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The Corporate Director Podcast
CEO safety and the role of the board
00:26:08
In this episode of The Corporate Director Podcast, we sit down with Mike Meyer, Principal at Meridian Compensation Partners. He discusses the growing importance of CEO security. The conversation delves into recent incidents, the factors that make...
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- [00:00]
Megan Day
Foreign.
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Podcast Host/Announcer
Welcome to the Corporate Director Podcast where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech fueled world. Here you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance strategy, board culture, risk management, digital transformation and more.
- [00:34]
Dottie Schindlinger
Hi everybody and welcome back to the Corporate Director Podcast, the voice of modern governance. My name is Dottie Schindlinger, Executive director of the Diligent Institute, and I'm joined once again by my co host Megan Day, strategy leader here at Diligent. Megan, how are you doing today?
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Megan Day
Hey, Dottie. Hanging in there in the New York City office here in beautiful spring, New York City.
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Dottie Schindlinger
Well, speaking of spring, I don't know if you're having the same thing that I'm having. My, my allergies are going crazy. The pollen is completely off the charts and I just, I just feel like I'm dragging today.
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Megan Day
Like it is just bad. The, the pollen count is high. That's what keeping is, is keeping Dottie up at night. And I'm going to make a terrible segue right now into talking about our latest Diligent Institute report on what, what keeps general counsels up at night. How'd you like that?
- [01:26]
Dottie Schindlinger
That was great. Well, yeah, you know, it's interesting, Megan, we haven't had a chance to talk about this one, but this year Diligent Institute has added to its director confidence index, a pulse check survey of general counsels. We've been interested to really kind of understand what are some of the things on their radar and in particular get their feel for different areas of risk. So this was our very first report. We'll be doing this once a quarter and it was really interesting. One of the things we asked was about board and GC alignment. So where are general counsel spending time in the boardroom providing advice and counsel to the board. And surprisingly, some of the areas that we thought, well, for sure, they're spending time in the boardroom talking about cyber and AI and about, you know, things like enterprise risk management. Turns out not a lot of boards are leaning on their GCs for this. I don't know what to make of this, Megan, but it was really kind of interesting to see those results.
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Megan Day
It's super interesting to me and maybe I'm a little biased. Just these are the conversations we are having here at Diligent and with our customers. So these issues are very much at the forefront for us. But 60% of directors said that their general counsel provides minimal to no support to the board in its oversight of AI that to me, I don't know, maybe coming off the heels of diligence AI summit this week, that seems kind of wild to me.
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Dottie Schindlinger
Yeah, I agreed. I mean, that just seemed kind of shocking to me. I would imagine if we run this again, we're going to get a very different result, I mean, as things continue on. And maybe it's because a lot of directors are thinking, well, you know, there's not a ton of regulation around AI yet, which would be a fair statement. And so we mostly lean on our GC to come in and advise us on what's happening on the regulatory front. But honestly, there's so much more to it than that. There are so many things you need to think about related to privacy and intellectual property and ethics. I mean, there's just a lot baked into how we use AI in our companies. I agree with you, Megan. That one really, really surprised me. Go ahead.
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Megan Day
I was just going to say for the, for the go getter gcs, if you will. I mean, we talk a lot to our customers about how they can be a strategic advantage for their board, that they can lean in and support in ways that are not necessarily unexpected by the directors. But the GC can offer so much more to them and this AI in particular. Some of the other topics that were discussed in this survey, I think are great opportunities for a GC who is eager to deepen their relationship with their board to become a strategic asset for them to lean in and support in these areas.
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Dottie Schindlinger
Well, Megan, in an attempt to make a terrible segue, one other area that you could spend some time talking to your general counsels about is the area of security for your top executives. We had the opportunity to sit down with Mike Meyer from Meridian Compensation Partners for this interview to talk about what's happening in the area of CEO security. It's a big topic around board tables right now. Obviously we had the murder of the CEO of UnitedHealthcare last year that made big news. But you know, quite honestly, the cost and sort of intensity around CEO security has been rising for many, many years. And I don't know, Megan, if you saw, there was an article just the other day about the amount that Google, for example, spends on security for their CEO. The amount that they disclosed spending last year nearly rivaled his salary. This is a big area of concern, I think, for a lot of executives and for a lot of boards. And it was good to have a chance to get a little bit of a reality check from Mike Meyer.
