Warner Bros. again rejected Paramount’s latest takeover bid and told shareholders Wednesday to stick with a rival offer from Netflix.Warner’s leadership has repeatedly rebuffed Skydance-owned Paramount’s overtures — and urged shareholders just weeks ago to back the sale of its streaming and studio business to Netflix for $72 billion. Paramount, meanwhile, has sweetened its $77.9 billion offer for the entire company and gone straight to shareholders with a hostile bid.Warner Bros. Discovery said Wednesday that its board determined Paramount’s offer is not in the best interests of the company or its shareholders. It again recommended shareholders support the Netflix deal.Late last month Paramount announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison — who is the father of Paramount CEO David Ellison — to back $40.4 billion in equity financing for the company’s offer. Paramount also increased its promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching what Netflix already put on the table.The battle for Warner and the value of each offer grows complicated because Netflix and Paramount want different things. Netflix’s proposed acquisition includes only Warner’s studio and streaming business, including its legacy TV and movie production arms and platforms like HBO Max. But Paramount wants the entire company — which, beyond studio and streaming, includes networks like CNN and Discovery.If Netflix is successful, Warner’s news and cable operations would be spun off into their own company, under a previously-announced separation.A merger with either company will attract tremendous antitrust scrutiny. Due to its size and potential impact, it will almost certainly trigger a review by the U.S. Justice Department, which could sue to block the transaction or request changes. Other countries and regulators overseas may also challenge the merger.
NEW YORK —
Warner Bros. again rejected Paramount’s latest takeover bid and told shareholders Wednesday to stick with a rival offer from Netflix.
Warner’s leadership has repeatedly rebuffed Skydance-owned Paramount’s overtures — and urged shareholders just weeks ago to back the sale of its streaming and studio business to Netflix for $72 billion. Paramount, meanwhile, has sweetened its $77.9 billion offer for the entire company and gone straight to shareholders with a hostile bid.
Warner Bros. Discovery said Wednesday that its board determined Paramount’s offer is not in the best interests of the company or its shareholders. It again recommended shareholders support the Netflix deal.
Late last month Paramount announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison — who is the father of Paramount CEO David Ellison — to back $40.4 billion in equity financing for the company’s offer. Paramount also increased its promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching what Netflix already put on the table.
The battle for Warner and the value of each offer grows complicated because Netflix and Paramount want different things. Netflix’s proposed acquisition includes only Warner’s studio and streaming business, including its legacy TV and movie production arms and platforms like HBO Max. But Paramount wants the entire company — which, beyond studio and streaming, includes networks like CNN and Discovery.
If Netflix is successful, Warner’s news and cable operations would be spun off into their own company, under a previously-announced separation.
A merger with either company will attract tremendous antitrust scrutiny. Due to its size and potential impact, it will almost certainly trigger a review by the U.S. Justice Department, which could sue to block the transaction or request changes. Other countries and regulators overseas may also challenge the merger.
Active listening. Shared responsibilities. Pre-planned forgiveness. If the tenets of AlixPartners’ co-CEO relationship sound a lot like those of a married couple who have gone through a lot of therapy, well, you’re not far off.
AlixPartners co-CEOs David Garfield and Rob Hornby were promoted to lead the 2,500-person global consulting firm in February, but previously had worked together for some 14 years, which both say was vital. “Having prior work experience together makes a huge difference,” AlixPartners co-CEO David Garfield told Fortune about sharing the top job with Rob Hornby. “I genuinely believe that our decisions are better as a result of collaborating on them than they would be if we were making them independently.”
Garfield is based in New York and has decades of experience in corporate strategy, shareholder value creation, and the commercial side of the global consulting business. Hornby is based in the UK and spends 30% of his time in New York. He has a soup-to-nuts background in AI, digital innovation, and both startup and global operating environments and previously led the firm’s Europe, Middle East, and Africa region. At the same time, both understand the tech and commercial sides and have a solid decade and a half of working together under their belts.
The geographic separation is a strategic advantage for the co-CEOs. Between them, they maintain 20 hours of leadership coverage across time zones—a feat that would be unsustainable long-term for a single CEO.
“We’re co-responsible for everything,” Hornby said. “So we share responsibility for all outcomes for everything. But that doesn’t mean that we are equally involved in everything—because we have different expertise.”
They operate under a single umbrella of “pre-planned forgiveness,” so if Hornby makes a decision that Garfield wouldn’t have made during the time they aren’t overlapping, there’s no harm done. The same is true for Hornby.
“Then there are some things we just have to say, ‘That’s too big. That’s something we need to talk about,’” said Hornby. “And we will reserve the right to take that offline, speak to each other and come back to whoever is asking for a decision.”
That conversation always involves active listening, said Garfield. At this point, they trust each other enough not to lobby based on preconceived notions but instead they get each other’s perspectives on the table.
“Ironically, I think it gets us to the answer faster because we don’t have to spend time building up a case,” said Garfield. “Having shared values makes a huge difference and having a foundation of trust makes a huge difference.”
While it’s going to plan for Garfield and Hornby, other leadership experts are more wary about splitting up the top job. Yet, as the world grows more complicated and the CEO role becomes increasingly complex, two might be better than one—but only if the combination is nearly flawless and interpersonal dynamics don’t derail the relationship, experts said. In the past three weeks, Comcast, Oracle, and now Spotify have all announced CEO transitions involving a co-CEO leadership structure with varying executive chair oversight on the board.
“There’s so much happening both externally and internally and organizations are going through constant change and it’s not letting up,” said Susan Sandlund, a managing director at Pearl Meyer who leads the leadership consulting practice. “It could potentially make sense to have co-CEOs if the company actually has a need for it but I wouldn’t say it should be the norm. I think it’s an exception and you have to have a pretty good business case for it.”
Data provider Esgauge reveals there are only eight co-CEOs currently operating in the Russell 3000 among 245 CEO transitions so far in 2025. During the past decade, the highest number of co-CEOs serving at a single time among companies in the index was 17 in 2023.
Part of the reason it’s been so unpopular historically is that “a lot can go wrong,” noted Sandlund.
When things get awkward with co-CEOs
The most obvious trap a duo can fall into? Power struggles, with one executive wanting to be the standout, said Shawn Cole, president of search form Cowen Partners. In meetings with clients, investors, or the board, one might talk over the other one, making things painfully awkward. Factions can form. Inconsistent messaging can confuse the leadership team; decision making can slow down. And there’s always the risk of confusion about authority, said Cole, who has been called in to sort out situations after a co-leadership structure has gone to pot. When it fails, Cole chalks it up to interpersonal issues and a perception about broken promises, especially if one of the co-CEOs was under an impression it was temporary or that they would ultimately get the CEO role all to themselves.
“It’s very much like a marriage,” Cole said. “It takes a lot of communication to make it work.” And just like a marriage, sometimes outside offers are too appealing to pass up.
“They’re always going to be drawn to other sole CEO opportunities,” he said, which is another reason co-CEO-ship doesn’t often last, in his view. He’s skeptical about the recent appointments, noting that some look like short-term solutions to problems that have emerged in succession plans. Sometimes boards have difficulty making a decision, or executives might be lured elsewhere, he said. “These just don’t seem like long-term solutions,” said Cole.
Egon Zehnder’s Chuck Gray, who advises boards on CEO succession, noted that the way different people react to power “is not always predictable.” Sometimes it’s for the good, but not in every case.
