards/management have day jobs and these fights can be extremely time consuming and expensive • Activism is morphing from perceived “corporate raiders” to “engaged shareowners/investors” for investors who hold their positions for long periods with a mission to change companies for the better through policies and performance enhancements• When faced with an activist challenge (e.g., 13D filing), speed of response is critical and requires a pre-planned approach based quality of continuous monitoring; you only have one chance to make a first impression to stakeholders• Current target areas for activists: corporate governance and perceived entrenchment of the board; operating performance; innovation to remain relevant; ability to tie ESG factors to bottom line over the long term; and management of supply chain challenges

Key Takeaways:• Sustainability is the “maturing” of ESG factors crossing over from government regulation to voluntary corporate reporting to becoming commonplace within organizations.• Sustainability has moved across the threshold into mainstream global commerce as investors understand that issues of sustainability have financial implications and dictate risks/opportunities that companies have from a business point of view.• Companies need to truly understand their shareholder base and be intentional in pursuing dialogue and engagement with investors – including not only institutional but also “activists” who often truly are speaking the language of business and are paying close attention to business issues impacting the company. • It is much easier to be a start-up and focus immediately on sustainable strategy than reinvent core competencies based on trendlines, but that innovation is what is required of today’s boards (“how you deliver what you are good at in a different way”).• Convergence of sustainability reporting standards will necessitate “integrated” reporting within financial statements and put pressure on the management to demand performance AND ensure the integrity of controls over the information provided to the market • The tools to measure/manage sustainability issues have historically been poor – however, as enterprise resources platforms evolve to address accounting complexity and reporting standards converge to provide a common compliance language, this will drive broader accountability and better information for stakeholders.• Next set of issues in focus: Human Capital vs. People Operations - However you choose to phrase, DEI, health/safety and labor conditions – companies need to focus on the employee engagement environments they are creating as these have a direct impact on business success. • As corporate responsibility shifts from reputational risk to a business imperative there is significant scrutiny by investors and the regulatory community that is forcing communication within the company regarding needed changes in controls/ policies/ procedures to accommodate sustainability and financial disclosures fully into integrated reporting that need to be a timely area of focus for the board.• Boards have responsibility for prioritization around what the company needs to “lean in on” – not a check the box, get an award, enhance my ratings play… this requires continual education that translates into deep thoughts on what is impacting my business to best drive strategy and value.Access: • Changing Business from the Inside Out: A Treehugger's Guide to Working in Corporations• Persefoni – Climate Management Accounting Platform• BDO’s ESG Center of Excellence

In this engaging discussion, Jason Brooks, Managing Director and leader of BDO’s Compensation Consulting Practice, teams up with Amy Rojik from BDO's Center for Corporate Governance. They dive into the shifting landscape of compensation committees, emphasizing the necessity of incorporating human capital management and ESG factors. Brooks and Rojik highlight the importance of adapting strategies for broader workforce needs and maintaining transparency in public disclosures. Furthermore, they discuss upcoming SEC regulations and the critical role of clear communication in enhancing employee engagement.

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Vanessa Teitelbaum, Senior Director of Professional Practice at the Center for Audit Quality (CAQ), to discuss the critical role audit committees play in the integrity of capital markets and how transparent disclosures about their oversight practices can provide significant value in the protection of investors.Key TakeawaysRobust proxy disclosures represent an opportunity for the audit committee to make clear to investors how the audit committee conducts its oversight responsibilities to promote audit qualityMost significant noted proxy disclosure increases in 2021 relate to the audit committee’s oversight of cybersecurityExpanded audit committee disclosure may present a mitigating safeguard to investor concerns of a lack of objectivity by the audit committeeAudit committees may find value in benchmarking from the Barometer, along with other CAQ resources, to provide practical data to help inform judgment on their own oversight and resulting disclosuresAudit committees are reminded to pay close attention to the SEC Regulatory Flexibility Agenda and proposed rule-making/comment letter processResourcesAccess the CAQ’s 2021 Audit Committee Transparency Barometer here.

Join BDO Tax Partner and Tax Risk Services National Leader Michael Williams as he sits down with James Egert, BDO in the U.K. partner and leader of its Tax Assurance and Risk Management practice, to discuss managing tax risk and why this topic is increasingly appearing on board agendas. James’ perspective from the more legislatively regulated U.K. helps inform what makes managing tax risk important for U.S-based companies. Key Takeaways:Board members and stakeholders are focused on tax risk in all forms: operational, compliance and strategic.If the wider operations of the business are not aligned with those of the tax function, there is greater possibility of riskBoard members should be aware of the top tax risks in business, including e-commerce, cross-border issues, residency issues, and information and data sharing.To help avoid reputational hazards, any large business should have a clearly articulated tax strategy approved by the board.

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Patrick Gadson, Partner –Shareholder Activism and Mergers and Acquisitions at Vinson & Elkins, to discuss defense strategies for boards and management teams to consider when challenged by activist shareholders. Key Takeaways:Boards of companies (all sizes) that are underperforming need to truly understand BOTH economic weaknesses in addition to other elements for improvement (e.g., ESG) that activists can use to promote their agendaTo engage effectively with activists truly requires boards active in knowing and developing relationships with their shareholder baseWhen put into an activist situation, directors need to understand the thick skin of and ability to go the distance in lengthy contests that activists possess that can often lead to “activism fatigue” in the boardroom that may affect good decision-making of directorsAvoid the emotion and strategically scenario plan with an objective party who can truly survey relevant facts and circumstances through an unbiased lens

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Cathy Moy, BDO Chief People Officer, to discuss company culture as a business imperative and the reasoning why culture must be center stage for boards as companies reposition their businesses and focus on growth in 2021 and beyond. From Cathy’s unique vantage point, she has seen firsthand how a company’s investment in its people positively impacts its bottom line – and long-term sustainability. Key Takeaways:Today, corporate culture is no longer a nice-to-have – it is a key driver of business and competitive advantage that must be top-of-mind for boards and the C-suite. Culture has to be foundational, drive from the top, for an organization to achieve the type of success that comes with employees who are fully bought into the company purpose and vision.Companies that approach key drivers of culture – from reimagining how work is accomplished to advancing DEI to investing in talent development and retention – have been, and will continue to be, the most resilient in the face of challenging times. Don’t discount the importance of culture when considering M&A – if you don’t have culture synergy and common vision for the future, the likelihood of successful integration decreases significantly. As part of the board’s role in mitigating risk and providing strategic oversight of management, it must consider the implications that corporate culture has on organizational agility and ability to sustainably scale. Recommended Resource:NACD Blue Ribbon Commission on Culture as a Corporate Asset

Melissa Means from Pearl Meyer discusses the impact of ESG on compensation committees, including incorporating HCM and DEI metrics. Key questions for incentive plan design revolve around measuring, timing, and incentive weighting. Companies are at varying stages of ESG integration, with a focus on defining HCM for organizational purposes.