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Megan Day
Yeah, interesting topic. Let's give it a Listen.
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Dottie Schindlinger
Joining us on the corporate director podcast today is Mike Meyer, principal at Meridian Compensation Partners. Mike, thanks so much for joining us on the show.
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Mike Meyer
Thanks, Dottie.
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Dottie Schindlinger
So why don't we start off by telling everybody a little bit more about your role at Meridian beyond being a principal. So what do you do there?
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Mike Meyer
Yeah, happy to. Thanks, Daddy. So Meridian itself is an executive compensation consulting firm. And we really have one mission. Our mission is to help corporate board members make informed business decisions, especially when it comes to topics related to compensation. So, as in my role as a principal, I advise clients on competitive executive pay levels, program designs, trends that we're seeing in the industry and in the space, which is what I'll touch on today, and related governance topics as well. And so these clients that I service range in size from large to small, private companies, some Fortune 200 companies, and I really service industries across a very broad range. I have clients in industrial products, technology, healthcare, professional services, food products, just to name a few, but really consider myself a generalist across. Across the space.
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Dottie Schindlinger
Well, you mentioned that you also serve in healthcare, and that is a really good segue to talk about. The topic we're gonna dig into today. We wanted to talk with you a little bit about the issue of CEO security. I mean, obviously at the start of the year, there was the pretty horrifying murder that took place of healthcare CEO. But before that and after that, I think the topic of CEO security has really become a hot topic for a lot of CEOs and for boards. So let's talk a little bit about what's happening for top leaders of organizations and why is security such a hot topic?
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Mike Meyer
Right, right. And d to your point, CEO security has always been on board agendas in some way, shape or form, but it's really been brought to the forefront. And just about every one of my boards is talking about it in 2025. And the. The main reason is one you already mentioned, which is the murder of the United Healthcare CEO Brian Thompson. But beyond that, there's been other incidents related to corporate executives and their security. Another one, just to mention, would be suspected arson of the home of an executive of a Bayer pharmaceutical executive. So you're starting to see a trend here in what types of companies might be targeted. But the fact that corporate executives are actually being sought out and targeted with some of these horrific crimes is. Is a reason why this has really been brought to the forefront of board agendas.
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Dottie Schindlinger
So, I mean, in addition to just crimes being committed against CEOs, there's also sort of CEOs becoming more public Personas. Right. So they're being targeted in social media as well. Let's talk a little bit about CEO security. Are there some particular companies that are the most susceptible and what makes them the most susceptible?
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Mike Meyer
There certainly are, and we touched on both topics briefly. But I really bucket the most susceptible companies into two categories. The first you just mentioned would be the size of the company, the profile of the company. I mean, many of these CEOs are becoming household names, which, which was not necessarily the truth 10 or 15 years ago. So if you're a very large US public company with a very high profile, very media forward in the us that would be a type of company that would be very susceptible to executive security risks. The other we touched on before as well would be the industry that you're in, not only what your product and services are, but how, what your customer base looks like. Are you susceptible to scrutiny to disgruntled customers? And that we've really seen show through in some of the incidents we discussed before. So those types of companies would be healthcare, insurance, pharmaceuticals, even law firms that might have a customer base that could become disgruntled.
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Dottie Schindlinger
Let's talk a little bit about the board specific role here. Because of course I think there's something that happens through the HR team and through the security security team. But what are some of the steps that the board should take to review CEO security? How can they get their finger on the pulse of what's going on there?
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Mike Meyer
Yeah, and Dottie, the, the first step, you'd think you'd want to jump right in and create some sort of program or policy. But boards are really, really taking this slow and going through the correct process steps. And the first process step that many boards are taking is communicating amongst the board members and the management members to say what are the perceived risks we face from a security perspective and should we hire a third party independent advisor to do a risk review of our executive security? And so many boards are doing that, bringing in a third party. This is occurring at the full board level before it gets delegated to any sort of committees. And they're doing a 360 degree security assessment to identify where gaps might exist. And then from there we can talk about some of the potential solutions, some of the gaps that have been identified and what I'm seeing in terms of programs and policies being put in place.
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Dottie Schindlinger
So let's say that the board does this review, they do this 360 review and they identify, yeah, it looks like our CEO is at some potential risk. What are Some of the specific things they should do right away, you know, kind of what are the first three steps, for example, that they should take?