“I’ve seen people who, when they became CEO, they’ve changed,” said Gray, co-head of Egon Zehnder’s North American board and CEO practice. “When you have two people sharing power, you don’t always know how they’ll react to being that type of structure.”
Gray observed that defining “equal” in a co-CEO relationship is nearly impossible. “Is it equal number of direct reports? Is it equal size P&Ls? Is it the same size office?” he said. “One line of business is bigger than the other, one has responsibility for all the P&Ls and all the corporate functions—will they feel equal?”
Gray noted a board member once requested that he stop her immediately if the board ever considered a co-CEO leadership structure ever again.
CEOs say they are lonely
Still, the CEO role itself may be driving renewed interest in power sharing and Gray said his firm plans to research splitting CEO roles in more depth. He’s been telling clients recently that “we’ve gotten to a point now where the CEO job is almost an impossible job for one human to have.” In board searches, CEOs have been asking for independent corporate directors to be sitting CEOs who have dealt with the ongoing disruptions since the fall of 2019.
“Wehn I talk to a lot of CEOs, you can just see the stress and the strain,” Gray said. In theory, if you can share some of the burden with someone, the job could be more sustainable, he said. Plus, a lot of CEOs say—and Gray noted this was a cliche—but CEOs say they’re lonely. Having another person could lessen the load, he said.
The key is having distinctly different roles, complementary skills, shared values, clear decision making rights, and genuine trust, experts agreed. More importantly, both people have to actually want to share the role, which is a trait that doesn’t always align with personalities drawn to being a CEO.
“It takes a very mature person,” said Sandlund. “Certain CEOs today, no way in hell would they be able to share power. Some days one will shine and the other can’t get their nose bent out of shape over it… You are truly sharing the limelight and have to be OK with that.”
Back at AlixPartners, Garfield and Hornby both said they’re OK with it. Garfield noted it’s not right for every company culture, but two people can have a wider range if they have the right chemistry and match. “I think the demands on a modern CEO are close to unsustainable,” said Hornby. “If you’re a singular CEO, I think it’s a pretty tough job nowadays. Co-CEOs, if you can meet the conditions of trust and relationship, just provides you with a lot more bandwidth to deal with a complicated world.”
When Nestlé abruptly ousted its chief executive Laurent Freixe over Labor Day weekend after revelations of a romantic relationship with a direct subordinate, one detail stood out: He was shown the door without a severance package.
That, according to corporate-governance veteran Nell Minow, is almost unheard-of in the C-suite.
“That is really unusual,” she told Fortune. “I think that’s actually a badge of success for corporate governance, because that’s something investors have been concerned about for a long time: CEOs being dismissed and somehow getting to stay on.”
Nestlé confirmed to Fortune that Freixe will not receive a severance package.
For years, high-profile executives who crossed ethical lines have left with multimillion-dollar parachutes. Famously, Steve Easterbrook, the former chief executive of McDonald’s, walked away from the role with a hefty sum of $40 million after getting caught having a consensual relationship with a subordinate. McDonald’s later clawed back $105 million from Easterbrook after finding he hadn’t disclosed sexual relationships with other subordinates at the fast food giant.
Adam Neumann—after leading a disastrous charge to take the company he founded, WeWork, public—received $445 million in a payout package during his ouster. And after 346 people died in two crashes during Dennis Muilenburg’s tenure as Boeing CEO, he was not awarded severance but still left with more than $60 million in stock options.
Minow said these different outcomes show that boards are not always consistent in how they police misconduct, but that one thing remains the same: Social media has left directors with fewer options to look the other way.
“There has been bad behavior in the boardroom for a long time,” Minow said. “But partly because of social media, partly because of the way things get out, the board is under more pressure to respond.”
The reputational fallout from bad behavior can be brutal. A Polish CEO who was recently caught on video snatching a U.S. Open souvenir hat from a child watched his company’s online reviews collapse to near zero in days. The “John” of Papa John’s caused Major League Baseball to pull its promotion with the pizza chain after he used the N-word during a media-training call in 2018.
Boards are slowly adapting, Minow argued. Some have begun docking bonuses or moving faster to terminate CEOs “for cause,” meaning the executive in question committed serious misconduct that warrants dismissal without severance pay. But she warned many still demonstrate a double standard.
“If you see some hypocrisy in the board, by the way that they handle the CEO versus the way they handle a middle manager, that’s a green light for employees to behave badly themselves.”
Even the apology, she said, operates as a test of governance. Minow keeps what she calls an informal “hall of shame” of poor executive apologies. The worst, she explained, dodge responsibility or fail to show how the company will prevent a repeat. The best are blunt, swift, and backed by action.
Ultimately, Nestlé’s move may prove a turning point. By denying Freixe a golden parachute, the Swiss food giant signaled that boards are starting to treat reputational risk as seriously as financial risk, and that missteps at the top no longer guarantee a cushy landing.
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Investors are pouring money into initial public offerings like it’s 2021, with this season alone unleashing several new tickers, including FIG, BLSH, and soon, STUB. For some, the surge is a welcome sign of renewed optimism after tariff-related chaos in the spring threatened a promised IPO revival.
But an analysis of recent IPO-related filings shows that women leaders are largely missing from the boards and executive teams at the vast majority of new public companies, despite years of calls for more diversity in corporate leadership. The data may even be an early signal of future losses for executive women, as DEI, already facing a backlash, is abandoned or sidelined, especially in the tech industry.
Damion Rallis, cofounder of board data firm Free Float Analytics, combed through information about 61 companies that filed IPO-related documents in the first two weeks of August. He found that nearly 88% of the firms (most of which were in tech) had only one or no women on their board of directors, while 93% had only one or no women in their C-suite. Rallis is now calling this the “Bro-PO market,” and said his findings were “crazy.”
“We’ve given up our ideals. We’ve just given up,” he said on Free Float’s Business Pants podcast.
Only seven of the 61 companies Rallis examined had two or more women on their boards, while only four listed two or more women executives. In total, women represented only 12% of the 349 directors and 11% of 205 executives identified in the filings. Stubhub listed one female executive on its team of five, and one female director on a board of seven. Bullish listed two executive leaders, both men, and one woman on its six-person board.
For reference, women represent about 30% of board members at Russell 3000 companies, according to recent studies, and 29% of C-suite roles, according to a 2024 McKinsey survey.
In recent years, corporate boards have made gender and racial diversity a central focus of recruitment efforts, especially after Nasdaq issued a rule that said listed companies must disclose their board gender and diversity statistics. That directive was set to expand: Eventually, it would have imposed minimum diversity requirements or asked companies to explain why their boards weren’t diverse. However, that effort was shut down in late 2024 by a federal appeals court that decided Nasdaq had overstepped its statutory authority when it set the policy.
In 2020, Goldman Sachs CEO David Solomon declared that “IPOs are a pivotal moment for firms,” as he described his bank’s then-landmark pledge not to take companies public if their boards were entirely male. But the company abandoned that promise this year, citing “legal developments related to board diversity requirements,” my colleague Emma Hinchliffe reported in February. “We continue to believe that successful boards benefit from diverse backgrounds and perspectives, and we will encourage them to take this approach,” Goldman told Fortune at the time.
