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March 9, 2017 - Issue 3.10 - Your weekly news on all things board.
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Director's Domain: Today's perspective from the boardroom. Brought to you by Boardspan.
Women directors: Where are they? Financial services firm State Street wants to know. In an impressive display of shareholder activism, the world’s third largest investment firm with $2.47 trillion in assets is demanding that companies it invests in have at least one woman director. It promises a vote against the reelection of those board members responsible for nominating new members, should they fail to bring a woman on the board. Meanwhile the one female director at Uber, Arianna Huffington, is publicly defending CEO Travis Kalanick, as the company reels from a slew of scandals. And the institutional investors in Wells Fargo are considering withholding their votes from board members who might have moved faster to contain last year’s fake accounts scandal. Word to the wise: Shareholders are watching!

In the Spotlight


State Street Demands More Women on Boards

“Index-fund giant State Street Global Advisors on Tuesday will begin pushing big companies to put more women on their boards, initially demanding change at those firms without any female directors. The money manager, which is a unit of State Street Corp., says it will vote against board members charged with nominating new directors if they don't soon make strides at adding women…. The money manager plans to give most firms in the Russell 3000, U.K.'s FTSE 350 and Australia's S&P/ASX 300 about a year to enact changes before voting against the reelection of heads of committees that nominate new board members…. Mr. O'Hanley said the $2.47 trillion asset manager also wants the companies it owns to identify problems with their nominating procedures that may contribute to the dearth of female board members….Nearly a quarter of the companies in the Russell 3000 index lack a female director, while 58% of the companies in the index have less than 15% women on their boards, according to Institutional Shareholder Services.” WALL STREET JOURNAL

Across the Board

Curated news and insights from the world's boardrooms.


Uber CEO “Has the Board’s Confidence”

"Uber has weathered no fewer than five scandals in the last two weeks, including allegations of sexual harassment and developing secret software to outsmart local authorities. But it doesn’t look like CEO Travis Kalanick will relinquish the reins anytime soon.  ‘He definitely has my confidence, he has the board’s confidence,’ Arianna Huffington, a member of Uber’s board of directors, said last Friday at the YPO Edge conference in Vancouver." YAHOO
 

Wells Fargo Board Faces Investor Rebellion

“Wells Fargo is working to stave off an investor rebellion as top institutional shareholders put pressure on the US bank for further boardroom changes in the wake of the sham accounts scandal. Stephen Sanger, chairman, was on Thursday due to hold talks with representatives from the voting advisory firm ISS, as investors consider whether to protest over the re-election of a number of board committee chairs. Several investors told the Financial Times that the board had been too slow to respond to the scandal that erupted six months ago, and that questions remained over whether longstanding directors had failed in their oversight duties.” FINANCIAL TIMES
 

Yahoo CFO Joins Boards of 2 Pre-IPO Companies

“Zuora Inc., which provides software for companies to run subscription-based businesses, aims to be a critical provider for companies that are increasingly shifting into service businesses. The company, which has raised about $250 million in venture funding at a valuation close to $1 billion, is targeting incumbent enterprise software companies such as Oracle and SAP. Now Zuora has brought on Yahoo Inc. Chief Financial Officer Ken Goldman as an independent board director. The arrival of Mr. Goldman, a seasoned executive at public companies, is another sign of Zuora’s own interest in an initial public offering… He is also sharing his services with another startup as Yahoo nears completion of its acquisition by Verizon Communications Inc. Mr. Goldman, saying he plans to move on after the merger, is also joining the board of Zerto Ltd., a company that provides disaster recovery services for data in the cloud." WALL STREET JOURNAL


LA Lakers Boardroom Drama Gives New Meaning to "Courtside"

“The behind-the-scenes struggle for control of the Lakers spilled into public view in a sixth-floor room in Los Angeles County Superior Court on Friday, with a thick stack of documents in which Jeanie Buss sought a restraining order against her brothers Jim and Johnny. In the latest chapter of a tumultuous season, Jeanie Buss appeared to thwart an effort by Jim and Johnny that could oust her as the Lakers’ president and controlling owner…. According to court documents, Johnny Buss notified his sister of a March 7 meeting to elect the team’s board of directors. He is listed as overseeing corporate development of the Lakers. The brothers proposed four directors, according to court records, but didn’t include her. In order to be the controlling owner, she also must be a director.” LOS ANGELES TIMES
 

CSX Gets New CEO and Directors, Plus a Big Bill

“Hunter Harrison is passing Go and he wants his $84 million. The lauded railroad turnaround specialist was officially installed as CEO of CSX Corp. late Monday as the company acquiesced to most of the demands of the activist investor backing his candidacy. In an interview with the Wall Street Journal last month, Harrison had lamented an earlier breakdown in negotiations over compensation and board seat disagreements as ‘chest pounding,’ calling for the two sides to stop going ‘through these games which create nothing but further anxiety for the shareholders.’ Yeah, about that….” BLOOMBERG
 

Caterpillar’s New Chairman: Not the CEO

“Caterpillar is about to get something it has needed for a long time … a chairman who doesn't also serve as CEO. When Chairman Doug Oberhelman retires on March 31, the title won't pass to Jim Umpleby, who succeeded Oberhelman as CEO on Jan. 1. Instead, outside director David Calhoun will become chairman. Caterpillar joins a growing number of big public companies that have separated the two roles. According to a 2016 study by Spencer Stuart, nearly half the companies in the Standard & Poor's 500 Index divide the titles, up from less than one-quarter 15 years ago. More importantly, an independent chairman positions Caterpillar's board to oversee Umpleby more effectively than it monitored Oberhelman, whose disastrous expansion campaign left the company badly exposed to steep cyclical downturns in its key markets.” CRAIN’S CHICAGO BUSINESS
 

Poor Governance Plagues Epi-Pen Maker

“Executives highlighted better-than-expected fourth-quarter earnings and a revenue stream that derives at least half of its sales from outside of the U.S. at Mylan's investor day. Shares responded in kind, rising 7% Wednesday. Mylan's new CFO, Ken Parks, even made promises to investors that the company would be more transparent, noting that Mylan is ‘trying to give better visibility’ to what the company is doing. But no amount of happy talk by company officials about improved performance and transparency may overcome its poor governance...” THE STREET
 

Are Boards Doing Their Job on CEO Pay?