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Mike Meyer
Right. And many boards, once they identify these gaps, are looking to delegate this to a committee to address very quickly. And what we're finding is that most of the solutions, this shouldn't be a surprise, require some sort of monetary investment by the company to ensure the security of the executives, because there's a monetary investment involved and we can speak to this a little bit later, but this starts to mold into a compensation related item. It becomes a taxable benefit to the CEO or to the executive. And therefore many of these conversations are being held at the compensation level, committee level. That committee is, is the one that Meridian works with most closely. And the, the types of monetary items we're seeing come to the forefront are items that have already existed. But the policies and, and procedures that might be put in place are somewhat of an enhancement to what we, we've seen in the past. These types of benefits or, or monetary investments include things like personal use of the corporate aircraft to ensure safe air travel for the CEO. It could be a chauffeur or a driver driving the CEO from their commute to work. And then the last bucket or category that we're seeing, a lot of it would be implementing a home security system or enhancing the home security system of our executives.
- [11:51]
Dottie Schindlinger
I would imagine one of the questions boards are going to start to ask themselves is, you know, what is this going to cost? So especially if they're on the compensation committee and they're going to want to think about that as a part of the overall compensation package. So what are some of the things that they need to keep in mind? My guess would be it could cost anything you want.
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Mike Meyer
Right?
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Dottie Schindlinger
It could be as simple as you want and as grandiose as you want. So what should they keep in mind?
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Mike Meyer
That's exactly right. The range is so wide. The categories that I listed off, I listed them purposefully and in the order of magnitude with the corporate aircraft being the most unpredictable and potentially the largest benefit to the executive. When I say benefit, you know, most people don't view this as a perquisite or as a, as a business expense. But based on current SEC disclosure requirements, this is a taxable benefit. It does appear in the all other compensation section of the summary compensation table. So it's very publicly forward. It does get included in the total pay of the executive. And so boards do certainly want to understand the cost and manage the cost when it's most appropriate. The first Thing boards should consider is what is the incremental cost? This is something that management is, is, is capable of modeling out for the board. But what was a, a bit of a surprise as I started with many of these discussions in the boardroom was there could be mechanisms already in existence. For example, if the, if the company already employs a personal driver and that driver now allocates a portion of their time to driving the CEO, the only compensation expense applicable to the CEO is the incremental portion of that individual's salary that is attributable to driving the CEO. So although some of these benefits may be enhanced or new, we're really looking for that incremental, incremental cost. So some of the data that, that we're bringing committees is a bit outdated. I'll cite some of it here, but I'll tell you where it's trending. So for specifically for use of the corporate aircraft, this is personal use of the corporate aircraft. Obviously, all business use is considered a business expense. We Meridian conducted a survey in 2024 of S&P 500 companies, and we found that of the companies that allow for personal use of the corporate aircraft, about half of them set limitations on the use and the cost of that personal use. And so if we're looking at the median of the S&P 500, that limitation was about 60 hours per year that the CEO could use for personal use, or about $200,000. Now, what, what I'm hearing in the boardroom in 2025, we fully expect those limits to either grow significantly, double or triple, or even be eliminated completely. Many of the conversations specifically with those most susceptible companies that I mentioned before, are to actually require or mandate the CEO to use the corporate aircraft for all travel. So you can see how these former historical dollar limits could increase pretty dramatically in the coming year.
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Dottie Schindlinger
I'm curious to ask you. You know, we've been talking a lot about physical security, right? And sort of how do we make sure to protect the physical person of the CEO? But, you know, it occurs to me there's a lot of risk and a lot of threat that comes online, right? That comes through social, that comes through email, that comes, you know, in, in different channels that can cause some, some other kinds of harm. Are there things that boards should be thinking about other than physical security for their CEOs, and what would you recommend that they do there?
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Mike Meyer
So it's interesting, there's a lot of additional risks. You talked about cybersecurity. Another one that that comes to mind is artificial intelligence. And the risk that poses in the coming years, board purview is expanding dramatically. Some of it within my realm of the compensation committee that that's more focused around human capital type topics and succession planning. But special committees are being formed on boards for cybersecurity risks. So beyond physical security, there's actually efforts and committees being set forth to address those other types of security risks as well.