Despite these policy shifts, most investors have come to expect companies to form diverse boards and C-suites as part of optimizing a leadership team. The bar is lower for “starter boards” of newly IPO’d companies, says Matt Moscardi, cofounder of Free Float Analytics. But he says he was still surprised that today’s fledgling public companies are not even nodding at market norms. Instead, they’re leaving out 50% of humanity.
“You’d expect them to look and say, ‘Well, you’re going to IPO, what do other publicly traded companies look like?’” Moscardi told Fortune, “and there is basically no effort to do that.”
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Millennials: You’ll remember walking into Abercrombie & Fitch in the late ‘90s and early 2000s. Loud, thumping music, perfume so strong you could barely think straight, and posters of half-naked men were all part of the experience—and a desire to feel “cool.”
David Turner/WWD/Penske Media—Getty Images
Mike Jeffries, Abercrombie’s former CEO, was behind that vision. And on Tuesday, he and his partner Matthew Smith were arrested in Florida in connection with sex trafficking-related charges, according to a federal indictment. The duo, along with an employee of theirs, James Jacobson, allegedly ran an international sex trafficking and prostitution ring from 2008 to 2015 that allegedly involved paying for secret sex with potentially dozens of men, including 15 unnamed victims.
The official indictment has been a long time coming. Last year, BBC released a documentary about Jeffries’ shady practices. The BBC investigation revealed that Jeffries and Smith allegedly used a middleman to find men to attend and participate in the sex events. Jeffries and Smith would allegedly engage in sexual activity with about four men at these events or “direct” them to have sex with one another, several attendees from the events told BBC. Jeffries’ personal staff dressed in Abercrombie uniforms and supervised the activity, according to the allegations, and staff members gave attendees envelopes filled with thousands of dollars in cash at the end of the events.
LAURENT FIEVET/AFP/GettyImages
The middleman “made it clear that unless I let him perform oral sex on me, I would not be meeting with Abercrombie & Fitch or Mike Jeffries,” David Bradberry, who was introduced to Jacobson in 2010 when he was 23 years old, told BBC. An agent posing as a model recruiter introduced Bradberry to Jacobson, who described himself as the gatekeeper to the “owners” of Abercrombie and Fitch, according to the BBC investigation.
The federal indictment included related allegations and more.
Jeffries’ shady past with Abercrombie
According to a 2006 interview with Salon, Jeffries wanted to make the 130-year-old retailer into the hearthrob teen clothing brand of the time, which he successfully did—but not without offending swaths of people. His interview pretty much sums up his marketing approach as only making it about “cool” people.
“Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla,” Jeffries told Salon. “You don’t alienate anybody, but you don’t excite anybody, either.”
Brooks Canaday/MediaNews Group/Boston Herald via Getty Images
By 2006, Abercrombie & Fitch’s earnings had risen for 52 straight quarters, with annual profits of more than $2 billion. Plus, the company had opened hundreds of new brick-and-mortar stores and launched three new labels, including Hollister.
In the early 2010s, Abercrombie started going south financially as a result of age discrimination and hiring practice lawsuits, and Jeffries’ 2006 interview with Salon started being circulated again and went viral. In 2013, Jeffries was named as the worst CEO of the year by TheStreet’s Herb Greenberg. To boot, CNBC’s Jim Cramer named him to his “Wall of Shame.”
“Since its early trading in 1996, Abercrombie has barely beaten the S&P 500. It has dramatically trailed the index over the past one-, three- and five-year marks,” Greenberg wrote in 2013. “The past year, in particular, has been an abomination, leading activist firm Engaged Capital to demand his ouster.”
By 2014, same-store sales slumped for 11 straight quarters and two of its subsidiary brands, Ruehl No.925 and Gilly Hicks, shut down just a few years after launch. Teens were just also over Abercrombie’s style at that point, and the shopping mall era was coming to a close. And in 2016, Abercrombie was deemed the most-hated retailer by the American Customer Satisfaction Index for its hypersexualized marketing and controversies.
Abercrombie’s second wind
But as Abercrombie has distanced itself from Jeffries, the brand is making a major comeback after posting its best first-quarter earnings in company history this year. Abercrombie reported $1 billion in net sales, a 22% increase from 2023. Last year, its annual revenues were $5 billion.
YUKI IWAMURA/AFP—Getty Images
This was an epic comeback for the brand. CEO Fran Horowitz took the helm in 2017, revamping stores and inventories as well as expanding sizes and introducing clothing for a variety of lifestyles.
“We moved from a place of fitting in to creating a place of belonging,” Horowitz said in a 2022 speech at the Fordham University Gabelli School of Business’ fifth annual American Innovation Conference.
Without OpenAI equity, Sam Altman is already worth $2 billion. Stefano Guidi/Getty Images
OpenAI CEO Sam Altman, who has famously claimed he doesn’t own any equity in the $157 billion A.I. company he runs, could soon be a multibillionaire as OpenAI is reportedly looking to grant him a 7 percent equity stake, worth $11 billion, according to Reuters. While Altman denied the report, OpenAI chairman Bret Taylor issued a statement saying the company’s board indeed had discussions about “whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made.”
The pressure to give Altman equity likely came from external investors. Fortune reported on last week that OpenAI investors are “pushing hard” for him to have skin in the game in order to raise massive funding. Reuters reported last month that OpenAI was ready to raise $6.5 billion from investors contingent on whether the company can change its corporate structure and remove a profit cap for investors.
Restructuring the company and giving Altman equity would reassure OpenAI investors that the leadership team is committed to maximizing their returns, which is crucial as OpenAI seeks more funding to meet its ambitious goals. Earlier this year, Altman made headlines for eventually wanting to raise up to $7 trillion in funding—more than Germany’s annual GDP, the world’s third largest—to achieve its long-term goals.
While Altman has not confirmed his plan to transition OpenAI into a for-profit structure, he said at a technology conference in Italy last week that OpenAI had been considering a restructuring to get to the “next stage.” Also last week, OpenAI’s CTO, Mira Murati, announced resignation. So did two other senior executives, Barret Zoph and Bob McGrew. Industry observers wondered whether their exits were related to the company’s restructuring, although Altman denied such speculations at the Italy conference.
OpenAI was founded in 2015 as a nonprofit research lab funded by donations from billionaires like Reid Hoffman and Elon Musk. Realizing that “donations alone would not scale with the cost of computational power and talent required to push core research forward,” according to its website, OpenAI in 2019 introduced a for-profit arm. The arm operates by a capped-profit model but the cap is so high that it might as well not exist—it allows OpenAI’s investors to reap a gain of up to 100 times their initial investments.
Altman is already a billionaire
Altman, 39, is currently estimated to be worth $2 billion, according to Bloomberg. He has $1.2 billion invested across a range of venture capital funds branded as Hydrazine Capital, along with an additional $434 million in Apollo Projects.
Altman owns shares in several high-flying tech companies, including a 8.7 percent stake in Reddit. In 2021, he invested $375 million in Helion Energy, a startup building the world’s first fusion plant. In 2022, he invested $180 million Retro Biosciences, a startup focused on slowing aging.
At a congressional hearing last May, Altman said he owned “no equity in OpenAI.” In a later statement through OpenAI spokesperson Steve Sharpe, Altman confirmed he doesn’t own profit-participation units either, an OpenAI scheme that gives employees a right to earn a given percentage of the company’s profit, similar to equity compensation.