“The compensation packages of the chief executive officers of America have been rising faster than just about any rational metric upon which they are supposedly based. ‘CEO pay grew an astounding 943% over the past 37 years,’ according to a recent Economic Policy Institute analysis. EPI further observes this was a far faster growth rate than ‘the cost of living, the productivity of the economy, and the stock market.’ …You can place much of the blame on compensation consultants and the corporate boards that hire them. Boards are supposed to act on behalf of shareholders when they are considering the pay packages created by the former. But the relationships are riddled with conflicts that produced the charade we have today.” BLOOMBERG
 

Board Self-Evaluations: Can We Do Better?

"The New York Stock Exchange requires that the boards of all publicly traded corporations conduct a self-evaluation at least annually to determine whether they are functioning effectively. The purpose of the exercise is to ensure that boards are staffed and led appropriately, that board members are effective in fulfilling their obligations, and that reliable processes are in place to satisfy important oversight requirements. Our research suggests that many board evaluations are inadequate. In a study of 187 boards we undertook with The Miles Group, a consulting and advisory firm, we found that most board evaluations fail to identify and correct poor performance among individual members. Only around half (55%) of companies that conduct board evaluations evaluate individual directors, and only around one-third (36%) believe their company does a very good job of accurately assessing the performance of individual directors." HARVARD BUSINESS REVIEW


From the Boardspan Archives

In the Boardroom, the Same is a Shame

The spring of 2016 brought another round of reports on the pale state of the U.S. boardroom. It remains a whiter shade of pale, predominantly male. In its annual review of corporate board appointments, the executive search firm Heidrick & Struggles International Inc. labels the latest crop of Fortune 500 directors 'the usual suspects,' noting 'stalled progress for women appointees' and 'generally flat numbers for directors of Hispanic, African, and Asian descent.' The problem of a lack of diversity in corporate leadership is not just an American one, either. In 2015, the percentage of new female CEOs at the world’s top 2,500 companies was at its lowest since 2011 — a measly 2.8%, notes PwC’s Strategy& in its latest CEO Success Study. There is no doubt that the forces of sexism and racism are alive and well in the upper echelons of the corporate world. But there’s more going on here than that...." MIT SLOAN MANAGEMENT REVIEW via BOARDSPAN

 Seat at the Table

  • Linkedin CMO and SVP of corporate communications Shannon Stubo joins the board of Vidyard, a video platform company focused on business marketing
  • Canadian communications company BCE nominates to its board Karen Sheriff, former president and CEO of Canadian telecom company Bell Aliant
  • Business intelligence firm CoreLogic names Frank Martell president, CEO, and director following the death last week of its president and CEO Anand Nallathambi; Martell was previously CFO, then COO of the firm
  • Biopharmaceutical firm Genocea Biosciences welcomes to its board Howard Mayer, M.D., SVP and head of global clinical development at pharmaceutical company Shire
  • Transportation and construction engineering firm Arconic appoints to its board David P. Hess, former EVP and chief customer officer of aerospace at United Technologies Corporation
  • W. Roy Dunbar, former chairman and CEO of web service provider Network Solutions, joins the board of wholesale landscape, irrigation, and outdoor lighting supplier SiteOne Landscape Supply
  • Retailer J. C. Penney elects to its board cybersecurity expert Debora Plunkett, former senior advisor to the director of the U.S. National Security Agency (NSA)
  • James A. Lovell, U.S. Navy (retired), who commanded the Apollo 13 manned moon mission, joins the board of the National Museum of the American Sailor Foundation, which is working to create the only museum dedicated exclusively to the enlisted sailor
  • Bioverativ, a biotech company focused on treating hemophilia, appoints to its board Anna Protopapas, president, CEO and a director of Mersana Therapeutics, a biotech firm focused on immunotherapy to treat cancer
  • Real estate investment trust City Office REIT appoints to its board John W. Sweet, founder and former chief investment officer of Physicians Realty Trust
  • Lisa R. Jacobs, a partner at global business law firm DLA Piper, joins the board of Republic First Bancorp
  • Coal company Peabody Energy announces a new board of 8 men and 1 woman to oversee the company as it emergences from bankruptcy: Glenn Kellow, president and CEO of Peabody Energy; Nicholas Chirekos, former North America head of mining at J.P. Morgan; Stephen Gorman, president and CEO of Borden Dairy Company and former COO of Delta Air Lines; Joe Laymon, VP of HR and corporate services for Chevron Corporation; Teresa Madden, former EVP and CFO of Xcel Energy, Inc.; Robert Malone, former chairman and president of BP America; Kenneth Moore, former managing director of First Reserve Corporation; Michael Sutherlin, former president and CEO of Joy Global; and Shaun Usmar, CEO of Triple Flag Mining Finance
  • Pharmaecutical company Recro Pharma appoints to its board Bryan Reasons, SVP and CFO of Impax Laboratories
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