We have stated and written on a number of occasions that Corporate Governance – the “G” in “ESG” – is far and away the most important element of that acronym.

Weak corporate Boards fail to hold management teams accountable. Sometimes Boards are weak because members don’t know the company they serve well and are therefore unqualified to hold management teams accountable. Another example includes Board members who are not there to hold management teams accountable, but rather to rubber stamp CEO initiatives and collect a check. These Boards are often comprised of friends of the CEO. This appears to have been the case at Activision (tkr: ATVI), whose stock is suffering the fallout from a Boys Club type of corporate culture. Our bet is ATVI CEO Bobby Kotick will step down soon, perhaps on Monday. The ATVI example feels similar to Under Armour (tkr: UAA) and Nike (tkr: NKE) in recent years. Both companies have new CEOs. Our bet is that Unity Software (tkr: U) could suffer a similar fate given its culture under CEO John Riccitiello.

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