According to regulatory filings, Altman owns 75 percent of the OpenAI Startup Fund, an independent entity associated with OpenAI but doesn’t receive funding from the company. The fund manages $325 million in assets to invest in smaller A.I. companies. However, Sharpe said Altman has not invested his own money, so he cannot financially benefit from the fund. In April, Altman was removed as an owner or controller of the startup fund over scrutiny that it’s too closely tied to OpenAI despite claiming independence.
Royal Bank of Canada said it has proof that its former chief financial officer engaged in an intimate relationship with a colleague that she failed to disclose, citing exchanges between the two over text messages and emails.
Canada’s biggest lender filed a statement of defense and counterclaim on Friday in the wrongful dismissal lawsuit filed earlier this month by Nadine Ahn, the executive it fired in April after 25 years at the bank.
The legal filing said Ahn began a close personal relationship with a colleague, Ken Mason — an executive in the bank’s corporate treasury group — as early as 2013 and that it continued until the time of her departure.
The document offers a remarkably detailed look at how the bank alleges the relationship played out over more than a decade. It includes descriptions of how the two bankers frequently met outside work for cocktails, celebrated anniversaries, swapped romantic poetry, and called each other by pet names — “Prickly Pear” for Ahn and “KD” for Mason.
Their text messages “fantasized about a life together, such as reading in bed together,” RBC’s court filing states.
“Ms. Ahn forwarded romantic poetry to Mr. Mason, expressing that she had fallen in love with Mr. Mason when she first saw him,” according to the filing. “Ms. Ahn and Mr. Mason continued to regularly see each other outside of the office during this time period, arranging a lunch on August 18, 2017 to celebrate their ‘fourth anniversary.’”
The close relationship continued after she was promoted to CFO in 2021, according to the documents. RBC alleges that Ahn used her position within the company to orchestrate promotions and pay raises for Mason, an endeavor it says Mason referred to as “Project Ken” in a document he drew up. She also shared confidential information with Mason, the bank claims, such as a draft of a speech to be given by Chief Executive Officer Dave McKay.
The filing states that RBC doesn’t have access to their messages, “except to the extent that Ms. Ahn and Mr. Mason copied personal communications to RBC systems.”
Lawyers for Mason and Ahn didn’t reply to messages seeking comment. Ahn said in her lawsuit that she and Mason were friends but denied that they were romantic partners. Mason, who filed a separate wrongful dismissal lawsuit against RBC, also denied a romantic relationship and said the bank would have treated them differently if they had both been men.
‘I Love You Too’
The bank cites “intimate communications” exchanged between the two via text message. As one example, it states, “On March 11, 2019, Ms. Ahn messaged Mr. Mason to say, ‘I love you.’ Mr. Mason responded 15 seconds later, ‘I love you too.’”
The two allegedly used calendar invites to schedule “liquidity meetings,” which the bank said was code for going for cocktails. At one such meeting, the two scribbled notes about their drink orders and other topics such as “concert, night out, winery” on a coaster from Canoe, an upscale restaurant in Toronto’s financial district. Mason had the coaster encased in plexiglass and kept it in his office, RBC claims.
The bank said it began investigating in March after an anonymous whistleblower alleged that Ahn and Mason had been seen “hugging and kissing and exiting the elevators” at the Fairmont Royal York, a hotel that’s right beside RBC’s head office.
Bank officials “immediately commenced a thorough investigation conducted by external legal counsel,” RBC spokesperson Gillian McArdle said in an emailed statement on Friday. “We were disappointed to learn the allegations were true.”
The Globe and Mail newspaper earlier reported on RBC’s court filing.
Ahn’s lawsuit complained about the way Royal Bank handled the investigation, the speed with which she was fired after being confronted with the allegations on April 5, and the damage to her reputation when the bank put out a press release that same day.
“Contrary to the statements of claim from Ms. Ahn and Mr. Mason, the investigation showed there was an undisclosed close personal relationship, and that Ms. Ahn misused her authority as CFO to directly benefit Mr. Mason,” McArdle said. “As she was a Named Executive Officer, we had an obligation to disclose.”
Ahn’s lawsuit is seeking almost C$50 million ($37 million) in pay and damages while Mason is suing Royal Bank for more than C$20 million in pay and damages.
In its counterclaim against Ahn, RBC is seeking about C$4.5 million for “excess compensation” paid to Mason and to claw back bonuses paid to Ahn, plus other damages and costs.
RBC’s filing states that when another employee raised concerns about Mason’s pay, Ahn terminated that person’s employment without cause. The bank said that former employee “has demanded compensation from RBC for bad faith termination of his employment, because of Ms. Ahn’s conduct.”
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Faith-based shareholder activism dates back to 1970s
Up until the 1990s, the nuns had few investments. That changed as they began to set aside money to care for elderly sisters as the community aged.
“We decided it was really important to do it in a responsible way,” said Sister Rose Marie Stallbaumer, who was the community’s treasurer for years. “We wanted to be sure that we weren’t just collecting money to help ourselves at the detriment of others.”
Faith-based shareholder activism is often traced to the early 1970s, when religious groups put forth resolutions for American companies to withdraw from South Africa over apartheid.
In 2004, the Mount St. Scholastica sisters joined the Benedictine Coalition for Responsible Investment, an umbrella group run by Sister Susan Mika, a nun based at a Texas monastery who has been working in the field since the 1980s.
The Benedictine Coalition works closely with the Interfaith Center for Corporate Responsibility, which acts as a clearinghouse for shareholder resolutions, coordinating with faith-based groups—including dozens of Catholic orders—to leverage assets and file on social justice-oriented topics.
The Benedictines have played a key role at ICCR for years, said Tim Smith, a senior policy advisor for the centre. It can be discouraging work, where the needle only moves slightly each year, but he said the sisters “have the endurance of long-distance runners.”
The resolutions rarely pass, and even if they do, they’re usually non-binding. But they’re still an educational tool and a means to raise awareness inside a corporation. The Benedictine sisters have watched over the years as support for some of their resolutions has gone from low single digits to 30% or even a majority.
Gradually environmental causes and human rights concerns have swayed some shareholders, even as a growing backlash foments against investments involving ESG (environmental, social and governance concerns).
OpenAI, the San Francisco-based A.I. powerhouse now valued at $80 billion, operates by a unique structure where it is a nonprofit entity that runs a capped-profit subsidiary in which investors can buy equity. However, CEO Sam Altman may be looking to transition the organization into a fully for-profit one, The Information reported last month. The move would be unusual, however, as OpenAI has already simultaneously reaped the benefits of positive publicity from being a nonprofit while receiving significant investments that typically go into a for-profit company.
OpenAI was founded as a nonprofit research lab in 2015 by Altman, Elon Musk, and Ilya Sutskever, among others. Born out of concern that financial incentives could lead A.I. astray, OpenAI declared in a blog post published upon its founding, “Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact.”
OpenAI describes its existing structure as “a partnership between our original nonprofit and a new capped profit arm” on its website.
In 2019, OpenAI introduced a capped-profit arm. The company describes its structure as “a partnership between our original nonprofit and a new capped profit arm.” Finding that relying purely on donations made it difficult for the organization to stay competitive, this dual-model allowed OpenAI to raise money for its capital-intensive research while staying true to its nonprofit mission.
However, in the fine print, OpenAI reveals that the cap on returns for investors is an outstanding 100x. For context, the most prominent A.I. stock, Nvidia, has risen around 30 times in the last five years. OpenAI’s profit cap is so high that it might as well not exist.
