Hannah Levitt, Bloomberg, January 27, 2020

Wells Fargo & Co.’s finance chief was promising analysts they would be kept abreast of the bank’s efforts to resolve scandals when his new boss chimed in. “I just want to be clear, I’m not suggesting here that any of these public issues will be closed this year,” Chief Executive Officer Charlie Scharf said earlier this month. “The time frames will be driven by when we accomplish that work and when the regulators are satisfied by it.”

The firm has yet to reach settlements with the U.S. Department of Justice and the Securities and Exchange Commission after setting aside more than $3 billion for litigation in the second half of last year. And in its quarterly filings, the bank lists an array of other open-ended probes, investigations and sanctions including a Federal Reserve-imposed growth cap.

It’s a strikingly long tail for a scandal that began with the 2016 revelation that employees had opened millions of potentially fake accounts to meet sales goals, possibly overcharging customers by a few million dollars. That unleashed a public and political backlash that has kept Wells Fargo in a harsh light ever since.

“There’s this sort of free-floating anger and fury that’s out there in the populace, and anything that sticks its head up that’s a problem that isn’t resolved in the right way, it coalesces,” Davia Temin, founder of crisis consultancy Temin & Co., said in an interview. “That fury is magnificent — it is stunning in its destructive power.” […read more]

Stephanie Forshee, Agenda, January 17, 2020

When supermodel Kate Upton went public two years ago and accused Guess co-founder Paul Marciano of groping her breasts — allegedly without her consent — word spread fast. Guess Inc. had been trading at $18.37 per share just a day earlier, but its stock dropped by 18% upon the news about Marciano, making it the worst trading day in six years as the company lost $250 million in value.

Due to the reputational damage brought by a MeToo claim, plus the piling on of shareholder lawsuits alleging the information was material for investors, analysts and executives have found themselves rethinking how to calculate the impact of these allegations on businesses.

Since MeToo received a platform in recent years, 285 companies have been hit with claims — 199 private companies and 86 public companies — according to Temin & Co., which tracks sexual misconduct allegations. Davia Temin, CEO of the risk and reputation firm, says, “Instead of putting their head in the sand not wanting to know, the best boards are saying, ‘We do want to know. We want to know before any problem arises.'” […read more] (subscription required)

David Heller, Corinne Gretler and Jeff Green, Bloomberg, January 12, 2020

Carlos Ghosn captured the world’s attention by being spirited out of Japan in a private jet concealed in a box often used for audio equipment with the help of a security detail led by a former Green Beret. He evaded two trials on charges of financial misconduct. Now he wants to salvage his shattered reputation.

“The world does love an anti-hero,” said Davia Temin. “The world does love someone who bucks rules and regulations — if they’re a romantic figure. He has made himself into quite a romantic figure. As tempting as is it to tell his story, more and more, the risk now isn’t just that he will sour public support, but that he will do something to make himself a further target.” […read more]

Stephanie Forshee, Agenda, December 20, 2019

Agenda’s survey showed that audit committee directors have been tasked with taking the lead on cyber risks, at least according to 23.8% of survey respondents. And almost 36% of respondents feel that substantiated whistle-blower claims belong with the audit committee. Even though sexual misconduct allegations have been high-risk areas for legal recourse from shareholders, the committee of choice isn’t always with audit- or risk-focused directors.

According to the quarterly survey, 42.7% of respondents said that MeToo issues don’t belong to an individual committee but rather the full board. By contrast, 12.2% felt that MeToo issues don’t even belong in the boardroom to begin with.

But then there are the 18% who think the comp committee should be in charge of Me Too issues. Corporate governance professionals think that as an offshoot of human capital issues, cultural concerns have increasingly been landing with the comp committee.

Davia Temin, president and CEO of Temin & Co., says that in her experience with boards, the audit and risk committee members are typically the directors who primarily oversee sexual misconduct allegations, or sometimes the complaints will go to the executive committee. “A fair amount of time, those committees will inform the whole board if the issue is important enough,” Temin explains.

Temin notes that the push for boards to handle concerns of sexual harassment or misconduct is happening more frequently and is largely being driven by boards that have more women on them. “Often we find that it is women corporate directors who will champion MeToo issues being examined at the board level,” Temin says.

As for comp committees’ overseeing sexual misconduct claims, Temin thinks that responsibility should lie elsewhere, since executives subject to misconduct allegations aren’t just having their pay docked but are often being ousted from the companies if they are found guilty. “Comp committees historically have handled the issue when penalties have not included letting executives go, but instead included the forfeiture or clawback of compensation as a penalty for sexual harassment. Today, we know that this remedy is not seen to be as viable under public scrutiny as it once was. Thus, stronger measures are usually taken.”

The bottom line, in Temin’s opinion, is that “what worked yesterday no longer works today, and most assuredly will not work tomorrow.” […read more] (subscription required)

Vanessa Fuhrmans and Rachel Feintzeig, The Wall Street Journal, December 5, 2019

Companies have increased scrutiny of consensual relationships among colleagues in the wake of the #MeToo movement. Whatever the corporate dating policy is, the underlying message to senior executives is: Just don’t do it. Mark Wiseman, a potential successor to BlackRock Inc. Chief Executive Laurence Fink, became the latest high-level boss to run afoul of company rules on romantic relationships at work.

Increasingly, organizations are hoping relationships just don’t crop up in their offices at all, said Davia Temin, CEO of Temin and Company, a Manhattan-based reputation and crisis-management firm. Whether it is a direct message or one read between the lines, “some places are saying, ‘Just say no,'” she said.

Some companies have had longstanding policies around relationships at work, but they often weren’t well-enforced rules. That is changing. Avoiding mixing love and work is the safer choice today, Ms. Temin said. […read more]

Amelia Lucas, CNBC, November 06, 2019

McDonald’s is garnering praise after deciding to fire its chief executive for having a relationship with an employee.

But the decision is reigniting scrutiny of the company’s handling of sexual harassment incidents that involve restaurant workers.

The Chicago-based company announced on Sunday that its board ousted CEO Steve Easterbrook for having a consensual relationship with an employee, a violation of the company’s non-fraternization policy.

“These days, what we find is boards are more worried about reputational risk, and they’re taking more action and acting more promptly,” said Davia Temin, the CEO of management consultancy Temin and Company. […read more]