October 29, 2015 - Issue 7 - Your weekly news on all things board.
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Director's Domain: News & views for today's boardroom. Brought to you by Boardspan.

While a great board member is priceless, director pay is raising eyebrows this week: Mark Zuckerberg faces a lawsuit for allegedly overcompensating the Facebook board and USC Athletic Director Pat Haden comes under scrutiny for taking home nearly a half million dollars in annual compensation from the dozen boards he sits on. Meanwhile activist investor Carl Icahn places AIG in his crosshairs and demands the company be split in three. And women cybersecurity experts are making big gains in the boardroom, snapping up 10 of 16 seats at large corporations that have recently added directors to bolster their boards’ security expertise.

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The Hot Seat


Zuckerberg's Generosity Apparently Knows No Bounds

“Facebook Inc.’s board and Chairman Mark Zuckerberg must face an investor’s claims that the world’s largest social network is wasting funds by allowing directors to set their own pay. Lawyers for Facebook weren’t able to show that the current system produced fair pay packages for directors or that Zuckerberg had properly ratified the compensation decisions, a Delaware judge ruled Wednesday…. In 2013, Facebook’s board paid non-employee directors an average of $461,000 in stock, exceeding industry peers by as much as 43 percent.” BLOOMBERG BUSINESS

Across the Board

Curated news and insights from the world's boardrooms.

This Week's Activist Slogan: "AIG! Divide It into Three!"

"Activist investor Carl Icahn said he has accumulated a ‘large stake’ in American International Group Inc. and called for the insurer to split into three public companies.… In taking on AIG, Carl Icahn is picking a fight with a board that already has two activist-friendly directors on it. Robert ‘Steve’ Miller, who had been chairman until this year, was nominated last year by Dan Loeb’s Third Point to the board of Dow Chemical amid a fight there. Meanwhile, Henry Miller was appointed to the board of Interpublic Group after being put forward by activist Elliott Management.” WALL STREET JOURNAL (paywall)

How Can You Get a Board Seat? Ask USC’s Pat Haden—He Has 12

“For USC Athletic Director Pat Haden, the demands of the job lately have seemed unending. He fired head football coach Steve Sarkisian last week, huddled with top school officials and team members and met with reporters to explain his actions, all before flying to South Bend, Ind., for the Trojans' nationally televised game against Notre Dame. ‘You can't work any more at this job than I do,’ Haden said. But he also juggles extensive obligations outside USC as a member of more than a dozen corporate and nonprofit boards, side work that pays him at least a half-million dollars a year (including stock options and share awards).... Sandra Miniutti, vice president of the nonprofit watchdog group Charity Navigator, said Haden might have taken on too many foundation assignments, given his USC and corporate roles. 'It would be hard to see how you could be an effective board member for so many different organizations,' she said." LOS ANGELES TIMES 

Cybersecurity in the Boardroom: It’s a Girl Thing

“Earlier this year, American International Group Inc. added Linda Mills to its board, attracted partly by her expertise in cybersecurity. In February, Wells Fargo & Co. selected Suzanne Vautrinot for its board for similar reasons. Before that, Walgreens Boots Alliance Inc. picked Janice Babiak. All directors, all focused on cybersecurity, all women. Over the last five years, as data theft has risen to the top of corporate concerns, 16 of the largest U.S. companies have appointed one or more directors with cybersecurity credentials, 10 of them women, a Bloomberg analysis shows.” BLOOMBERG BUSINESS

When in Trouble, Bolster the Board

“Mason Morfit, a partner at activist hedge fund ValueAct Capital, is rejoining the board of directors of embattled specialty drugmaker Valeant Pharmaceuticals as the Quebec-based company defends itself against allegations of accounting impropriety and aggressive conduct when selling prescriptions…. Morfit had been a Valeant board director from May 2007 to May 2014. During that time Valeant shares surged over 400% …. Currently, Valeant is on the defensive as investors try to better understand the company’s relationship with specialty pharmacies it consolidates into its finances, but that hadn’t been disclosed to investors until recently.” FORBES

How to Get Ahead of Activists With Shareholder Access

“State Street will now allow large, long-term shareholders to nominate candidates for its board of directors, a move that risks inviting trouble from activist investors but may deflect throwing attention on its struggling share price over the short term…. State Street appears to be taking a proactive strategy in dealing with the increasingly popular phenomenon. It was not forced into the move by a crusading shareholder, spokeswoman Anne McNally said… ‘We make changes to our governance practices when we believe them to be in the best interests of State Street and our shareholders. We believe adopting proxy access is appropriate at this time.’” BOSTON BUSINESS JOURNAL

To Be Black, Female and Scrutinized by Your Board

“A bitter feud between Florida A&M University’s president and the chairman of its Board of Trustees culminated on Friday in the chairman’s stepping down and the president’s narrowly hanging on to her job. But the turmoil has raised questions that are reverberating beyond the boundaries of the public, historically black institution. Among them:  When does a board’s involvement in day-to-day matters devolve from responsible oversight to micromanaging? Are historically black institutions … particularly prone to boards that overreach? Are male-dominated boards more likely to challenge the authority of female presidents?” CHRONICLE OF HIGHER EDUCATION

A CFO’s Secrets to Success

“You may not know it, but it can be very challenging for chief financial officers to work with a board of directors. Here are some tips to make it less challenging for all finance leaders to successfully work with the board: 1. Don’t Kill Them with Data…” BUSINESS INSIDER

Think Digital

“We all know it’s important to be ‘digital’ in today’s marketplace—but what does that mean? Yes, it involves understanding technology, but it’s also about taking thoughtful risks with digital initiatives, whether you’re launching a new product or automating core processes…. By analyzing more than 200 companies around the world, we have identified key digital strengths in four areas—strategy, culture, organization, and capabilities. Answer these questions to see how digitally savvy your team and organization are overall and to roughly gauge progress in each area." HARVARD BUSINESS REVIEW

A Seat at the Table

★ DreamWorks Animation welcomes Maggie Wilderotter, executive chairman of Frontier Communications, to the studio's board.  Cammie Dunaway, formerly EVP of sales and marketing at Nintendo, joins the board of Marketo Inc., a maker of marketing software and solutions. ★ Venture capitalist Vinod Khosla steps off the board of Square, the mobile payments company headed up by Jack Dorsey, as it prepares for an IPO. Global asset manager The Carlyle Group names Anthony Welters, executive chairman of the Black Ivy Group, L.L.C. and senior adviser to the office of the CEO of UnitedHealth Group as an independent director. ★ Jes Staley is named CEO of Barclays and leaves the UBS board of directors, which he joined in May.
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