At the center of the model transition is OpenAI’s board
OpenAI maintains that it is accountable to an independent nonprofit board, whose members own no equity in the company. However, observers began questioning who actually gets to call the shots at the company after its former board tried to fire Altman late last year. Microsoft (MSFT), the largest corporate investor behind OpenAI with a $13 billion stake, agreed to hire Altman within three days of his firing. Altman won his job back at OpenAI only days after, and surprisingly, Microsoft appeared to have encouraged it. This raises the question: in the fierce race for A.I. talent, why did Microsoft not try harder to retain Altman from re-joining its competitor, OpenAI?
“What we call OpenAI should be called Microsoft A.I. Microsoft controls OpenAI,” said NYU Professor Scott Galloway in an interview with Tech.Eu. (In March, Microsoft tapped Mustafa Suleyman, a co-founder of Google’s A.I. lab DeepMind, to lead a new unit called Microsoft A.I.) Microsoft holds a non-voting observer role on the board of OpenAI. On July 3, Apple, which in June announced a partnership with OpenAI, said its App Store chief Phil Schiller would receive a similar seat on the board.
It is unclear how OpenAI may transition to a for-profit model; it likely may involve doing away with its non-profit board that oversees the company. In a request for comment from Reuters, OpenAI said, “We remain focused on building A.I. that benefits everyone. The nonprofit is core to our mission and will continue to exist.”
OpenAI’s capped-profit model is rare, but its hybrid governance model has a long history of precedent. Food retailer Newman’s Own is a nonprofit that wholly owns for-profit distributor No Limit, which produces and sells all Newman’s Own products. In 2022, Patagonia’s founder donated 100 percent of the for-profit clothing brand’s voting shares to a nonprofit, making it another for-profit corporation owned by a nonprofit.
Joseph Otting, New York Community Bancorp’s recently installed CEO, described a March 6 capital raise of $1.05 billion as the best decision for investors. “If the capital raise was not ready to go specifically that afternoon, the chances of the company surviving would have been at a peril,” he told shareholders.
Bloomberg
New York Community Bancorp’s new executive management team had to answer this week to shareholders whose investments in the beleaguered company have lost substantial value.
But questions from shareholders, none of whom were identified during the meeting, suggested at least some discontent in the wake of the capital influx, which significantly diluted their existing position in the Long Island-based company.
One shareholder wanted to know why investors should sign off on the additional capital, which came from an investment group led by former Trump administration Treasury Secretary Steven Mnuchin. Although the capital infusion was announced March 6 and closed six days later, New York Community was required to obtain shareholder approval to finalize the deal because of the amount of stock it plans to issue.
“If the capital raise was not ready to go specifically that afternoon, the chances of the company surviving would have been at a peril,” CEO Joseph Otting told shareholders during the meeting. “As we look back today, it was the right decision for the company, it was the right decision for the investors, and collectively we will work very hard to reestablish the value of this company going forward.”
New York Community’s annual meeting, which took place virtually, was open only to shareholders, though a recording was later made public. It was the firm’s first annual meeting with its new management team.
The new corporate leaders include Otting, who served alongside Mnuchin in the Trump administration and took over as the company’s president and CEO on April 1. Earlier this week, Otting succeeded Sandro DiNello as chairman of the board.
New York Community is the parent company of Flagstar Bank. It acquired Troy, Michigan-based Flagstar Bancorp in late 2022 as part of a strategy to diversify its loan portfolio.
Wednesday’s meeting offered a chance for investors to hear more about how executives are trying to move the $112.9 billion-asset company forward after severe challenges this year, which have been driven primarily by bad loans in its commercial real estate portfolio. So far this year, the company’s stock price has plummeted by 70%, its leadership team has been almost entirely overhauled and it has warned of ongoing pain as it roots out troubled multifamily and office loans.
Shareholders approved the proposal related to the capital infusion, as well as seven other company proposals included in its latest proxy statement. They rejected one company proposal and one shareholder proposal, both of which aimed to eliminate supermajority voting requirements.
The vote counts have not yet been released.
A proposal that would allow the bank’s board to enact a reverse stock split of issued and outstanding common stock by a ratio of 1-for-3 was among those that received majority shareholder support. A reverse stock split is a strategy that banks can put in play when their shares are trading at low figures, and they want the prices to look higher.
According to New York Community’s proxy statement, the company expects its tangible book value per share this year to be $6.05 to $6.10, reflecting shareholder dilution of nearly 40%. The company has said that tangible book value per share could rise to somewhere between $7 and $7.25 by 2026.
He also noted that the company’s shares are trading at about half of their book value, an indication that investors are skeptical that $1.05 billion will be enough to cover potential loan losses or New York Community’s weaker earnings going forward.
On Wednesday, one New York Community shareholder wanted to know if the bank could enact a policy that would protect existing shareholders’ investments in the event of a reverse stock split. In the company’s proxy statement, the board said that doing so “should increase the per share price of the common stock and make the bid price of the common stock more attractive to a broader group of institutional and retail investors.”
Otting did not commit to any such policy Wednesday, but he did say that it was “unfortunate, the situation that we found the company in when we arrived” and that the management team “appreciates the impact” that the company’s challenges have had on longtime shareholders.
“Myself and the new executive management team and the board really are here to enhance the value to all shareholders, and that is our mission ahead,” Otting said. “We really want to build a strong regional bank that serves the needs of commercial real estate customers, commercial and corporate banking customers, specialized industries and consumers.”
Another shareholder wanted to know more about the steps New York Community is taking to make sure it has adequate reserves to handle future loan losses. About 45% of the firm’s loan portfolio is made up of multifamily loans, which are under pressure due to a combination of higher interest rates and a 2019 law in New York that’s hampered landlords’ ability to raise rents.
About 4% of the book is made up of office loans, which are also facing challenges as companies reduce their office spaces in the post-pandemic shift to hybrid- and remote-work environments.
Craig Gifford, who took over as chief financial officer in mid-April, said the company continues to comb through both of those loan categories, moving from the largest loans to smaller ones. Preliminary results from those reviews are in line with the loan-loss reserves reported in the first quarter, as well as the potential for incremental reserves throughout the year, Gifford said.
Meanwhile, the company is planning to add more new faces to its executive ranks. It is hiring a new chief credit officer and someone to run its commercial and private banking unit, Otting said.
New York Community does not plan to hire a new chief operating officer, following the departure of Julie Signorille-Browne last month. Otting said Signorille-Browne’s duties have been divided up among other executives.
The company’s head of human resources and its head of technology will now report to Otting, while Gifford will oversee operations and facilities as well as procurement duties, Otting said.
Polo Rocha and Catherine Leffert contributed to this story.
Norfolk Southern’s CEO will be under more pressure to improve profits after the railroad’s shareholders voted Thursday to elect three of the board members an activist investor nominated, but he won’t be fired right away.
Ancora Holdings had nominated seven directors as part of a bid to take control of the railroad’s 13-member board and overhaul its operations. The key support Ancora picked up from major investors, two major rail unions and proxy advisory firms wasn’t enough to persuade shareholders to elect Ancora’s entire slate.
Ancora’s Jim Chadwick blamed passive investors for failing to support the investors’ nominees. Chadwick promised to hold CEO Alan Shaw accountable and keep fighting to improve the railroad.
