MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Activist Bloodlust: CEOs and Chairmen…Who’s Next?

C. HUYGENS - Thursday, July 06, 2017
In June, 8 CEOs resigned or announced their departures. In the first five months of 2017, 13 companies with market values of more than $40 billion installed new CEOs—including American International Group Inc. In at least 1/3 of the cases, activists were involved reports the Wall Street Journal.

The bloodlust continues.

Meanwhile, at Ericson where Chairman Leif Johansson is stepping down under pressure according to the Financial Times, “activist shareholder (Cevian Capital) quickly heaped heavy criticism on Ericsson’s board given the group’s poor performance, with Christer Gardell, Cevian’s co-founder, saying they had “done a very poor job”.”

Read more in the Wall Street Journal.

Reputation Crisis Triggers Bloodbath at Uber

C. HUYGENS - Tuesday, June 27, 2017
Uber has become a charnel house

“The ferocity and velocity of attacks in this era of weaponized social media often leads companies to try to satisfy the blood lust with human sacrifice – in the form of resignations, terminations and compensation claw-backs.”

Read more in the Insurance Business America.

Wells Fargo: Regulators and Litigators Want Board Member Scalps

C. HUYGENS - Thursday, June 22, 2017
Regulators and litigators want board member scalps--Buffet may be outgunned. The reputation crisis at Wells Fargo now enters the regulatory phase, which by Steel City Re's metrics, is typically a very costly process.

"I urge you to exercise your legal authority to remove the holdover Wells Fargo Board members. Federal Reserve regulations and guidance impose clear risk-management obligations on the Board — obligations that are quite demanding for a bank as large and complex as Wells Fargo," Warren wrote. "The Board did nothing to stop rampant misconduct in the Community Bank that resulted in more than 5000 bank employees creating more than two million fake accounts over four years."

Read more in Business Insider.

Board Allowed Long-lasting Reputational Damage to Wells Fargo

C. HUYGENS - Wednesday, June 21, 2017
Senator Warren, writing to the Fed demanding the removal of all 12 directors of Wells Fargo…

…argues in the letter that the directors failed in their risk-management obligations, resulting in "massive financial losses" and "long-lasting reputational damage to the bank that has eroded the bank's customer base."

Read more in the Business Insider.

Another CEO Head, This Time Deservedly, Handed to God(s) of Reputation

C. HUYGENS - Wednesday, June 21, 2017
From the man who noted last week that Uber was suffering from a “reputational deficit”.

“There will be many pages in the history books devoted to [Travis Kalanick],” wrote Bill Gurley, an Uber board member representing one of the firms that demanded Mr Kalanick’s resignation, in a tweet. “Very few entrepreneurs have had such a lasting impact on the world.”

Read more in the Financial Times.

CEO’s Toxic Wake Creates Reputational Deficit

C. HUYGENS - Wednesday, June 14, 2017
As Uber’s board was wrestling with core governance issues arising from its sexist environment as detailed in a commissioned report, board member David Bonderman directed s sexist comment at board member Arianna Huffington.

Ms Huffington laughed awkwardly and said it would be his turn to talk soon. After the meeting, Mr Bonderman emailed Uber employees to apologise — and later announced he was resigning from the board.

“We are in a reputational deficit,” admitted board member Bill Gurley. “It is going to take us a while to get out of this.”

Read more in the Financial Times.

Why Boards Today Need Reputation Insurances

C. HUYGENS - Tuesday, May 16, 2017
Reputation insurance is an important part of any company’s risk management strategy, according to Dr Nir Kossovsky of Steel City Re

Directors are learning the hard way that they may personally be more vulnerable than the well-known corporate brands they oversee. Directors are being targeted and replaced, with 16 percent of board members at companies we studied having been replaced after reputational events.

On average, a corporate board member makes about $250,000 per year to sit on a board and usually serves on more than one. If a reputational attack leads to that board member stepping down—and potentially not being asked to serve on additional boards—it could represent significant lost personal income
.

Read more from Captive Insurance Times

VW’s Reputation Crisis Likely to End Badly

C. HUYGENS - Monday, December 14, 2015
Generally, stakeholders will ultimately forgive point failures like an errant supplier for Toyota, or even a London Whale for JPMorgan Chase. They will be less forgiving if the failure appears to be evidence of a systemic failure engineered by directors and officers. Until culpability is assessed, however, directors and officers by default will be pummeled in the court of public opinion.

To put hard numbers around the volatility associated with presumed culpability and ultimate assignment, read more at Risk & Insurance and see the chart below. To understand how directors who are unjustly being accused of ineptitude can protect themselves, click here.

Personal Reputation Risk Worth 32% Premium

C. HUYGENS - Friday, July 17, 2015
Personal risk to corporate directors is assumed to be covered by D&O liability insurance. Except that personal reputation isn't covered by D&O at all. Which is why Kathy Grant's story is so interesting.

Ms. Grant heads a cash-strapped Health Board in New Zealand. As its Commissioner, she is facing the need to make "extreme cuts" in benefits that will not be popular among the constituency. How extreme you may ask? So much so, explained a government spokesperson, that Ms. Grant's personal reputation is at risk.

Risk is not an impediment to progress if priced correctly. That's the logic, after all, in hazard duty pay. To bear personal reputation risk, the Health Board is paying Ms Grant a healthy 31.8% premium over the maximum customary rate of $1062 per day.

Read more.

D&O's Weakened DNA

C. HUYGENS - Wednesday, June 17, 2015
That ol' liability insurance just ain't what it used to be. Gone is the roar of certain protection. "D&O insurance today merely whispers relative to the noise of 21st century threats — especially from social media, regulatory scrutiny, and investor activism — to directors’ 'personal capital or their reputations.'”

And while these threats are at least discussed in corporate filings, disclosures do not have great signaling gravitas or impact, nor are they as robust and convincing as talking money.

Read More at Risk & Insurance.

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