Why 2019 May Be A Wild Ride For Directors

2019The year ahead could be a challenging one for corporate boards and directors, with items such as the proposed Accountable Capitalism Act and diversity quotas taking center stage, along with traditional challenges such as ESG and cybersecurity.

TK Kerstetter, Corporate Board Member’s Editor-at-Large and the CEO of Boardroom Resources, says directors will need to focus on some new areas in 2019, including some political developments worth monitoring.

“2019 has the potential to be a very disruptive year for boardrooms,” Kerstetter told Corporate Board Member. “It’s not only the normal things like cyber and ESG and board composition, but things such as Senator Elizabeth Warren’s proposed legislation which would change corporate structures and do federal chartering. It also has a section where 40 percent of the board would have to be elected by the employees, and certainly that is a disruptive factor.”

The Accountable Capitalism Act is a bill proposed last August that would create an Office of United States Corporations inside the Department of Commerce, and would require any corporation with revenue over $1 billion to obtain a federal charter of corporate citizenship instructing it to consider the interests of all relevant stakeholders when making decisions—not just shareholders.

California’s new law requiring board diversity at public companies will also be under the microscope in the year ahead.

“There will be the challenges to the California diversity ruling, where California-based companies will have a quota for a women on boards,” Kerstetter says. “These laws are nothing new globally, but I’m not in favor of them in the US and I still think that the majority of people, including a good segment of women who believe they’d rather see it done the right way rather than through quotas.”

The underlying message here is that while every year is a challenge for corporate board members, they may really want to buckle up in 2019.

“All of this together has the chance to be an extremely disruptive year in the boardroom,” Kerstetter says. “If you take those things and look at the potential of that added with the normal disruptors like digital transformation, cyber and just overall activists, it has the potential to be a pretty wild year.”