“For the passive investors. If anything should go wrong here and there’s another derailment and people die, this is on you,” Chadwick said. “You ignored the recommendation of the proxy advisors, the unions, the largest customer of the company. You gave us literally no support and we still won three board seats without you. What happens at Norfolk Southern now is on your firms and your conscience.”
The board members voted out included Chair Amy Miles.
Norfolk Southern’s stock price, which soared after Ancora announced its campaign to oust Shaw, immediately fell after the results of the vote were announced. It was trading down nearly 4% at $223.43 Thursday morning.
Shaw’s plan calls for keeping more workers on hand during a downturn to make sure the railroad is prepared to handle the eventual rebound in shipments once the economy recovers and continuing to invest in safety improvements to prevent derailments. He received the backing of the rest of rail labor, several key regulators and a number of the railroad’s customers.
“Norfolk Southern has persevered through several challenges over the last year. We have met every challenge and never lost sight of where we are taking our powerful franchise,” Shaw said. “We are keeping our promises and delivering tangible results, and there is more to do.”
Ancora had argued that Norfolk Southern should implement the industry standard Precision Scheduled Railroading operating model that is designed to minimize the number of workers, locomotives and railcars a railroad needs.
The Precision Scheduled Railroad operating model relies on running fewer, longer trains on a tighter schedule and switching cars between trains less often to streamline operations. Shaw had argued that running the railroad too lean would jeopardize the improvements in safety and service Norfolk Southern has seen since its disastrous February 2023 derailment in East Palestine, Ohio.
Rail unions have said they believe Precision Scheduled Railroading has made the industry more dangerous and derailments more likely because inspections are so rushed and preventative maintenance may be neglected.
For now, Shaw and the Chief Operating Officer he just hired in March, John Orr, will have more time to prove their strategy will work. NS paid CPKC railroad $25 million to get permission to hire Orr. But if they don’t bring Norfolk Southern’s profit margins in line with the rest of the industry, their jobs could still be in jeopardy.
“Your CEO has missed earnings estimates for six quarters in a row and destroyed a town in our own state,” said Chadwick, whose firm is based in Ohio. “And if this underperformance continues, we will hold you accountable. But we will work with you for the mutual benefit of all stakeholders.”
Ancora wanted to hire former UPS Chief Operating Officer Jim Barber to be the railroad’s next CEO and former CSX railroad operating chief Jaimie Boychuk as the chief operating officer. Barber has said keeping more workers on hand during slower times is wasteful and compared it to UPS keeping all its seasonal workers it hires for the holiday season on the payroll year round.
The investors had projected their plan would cut more than $800 million in expenses in the first year and another $275 million by the end of three years. Ancora said say they didn’t plan layoffs, but wanted to use attrition to eliminate about 1,500 jobs over time.
Norfolk Southern has said it’s own plan to make the railroad more efficient would generate about $400 million in cost savings over two years and improve its profit margin. But analysts have said its profits might still lag behind the other major freight railroads because they are all working to get more efficient too.
Regulators took over Republic First on Friday with Fulton Bank acquiring substantially all of the bank’s assets and deposits. The sale will result in a $667 million loss for the Deposit Insurance Fund.
Republic First Bank was shuttered by its state regulator and taken over by the Federal Deposit Insurance Corp. on Friday, ending the Philadelphia-based bank’s yearslong struggle to maintain adequate capital amid a bitter proxy war with investor groups.
Fulton Bank in Lancaster, Pennsylvania, will assume substantially all of Republic First’s $6 billion of assets and $4 billion of deposits, according to a statement from the FDIC.
Republic First’s 32 branches, which are spread across Pennsylvania, New Jersey and New York, will open for business on Monday morning — or Saturday morning for locations that normally operate on the weekend — as Fulton Bank branches, the agency announced.
Republic First’s parent company, Republic First Bancshares, has been dealing with internal strife since late 2021, when a group of activist investors sought to force a sale of the bank, citing concerns about decisions made by then-CEO Vernon Hill.
Problems for the bank compounded just six weeks later when a second investor group called for Hill’s ouster. The embattled executive eventually succumbed to the pressure — following the death of a key ally — and lost his chairmanship of the bank’s board in May 2022. Hill ultimately resigned from his post as CEO two months later.
The bank attempted to raise $125 million in additional capital from investors last year — an effort that launched on the same day that Silicon Valley Bank failed — but the deal fell apart only months later.
As is customary in a bank failure, the FDIC was appointed receiver for Republic First after its failure. The sale to Fulton Bank will result in a $667 million loss for the Deposit Insurance Fund.
In its announcement, the agency said the sale to Fulton Bank would be the least costly outcome for the fund.
Jamie Dimon is chairman and CEO at JPMorgan Chase, while David Solomon holds those same two roles at Goldman Sachs, as does Brian Moynihan at Bank of America. Shareholders at all three banks will vote soon on whether to split the responsibilities between two people.
Shareholders at JPMorgan Chase, Bank of America and Goldman Sachs will vote soon on whether those banks’ chief executives should also chair their boards. Big banks have mostly fended off those pushes in the past, and they’re arguing now that the addition of lead independent directors who fulfill chairman-like duties provide an effective check on CEOs.
Backers of the split say that’s not enough. Much like the U.S. government, corporate leaders need to have proper checks and balances, said Paul Chesser, director of the corporate integrity project at the conservative-leaning National Legal and Policy Center. The group has put the issue up for a vote at Goldman Sachs.
“If it’s a chairman and a CEO, there really is no counter to them unless there’s some real egregious conduct going on,” Chesser said.
The proxy advisory firms Glass Lewis and Institutional Shareholder Services are backing the shareholder proposals at Bank of America and Goldman Sachs. Their recommendations aren’t yet available for the vote at JPMorgan Chase, where Chairman and CEO Jamie Dimon this week criticized the “constant battle” over the issue and decried the “undue influence” of proxy advisers, noting that Glass Lewis and ISS are owned by foreign companies.
“There is no evidence this makes a company better off,” Dimon wrote in his annual letter to shareholders.
Some researchers who study the issue say Dimon has a point. Studies have shown “quite consistently” that there’s no correlation between splitting the chairman-CEO role and a company’s financial performance, said Ryan Krause, a professor at Texas Christian University’s business school.
There is, however, some evidence that companies with a separate chairman are less prone to instances of wrongdoing, Krause said.
That issue proved salient in 2016, when a series of consumer abuse scandals unfurled at Wells Fargo, which was led at the time by Chairman and CEO John Stumpf. Stumpf would soon be out, and the bank would split the chairman and CEO roles.
Many large U.S. banks still have joint chairman and CEO positions. Citigroup is a notable exception, as is the auto lender Ally Financial.
But more companies are shifting toward splitting the roles, with 59% of S&P 500 company boards reporting that they had a separate chair and CEO last year, according to the executive search firm Spencer Stuart. That’s up from 45% a decade ago and from just 16% in 1998, the firm said in an annual report on board trends.
In the banking industry, support for splitting the chairman and CEO jobs has ebbed and flowed at different times.
Cincinnati-based Fifth Third Bancorp stripped the chairman title from then-CEO Kevin Kabat in 2010, amid fallout from the 2008 financial crisis. But eight years later, the bank gave the chairman job to then-CEO Greg Carmichael, pointing to improvements in profitability and technology during his tenure as chief executive.
Bank of America shareholders also split the CEO and chairman roles after the financial crisis, which meant that Brian Moynihan was simply the CEO when he was hired in 2010. By 2015, Bank of America’s board decided to bestow him the chairman title. Since then, BofA investors have shot down proposals to split the roles in 2017, 2018 and 2023.