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Dottie Schindlinger
Right. I mean, you know, as you mentioned, AI, for example, you know, there's the risk of deep fakes and that being used to launch some type of attack, faking the person of the CEO doing something. Right. It occurs to me too though, you know, boards can look at that both ways. Right. They can monitor those kinds of tools for risk, but they could also potentially deploy those kinds of tools to help mitigate risk as well. Do you have any sort of just best and final thoughts for our audience? Knowing, you know, we got a lot of board members that listen to this show, so any sort of things that you would add to their checklist to keep an eye on?
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Mike Meyer
Yeah, just really, really thinking through the process again. I mean most companies have already kicked off these types of 360 degree risk reviews. But not taking this too fast, not jumping to conclusions, using your advisors appropriately to first understand if gaps exist, both perceived and actual, and then understanding what solutions exist and what the cost of those solutions might be. So really just going through the process, realizing this is a very sensitive topic and we want to act quickly, but knowing that there's several process steps, both at the board level and at the committee level.
- [17:04]
Dottie Schindlinger
Well, Mike, before we let you go, there are three questions that we like to ask every guest that joins us on the show. So the first question is, what do you think will be the biggest difference between boardrooms today and 10 years from now?
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Mike Meyer
Yeah, there's a couple things that so I've been advising for over 10 years. And so I've already seen some of these evolutions and trends of how the board has changed over the past 10 years. And I think some of those will simply continue and grow in magnitude. So a couple that come to mind. The first we touched on briefly is the expansion of responsibilities. The board was, was very much allocated into an audit committee and a compensation committee. Those committees are changing. Compensation committees are becoming human capital committees and we're really getting ingrained into the succession planning and the culture of the company itself. And so this is adding time and responsibilities to directors plates and I foresee that continuing even further over the next 10 years. The second trend I'm really Seeing this is an outcome of AI, it's an outcome of data availability is the sophistication of performance goal setting. This used to be very much a internal budgeting process where the CFO would come forward once a year and say, this is how we expect to perform over the next year, two or three years. We're really bringing more reference points to the table because of data availability. We're looking at analyst expectations, we're looking at relative performance versus peer companies sharing ratios, and it's really necessary nowadays. And over the next five or 10 years, because of some of this economic uncertainty, where we're becoming more sophisticated, we're creating asymmetrical ranges, we're not sticking to a standard anymore when it comes to performance goal setting. So I think that trend will further as well.
- [18:49]
Dottie Schindlinger
Those are both really, really great points. What was the last thing that you read or watched or listened to that made you think about governance in a new light?
- [18:59]
Mike Meyer
Yeah, it's interesting, Dottie, because we touched on it before. A lot of the articles that I'm reading, Wall Street Journal nowadays are related to the impact of artificial intelligence and how boards might oversee that. We talked about the different committees that they might set up to help oversee this use of AI within the company. But I think the other spin on this is they're going to want to understand what the potential consequences are if they don't effectively manage the use of AI and how they might have to engage with shareholders and what some of those risks look like. And so, again, just realizing that management teams, consultants, board members are all getting up to speed on the use of AI. At the same time, it's becoming critically important for board members to, to understand how AI impacts their business and the potential risks for their business.
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Dottie Schindlinger
I want to. Plus one, everything you just said. And, and finally, Mike, what is your current passion project?
- [19:56]
Mike Meyer
Yeah, on.
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Dottie Schindlinger
On.
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Mike Meyer
On more of a. A personal standpoint. My current passion is, is world travel. So my, my wife and I, you know, try to get to a couple countries a year, not only just to explore the country, but to kind of immerse ourselves in the culture. And so we do a lot of, a lot of hiking, we stay with local residents, we eat their local food. And I think it, it really helps both obviously personally from, from a hobby standpoint, but professionally, because I, I get to see all these different perspectives of folks that have very different walks of life than I do, and I think that that helps me in the boardroom bring different perspectives to the table. So next on the list for me is Hopefully a hiking trip in Patagonia in Chilean Argentina.
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Dottie Schindlinger
Oh, amazing. That sounds incredible. Wow. Well, Mike, I want to thank you so much for joining us on the show, giving us a lot of great perspective today on CEO security. Thanks for being our guest.
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Mike Meyer
Yeah, I really appreciate it, Dottie. Thank you.
