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‘Psst. Over here…’

It might have escaped wider notice, but those in the know will be aware that GCHQ is recruiting a number of non-exec boardroom roles. The UK’s leading intelligence-gathering agency is now advertising to fill three vacancies: strategy lead and lead NED; technology and digital lead; and audit and risk lead.

Of course, these aren’t just any regular NED gigs. “Your discretion is vital,” the job advert  insists. “Please limit the number of people you talk to about any of these roles to your immediate family and/or partner. Successful candidates will not normally be able to disclose that they are a non-executive director for GCHQ.”

In cases such as this, you might expect that applications be left via a dead drop on Regent’s Park or in an abandoned telephone box but, disappointingly, it seems you can simply email your CV instead.

A well-earned rest

There can’t be many more divisive characters in the current business landscape than Elon Musk. To some, he’s a visionary genius with a remarkable ability to turn ideas into billion dollar businesses. To others he’s the worst kind of Bond villain-tech bro hybrid, playing fast and loose with other people’s money with little regard for the consequences.

Whatever your view, it’s about to be tested by the news that Musk has just seen his trusted Tesla CFO leave the company. To the surprise of analysts, Zachary Kirkhorn announced his departure last week, leaving some scratching their heads as to why—and why now?

Kirkhorn says he’s leaving for personal reasons and will stay until the end of the year. However, as is to be expected, no high-profile CFO can ever leave their role without some level of fevered speculation over the reasons—they tend to be the first to know if the ship’s about to hit an iceberg, after all.

Gene Munster, managing partner at Deepwater Asset Management, may have hit on something when he told Reuters, “That he’s going to be around until the end of the year is evidence that this is just for personal reasons and the personal reason is likely that working with Elon Musk is really hard and he’s done it for 13 years.”

Kirkhorn has been at Tesla for 13 years and, in that time, seen the carmaker’s market cap grow from $50bn to (at last count) $773bn. So it’ll be interesting to see how the company reassures the markets during what it says will be a “seamless transition”.

It’s pretty clear the CFO will be missed. As one Tesla investor, Thomas Martin, senior portfolio manager at Globalt Investments, put it, “He was able to be an effective liaison communicator between Elon and other executives…that would be a skill set that is hard to come by and very valuable but hard to quantify.”

Diversity as division?

The drive towards increasing diversity of boards has been a key plank of the corporate governance debate for the past decade, but it seems that some are beginning to doubt a diverse board is an effective one.

New research has suggested that activist investors are more likely to target companies with diverse boards in order to sway executive decisions. According to a study conducted by academics in the US and Japan, there is growing evidence that “financially motivated shareholder activists often target firms that experience problems, such as deficient governance or underperformance” in order to push their own agendas.

The study revealed that hedge funds are increasingly focused on exploiting differences of opinion among board members, as well as their more deliberate decision-making processes, to sway shareholder votes in their favour. In practice, that means “forcing companies up against a wall where decisions have to be made quickly and maybe not in the most ideal way and setting,” says Mark DesJardine, a professor at Dartmouth’s Tuck School of Business in the US.

“It’s very clear that there are a lot of benefits of diverse teams, but there are also hurdles to overcome,” DesJardine added. “They take longer to come to a consensus. They face more communication issues. It takes more time to understand.”

Whether that perception—that diverse boards are weaker, more divided and hence more vulnerable—is given particular resonance by the news that, in the US at least, the process of increasing diversity at boardroom level stalled last year as larger companies focused on recruiting more experienced directors. New research has shown that Fortune 500 companies have, post-Covid, focused more on adding directors with financial expertise and less on changing the composition of boards along gender or ethnic background lines.

The Spencer Stuart study points out the increase in demand for “experienced” directors, with appointments “returning to 2018 levels and reversing several years of decline”. Thirty per cent of new directors appointed in 2023 are active or retired CEOs and 27% have a financial background.

What this says about the diversity agenda is unclear. It may simply be what Julie Daum, leader of Spencer Stuart’s North American board practice, says: “There is a desire to have CEO and CFO experience and there is not as much diversity in those categories currently.”

An optimistic view would be that the diversity race has been run and now previously underrepresented groups have achieved parity. A more jaded eye may see things differently, however, and wonder whether companies are too quick to jettison well intentioned initiatives when the going gets tough?

Into the breach

If cyber security wasn’t already inching its way to the top of the board’s agenda, recent revelations from Capita should give it a bump. The outsourcing giant announced last week that it had suffered a £25m loss from a breach that occurred in May this year, in which “some data was exfiltrated”.

And although the data in question amounted to not even 0.1% of its server estate, Capita’s position as outsourcer of choice to the NHS, MoD, HM Prison Service and many others means this will echo far beyond Capita’s own operations.

Indeed, in the wake of the attack, about 90 organisations reported breaches of personal information held by Capita to the data watchdog: the Information Commissioner’s Office.

As a result of the breach, Capita shares fell by more than 12% in morning trading last week after the release of its results, making it the biggest faller on the FTSE 250. That’s not to mention the earlier-than-planned departure of CEO Jon Lewis—a move that the company denies is linked to the cyber-attack.

Perhaps it is time to put the chief information security officer on the board at last?

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