The question will come up again at the bank’s annual shareholder meeting on April 24.
John Chevedden, a BofA shareholder who’s putting the issue up for a vote, said in his proposal there’s “clearly a need for a change” due to the company’s lagging stock price. Bank of America and other large companies’ complexities “increasingly demand that 2 persons fill the 2 most important jobs in the company.” The proposal says that the change could be phased in the next time there’s a new CEO.
The bank’s board is recommending that shareholders vote against the proposal, saying that its current structure provides “robust and effective independent board oversight.” That setup includes a strong lead independent director — former Pepsi executive Lionel Nowell — who regularly meets with other independent directors, Moynihan, shareholders and regulators.
The board at JPMorgan Chase, which is facing a similar vote at its May 21 meeting, also pointed to the “strong, effective counterbalance” provided by its lead independent director, former NBCUniversal Chairman Stephen Burke. In recommending that shareholders oppose the push to split the duties, the board noted a lack of “empirical evidence demonstrating a significant relationship” between a separate chairman and CEO and strong company performance.
“With Mr. Dimon serving as both Chairman and CEO, the Firm has delivered ROTCE that has consistently and substantially outperformed” its peers, the bank’s board wrote, referring to return on tangible common equity, which is a common measure of shareholder returns.
Goldman Sachs’ board also pushed back on the idea. It said that its lead director is active, setting the agenda for meetings, focusing on the effectiveness of the board, being a liaison for independent directors and management and repeatedly meeting with shareholders and regulators.
“We are committed to independent leadership on our board,” the Wall Street bank stated, adding that it has repeatedly disclosed it would “not hesitate to appoint an independent chair” if its governance committee decided that step was necessary.
Goldman also argued that the combined role has provided for “strong and effective leadership” from Chairman and CEO David Solomon, particularly during turbulent times in the economy and the regulatory environment.
Walter Gontarek, a visiting fellow at the UK’s Cranfield University who has studied the corporate governance reform proposal at U.S. banks, said that combining the two roles can offer “handsome benefits as firms can navigate fast moving developments.”
Gontarek found in a recent paper that firms with a dual chairman and CEO can take on greater risk, but that linkage broke down when companies were subject to heightened regulatory supervision.
“The so-called agency costs of CEO duality can be mitigated when regulatory reach is greater,” said Gontarek, a former banker who is CEO and chair of the London-based business lender Channel Capital Advisors.
Bank regulators in Europe generally don’t permit the industry to combine the CEO and chair roles.
“The next few years will tell us if the U.S. market moves towards the European model in discouraging CEO and chair combinations or reverses course,” Gontarek said.
One relevant factor is that big banks’ investors are from all over the world, and combined chairman-CEOs are almost “unheard of’ in parts of Europe, said Courteney Keatinge, senior director of ESG research at the proxy advisory firm Glass Lewis.
Keatinge, whose firm is recommending that shareholders vote for the chairman-CEO split at Bank of America and Goldman Sachs, acknowledged that academic research on the issue is mixed. But she said a more independent board led by a separate chair is “more likely to ask the tough questions” and challenge management when needed.
“We really want as much independence as possible on the board because it ensures that shareholders’ interests are being served,” Keatinge said.
Krause, the Texas Christian University professor, said there are several trade-offs involved, pointing to potentially faster decision-making by a chairman-CEO but also the potentially increased ability to challenge CEOs if the two roles are split.
Ultimately the issue comes down to what board chairs and CEOs are “doing with their power,” the type of social dynamics that are harder to capture in academic research, Krause said.
“It really matters who chairs the board, and by ‘who’ I don’t just mean, ‘Are they the CEO or not?’” Krause said. “I mean the person, the values, the governing priorities that they bring to that role, and that’s very difficult to measure.”
A former Twitter manager is suing Elon Musk and his social media company X in a New Jersey court, alleging the worker was wrongfully fired for trying to make sure X — formerly Twitter — held up its part of a government agreement.
Alan Rosa served as head of global information technology and information security from his remote home office in the Garden State for 10 months in 2022—until he was fired a few weeks after the tycoon bought the company.
Earlier that year Twitter had been fined $150 million for previously exploiting personal data from users for commercial purposes without informing them. A Federal Trade Commission consent decree subsequently required Twitter to establish a comprehensive information security program including the introduction of new compliance measures to prevent further abuses.
On Dec. 6 Rosa was dismissed, he claims, because the new owner sought to make cuts in the budget, including software that shared important information with law enforcement authorities around the world.
The legal team argued that Musk knew full well the cuts would risk Twitter breaching government agreements, such as that with the FTC, but was “consistently dismissive” of his obligations.
Rosa “objected to these cuts as he had a reasonable belief that cutting these programs would prevent Twitter from complying with its obligations under the Twitter FTC Consent Decree Order,” the lawsuit says, adding that Rosa was fired “in retaliation” for his refusal.
Not only did Twitter never provide a cause for his termination, it refused to pay out the severance and benefits totaling well over half a million dollars it promised Rosa, pending the results of a new probe into his conduct as employee.
“Defendants acted maliciously and willfully in creating a pretextual sham investigation regarding Plaintiff’s conduct,” the suit claims.
Seeking unspecified damages
The allegations that Musk cooked up an excuse to short-change Rosa are, at the very least, in character. In his official biography of Musk, Walter Isaacson revealed how his subject bragged about hatching a secret plan to fire then-Twitter head Parag Agrawal without severance over a vendetta Musk had with the former CEO.
Rosa’s legal counsel, the firm Deutsch Atkins & Kleinfeldt, P.C., claims his termination equates to a breach of contract and is unlawful under New Jersey regulations. It furthermore violates New York labor law and the California Labor Code, his lawyers argue.
An initial attempt by the two sides to resolve the dispute in arbitration failed after Twitter never responded to emails from the arbitrator and never paid its portion of the fee, despite signing an agreement to do so.
In addition to all legal and attorney costs, Rosa is seeking unspecified compensatory damages, punitive damages and emotional damages, as well as any other relief deemed appropriate by the court.
Fortune reached out for comment to X’s public relations account, which under Musk had automated to reply at all times with a poop emoji. Under CEO Linda Yaccarino, that has since been changed to “busy now, please check back later.”
On Jan. 1, 2024, Truist Financial’s 21-member board will shrink to 13 directors as a result of four retirements and four early departures.
Scott McIntyre/Bloomberg
Truist Financial is sharply reducing the size of its board of directors — a move that could give CEO Bill Rogers more leeway to make bigger changes as the bank faces pressure to ramp up its profitability.
Effective Jan. 1, 2024, the board will go from 21 directors to 13, the Charlotte, North Carolina, company said Monday.
Four of the directors have made the decision to “conclude their service early,” the company said in a press release. A company spokesperson declined to elaborate on why those four — Anna Chablik, Paul Donahue, Easter Maynard and Frank Scruggs Jr. — are leaving early.
Four more directors will depart because they’ve reached the mandatory retirement age of 75: Kelly King, the former CEO of both BB&T Corp. and Truist, as well as Nido Qubein, David Ratcliffe and Thomas Thompson.
The changes come amid pressure from critics who say Truist isn’t living up to the expectations it established four years ago with respect to cost savings and other issues. Truist was formed in 2019 by a “merger of equals” between BB&T and SunTrust Banks.