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Dottie Schindlinger
We've been joined today by Mike Meyer, principal at Meridian Compensation Partners. Mike, thanks so much for joining us.
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Megan Day
Great topic, Dottie. Really interesting to get this perspective and honestly not something that I have paid much attention to or would think about being, you know, a key area for the board and senior leadership teams to really think through.
- [21:18]
Dottie Schindlinger
Well, you know, it is interesting, Megan, because he brings up the point that you do need to think about this as part of the overall compensation package, but these things are all very, very, very dependent on the type of company that you're on, Right? So for some CEOs, physical security is not that much of a deal, but certainly cybersecurity is always going to be a deal. And CEOs are always targets, right? For attacks, for phishing attacks, especially spear phishing attacks are always targets. So thinking about that, no matter what size company you're in, is, I think, a smart idea. But truthfully, things for CEOs in the age of social media have just really changed. A lot of CEOs have become big, outsized public Personas, both on social media and in the press, and that makes them a target, you know, and then that is something you really have to think about as a board looking at that as an area of risk. Not just protecting the individual person, but protecting the interests of the company by making sure that that top executive position, you know, doesn't have a big red target on its back. And it was interesting to talk to him about that and really understand, you know, the amount that you might spend on that. Obviously, it's going to be very, very dependent. But he brought up the example of, you know, allowing the CEO to use the. The company's plane if it has a jet, for example, for private travel, and how that might seem like a weird, A weird thing to include under security. He said, unless the person's a very public Persona that is under threat, in which case you have to protect them on their off hours, too. And I hadn't really ever thought about that, but it was just an interesting thing to. It's just an interesting thing to kind of contemplate that. Yeah, I mean, it's not like their security increases the minute they go off work for the day. Probably the opposite, you know, so it's kind of Fascinating. I also was interested to hear from him about, you know, just his thoughts about how boards are changing in general. I mean, I think a lot of people have come on the show and we've all talked about the expansion of responsibilities, but he also had just an interesting note that he really sees a change in performance goal setting. Right. That it used to be kind of all tied to internal budget processes, but now, you know, especially with AI, boards have to think differently about how they're measuring performance and really looking at a lot of different reference points and looking at things like how are we weathering economic uncertainty or how are we, you know, how are we doing vis a vis our competitors on AI innovation? And, you know, just a lot of different areas that you can measure now as you think about performance. And so taking the time as a board to really be thoughtful around performance goal setting and giving that guidance to management. I think he's right. I think that's going to continue to become a bigger and bigger part of the board's job. And I just thought that was interesting. No one's really brought that up before, and I wondered what you thought about that, Megan.
- [24:02]
Megan Day
It's really interesting and I think. So top of mind for me now, in light of, and we didn't talk about this or haven't recently on the show, is the rise in activism that we're seeing. And this proxy season and compensation is always sort of at the front and center of that. So how do you meaningfully measure performance and then compensate accordingly? I think, you know, as you talked about, will get trickier and trickier.
- [24:29]
Dottie Schindlinger
Yeah, well, you brought that up, Megan. You know, fair, fair warning to directors. If you haven't seen the news, there were more director seats turned over during this proxy season than ever before. So that's a, you know, there's. It's a very active cycle. There's not maybe as many attempts happening, but they're much more successful. Yeah. Keep. Keep an eye on this space, as they say. Well, Megan, I think that wraps up another episode of the corporate director podcast. What do you think?
- [24:55]
Megan Day
I think so.
- [24:57]
Dottie Schindlinger
Thank you so much. We'd like to say a few special thank yous, first and foremost to our CEO, security expert Mike Meyer from Meridian Compensation Partners, podcast producers Kira Ciccarelli, Steven Steve Clayton and Laura Klein, our sponsors of the show, PwC, KPMG, Wilson Sonsini and Meridian Compensation Partners. And most especially, thank you to Diligent for continuing to let us do this show. If you like our show, please be sure to give us a rating on your Podcast player of choice five stars only, please. You can also listen to our episodes and see more from Diligent Institute by going to diligent.com resources thank you so much for listening.
- [25:33]
Podcast Host/Announcer
You've been listening to the Corporate Director Podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about corporate governance and tools to help directors do their job better, visit www.digent.com. thank you so much for listening. Until next time.