Anyones Game: A Contested Election
By Maureen Milford

Of the potential results in November, a close election raises a significant wild card for boards of directors.

There has been some concern expressed that President Donald Trump may not concede if he loses to his challenger Joe Biden in a close election if he can raise claims about the legitimacy of the results.

“Very close elections always put the electoral system under stress,” most recently in the 2000 election of George W. Bush versus Al Gore, says Richard Hasen in his book Election Meltdown. “Bush v. Gore happened before the rise of social media and Trumpism. Since then, stress on the system has increased dramatically.”

Corporate boards might want to prepare for the potential of drawn-out litigation, which could hinder corporate planning and risk mitigation because of uncertainty as to which administration will lead the country.

“I do think there is a chance of a protracted litigation struggle if the election is very close in a state that matters to the electoral college outcome,” says Hasen, who is a professor of law and political science at the University of California, Irvine.

“Particularly if there is a divergence between in-person and absentee balloting results in a swing state like Pennsylvania that will report most of its in-person voting first, there’s a risk of instability,” should Trump raise claims of voter fraud, he says. “It is going to take a lot of attention to the procedures used for ensuring a safe and legitimate election to avoid such a contest leading to some political instability in the United States.”

Since the two candidates are certain to have very different policy platforms as president — which could impact technology, gig-economy and fossil fuel industries, to name a few — such a contest over election results could leave boards of directors in a no man’s land.

“We see how Facebook seems to have positioned itself in ways to be friendly to a Republican administration, and now is trying to shift gears in case the Democrats gain power,” says Ann Lipton, an associate professor of business law and entrepreneurship at Tulane University Law School. “That’s very difficult to navigate, especially now.”

In terms of operations, Facebook, Twitter and YouTube are preparing how they will react if Trump questions the election’s validity, according to The New York Times.

Adding to the unpredictability brew, Trump has been vociferous about his objections to universal mail-in voting. An NBC/Wall Street Journal poll in August found that voters are much less confident than they were four years ago that the election results will be accurately counted. The poll found that 45% of voters are not confident about the ballot count, compared with 34% who reported that sentiment during the 2016 election.

What’s more, The New York Times reported in early August that Russia continues to meddle in the election to get Trump re-elected. China, meanwhile, is considering whether to take more aggressive steps to send Trump packing, the Times reports.

Nonetheless, there are reports that the Trump administration is working on a transition plan should Biden be the winner in November, according to Business Insider.

“They seem to be taking implementation of the law very seriously,” David Marchick, director of the Center for Presidential Transition at the Partnership for Public Service, a good-government advocacy group, said to Business Insider.

Kurt Landgraf, former CEO of DuPont Merck Pharmaceutical Co. in Wilmington, Del., and current board member for Corning Inc. and Louisiana-Pacific Corporation, says he does not believe corporations are making specific preparations for a contested election. “I think they are more concerned with deterioration of relations with China if Trump does not get defeated.”

Michael Montelongo, president and CEO of GRC Advisory Services LLC, and a director of Herbalife Nutrition Ltd. and Conduent Inc., says boards are less concerned with a specific event, such as a contested election, than they are with “preparing and bracing for increased civic contentiousness.”

“It’s likely boards and management teams are factoring the election and its results into their risk management/risk opportunity processes and executing ‘what if’ scenarios,” Montelongo says.

“In doing so, they will be organized, trained and ready to pounce on an opportunity or mitigate the impact of an adverse consequence no matter who the nation elects to office.”

Deborah Ellinger sits on the boards of iRobot and Covetrus and is a senior adviser for Boston Consulting Group. She is a former president/CEO of private equity-owned companies.

2020 Third Quarter

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