The composition of the board, which has changed little since the December 2019 merger, is one of the areas that investors and analysts have identified as problematic in recent months.
Five of the departing directors are from legacy BB&T, while the other three are from SunTrust. That leaves six remaining directors from BB&T and seven from SunTrust, including Rogers, who was SunTrust’s CEO at the time of the merger. He took over as Truist’s top executive two years ago.
With the majority of directors now hailing from SunTrust, Rogers “should now have more control of the board to take more forceful actions,” Wells Fargo Securities analyst Mike Mayo said Monday in a research note.
Mayo, who has been especially critical of Truist, has identified the current board composition as one of several problems at the $565.8 billion-asset company. His list also includes rising expenses, missed efficiency targets and what he characterizes as a mismatch between incentive compensation and accountability.
“Time for a board refresh,” Mayo wrote in a July research note, citing the fact that Truist’s board was larger than those of peer banks, the 12-year average tenure of its directors and the lack of turnover since the merger was finalized.
Three weeks ago, Truist pledged to tackle higher costs by cutting expenses by $750 million over the next 12 to 18 months. The spending reduction will involve “significant” job cuts between now and the first quarter of 2024, as well as a reduction in the number of management layers, the consolidation of certain business lines and cuts in technology spending, the company said.
The initiative equates to an annual spending reduction of about 5%. It should help Truist cap expense growth at no more than 1% next year, Rogers said at a recent industry conference. That’s a big change from this year, when expenses are expected to rise about 7% from 2022.
It’s unclear whether the decision to shrink the size of the board came in response to investor pressure, said Terry McEvoy, an analyst at Stephens Research. Because some of the investor criticism has involved expenses, “some may come to the conclusion that those are active discussions at the board level,” he said.
And while King’s planned departure has been known for years, some observers wondered Monday if his impending exit might lead to more changes for Truist’s insurance subsidiary. That unit was largely built by BB&T while King was at its helm.
Earlier this year, Truist sold a 20% stake in its insurance business to a private equity firm. Rogers and other executives have since noted that Truist’s remaining 80% stake offers flexibility in terms of revenue opportunities.
If King is no longer on Truist’s board, that might open the door to sell all or more of the insurance unit.
While it’s hard to draw conclusions, “strategically, Truist has seriously evaluated that line of business and what was best for Truist Insurance and Truist shareholders,” McEvoy said.
At the time the merger was completed, Truist had 22 directors. Then in the fall of 2021, Paul Garcia resigned, and the company did not fill his seat. At the time, Truist said the decision to reduce the size of the board to 21 was based partly on “feedback” it received from shareholders.
The company has touted the makeup of its current directors, 43% of whom are racially, ethnically or gender diverse. Of the continuing 13 directors, six are diverse, the Truist spokesperson said in an email.
Monday’s board news did little to improve the company’s stock price, which fell about 3.4% for the day. So far this year, it’s down about 35%. By comparison, the KBW Nasdaq Bank Index benchmark is down 24% for the year.
The reduction in board size is “not a game-changer,” and it won’t affect earnings estimates, Piper Sandler analyst Scott Siefers wrote Monday in a research note.
Still, “we view this move as a symbolic step forward for the company,” Siefers wrote. Truist “appears to be operating with a renewed sense of urgency” and “to us, reducing the size” of the board “represents another step along this path of simplification and efficiency.”
Shares of GameStop Corp. surged Thursday, after the consumer electronics retailer named Ryan Cohen as it president and chief executive officer, effective immediately.
The move, which wasn’t unexpected, comes a few months after the company fired then-CEO Matthew Furlong, and elected activist investor Ryan Cohen as executive chairman. At that time, Cohen said in a tweet, “Not for long.”
Cohen will relinquish his role as executive chairman when he is appointed chairman.
GameStop’s stock GME shot up 9.9% in premarket trading, putting it on track to open at a three-week high.
Cohen, who previously founded and was CEO Chewy Inc. CHWY, -0.06%,
is the manager of RC Ventures, which in June disclosed a 36.85 million-share, or 12.1% stake in GameStop.
“In connection with his appointment, Mr. Cohen will assume the role of principal executive officer from Mark H. Robinson effective immediately and his responsibilities will include the oversight of all other executive officers, including Mr. Robinson,” the company said in a statement.
The company said Cohen will not receive any compensation for his roles as president, CEO and chairman, and will “continue to engage in various business activities and pursuits outside of the company.”
GameStop’s stock, which was one of the original “meme” stocks, has tumbled 37.2% over the past 12 months, while the S&P 500 index GME, +2.21%
has gained 14.9%.
Banco Santander CEO Hector Grisi wants to simplify the company so it can reach its profitability targets. His overhaul plans will likely reduce management layers and may lead to some job cuts, people familiar with the matter say.
Paul Hanna/Photographer: Paul Hanna/Bloombe
Banco Santander overhauled its corporate structure as Chief Executive Officer Hector Grisi seeks to simplify the company’s operations.
As part of the changes, the Spanish bank is combining individual countries’ retail and commercial banking businesses under a new global unit, which will be headed by Daniel Barriuso, and creating a new digital consumer bank area that will be led by Jose Luis de Mora, Santander said in a statement late Monday.
The moves are aimed at simplifying the business and helping the company reach profitability targets. They will likely reduce management layers and may lead to some job cuts, people familiar with the matter said, asking not to be identified discussing nonpublic information.
The new management structure will result in five units: retail and commercial, digital consumer bank, payments, wealth management and insurance as well as corporate and investment banking.
The Spanish bank last year named Grisi, who had been running the Mexico business, as the company’s chief executive officer, a role he took on at the start of 2023. A string of hires and management changes followed, including the exit of Antonio Simoes, who had been head of Europe and was seen as a possible CEO candidate. The bank in April hired Christiana Riley, a longtime Deutsche Bank AG executive, as head of its North American and Mexican operations, starting Oct. 1.
An expansion into U.S. investment banking is also in the works, tapping several new hires from the ranks of Credit Suisse.
Santander will align the way it reports financial results to the new model starting in January 2024, with the five global businesses becoming the new primary segments for the group, while country- and region-specific data will become secondary segments, it said.
Santander’s revamp closely resembles a plan announced last week by Citigroup CEO Jane Fraser. In that company’s biggest restructuring in two decades, Fraser reorganized the firm into five main business and eliminated regional chiefs who oversee operations in about 160 countries. The changes will involve a number of job cuts in Citigroup’s back-office functions.
Santander adopted a regional approach to managing its business in 2019, and a year later rolled out a ‘One Santander’ strategy, to which chairman Ana Botin often refers. That strategy was aimed at increasing connectivity, the company says on its website.
With businesses from Spain to the United Kingdom, Brazil and the United States, Banco Santander is one of the largest retail banks in the world. It has about 212,000 employees and a market capitalization of 55.7 billion euros ($59.5 billion). Botin has been executive chairman of the lender since her father died in 2014.
Shares of GameStop Corp. rose in extended trading Wednesday after the videogame retailer and original meme stock reported second-quarter results that beat expectations, lifted by international sales gains and what the company described as “a significant software release.”
The company — which over the past few months has made some big leadership changes — reported a net loss of $2.8 million, or 1 cent a share, compared with $108.7 million, or 36 cents a share, in the same quarter last year. Revenue crept higher to $1.16 billion,…
