July 14, 2016 - Issue 2.28 - 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.

Tumultuous times: Nearly half the directors at pipeline giant Williams Co. resign when a move to oust the CEO is blocked. The entire board of digital privacy nonprofit The Tor Project is refreshed by its new executive director, whose predecessor resigned amid accusations of sexual abuse. The $12 billion Hersey Trust sees its third trustee resign as the Trust confronts demands for governance reform from Pennsylvania’s Attorney General. The all-volunteer board of the defunct nonprofit Architecture for Humanity faces a $3 million lawsuit for financial mismanagement. And not surprisingly, the implosion of blood-testing company Theranos inspires new levels of scrutiny of the sometimes lax governance practices of Silicon Valley’s venture capital-fueled startups.

It sounds like time to focus on doing what's right—see below for "Integrity is Free"—and to take note of the bright spots, including the increasing diversity on prominent boards such as Intel, Accenture, GoPro, and …Boardspan! Read all about it.

Have a board news to share? Drop us a line:

The Hot Seat

Chocolate-Maker's Board Finds Itself In a Pickle

“In a sign of deepening turmoil, Hershey Trust board member Joan E. Steel resigned her position at the troubled $12.3 billion charity for impoverished children as the giant charity faces its latest investigation by the Pennsylvania Office of Attorney General. The office has set a July 31 deadline for the trust to comply with its demands for reforms, which include the removal of three long-standing board members and other governance changes. Steel, who lives in the Chicago area, was not one of the three board members the attorney general has been seeking to remove. Her resignation also comes as the Hershey Co. candy giant — which is controlled by the Hershey Trust — has rejected a $23 billion offer from Mondelez International Inc.” PHILLY.COM

Across the Board

Curated news and insights from the world's boardrooms.

Theranos and Other Difficult Lessons in Governance

“U.S. health regulators on Friday dealt Theranos a major blow by moving to revoke its license to operate a California lab and banning founder Elizabeth Holmes from the blood-testing business for at least two years. Silicon Valley investors say Palo Alto, Calif.-based Theranos—which was valued at $9 billion in a 2014 funding round—offers lessons about the importance of oversight and due diligence in the venture-capital business…. Other highflying startups with prominent venture investors have suffered from corporate-governance issues. Health-benefits broker Zenefits had a single outside board member, Lars Dalgaard of Andreessen Horowitz, until five months ago. …. Enlitic Inc., which applies artificial intelligence to medical data, is reconstituting its advisory board with experts who are expected to take a more active role overseeing the company....” WALL STREET JOURNAL

Digital Privacy Group Replaces Board Following Sex Scandal

“The Tor Project, a nonprofit digital privacy group, on Wednesday replaced its board with a new slate of directors as part of a larger shake-up after allegations of sexual misconduct by a prominent employee.... The group has been becoming better known in the last few years, as Tor is regarded as a useful tool to evade online tracking and government surveillance…. The new board is part of [new executive director Shari] Steele’s broader restructuring as she seeks to promote the legitimacy of the Tor Project. Apart from dealing with the allegations over [former executive director Jacob] Appelbaum, the organization has also struggled to fend off an image as a ‘Dark Web’ tool used by drug dealers and pedophiles.” NEW YORK TIMES

6 of 13 Directors Resign After Failed Attempt to Oust CEO

“Six of Williams Cos.’s 13 directors, including independent chairman Frank T. MacInnis, resigned after a failed attempt to remove Chief Executive Officer Alan Armstrong. The board of the pipeline giant has ‘thoroughly evaluated’ its leadership structure and determined that Armstrong is the right chief executive officer, according to a statement on Friday. The shakeup comes after a proposed $33 billion takeover by Energy Transfer Equity LP collapsed this week. Activist investors Keith Meister and Eric Mandelblatt, and Ralph Izzo, chief executive officer of New Jersey’s Public Service Enterprise Group Inc., were among board members who resigned.” BLOOMBERG

Greek Banks to Replace 1/3 of Board Members

“Greek banks must replace almost a third of their board members by September in a bailout-mandated drive to strengthen corporate governance, bankers with knowledge of the matter told Reuters. Greek banks traditionally have businessmen, union leaders and in some cases politicians on their boards. But under its third international bailout, Greece agreed to try to 'de-politicize' links between government and the banks, boost board-level expertise and improve corporate governance, one banker said.” REUTERS

Architecture Nonprofit Board Accused of "Gross Negligence"

“In 2015, Architecture for Humanity (AFH), a U.S.-based nonprofit organization with more than 60 chapters worldwide, abruptly closed and declared bankruptcy, leaving many to wonder what exactly went wrong….On June 10, a court-appointed trustee filed a [legal] complaint against the group’s founders … and 10 members of the board of directors, who served as volunteers. The board consists of entrepreneurs, tech experts, and architects, including Toshiko Mori, a prominent New York-based architect, and Clark Manus, the former president of the American Institute of Architects (AIA)…..Specifically, the suit accuses the AFH founders and board members of improperly using ‘restricted funds’—charitable contributions with specific requirements—and violating agreements with donors.” ARCHITECTURAL RECORD

How Vocal Should You Be in a Board Meeting?

“How many comments or questions should a board member raise in a board meeting? Before I became a director, I asked board chairs what qualities they most appreciate in a non-executive director. One said, 'Someone who only makes one comment at each meeting. But it is a really important contribution.' Is this right? Should a non-executive expect to make one contribution per meeting, or one contribution per agenda item, or what?” HARVARD BUSINESS REVIEW

Ubisoft Fills Out Board in Attempt to Foil Vivendi

“[Gamemaker] Ubisoft is looking to shield itself from the growing influence of French media conglomerate, Vivendi, by filling out its board of directors with two new independent directors. The proposed appointments of former Uber strategist Frédérique Dame and Wrigley CFO Florence Naviner will be subject to the approval of a shareholders' meeting on September 29…. The changes are unlikely to dissuade Vivendi from pursuing the studio. Vivendi recently accomplished a hostile takeover of former Ubisoft sister company Gameloft, and has continued to purchase Ubisoft shares as Vivendi's takeover threat continues to loom.” GAMASOFT

2nd Woman Director for Intel Board

“Intel added electrical engineering professor Dr. Tsu-Jae King Liu to its board of directors, marking just the second woman on the chipmaker’s governing body. Liu joins lawyer and former ambassador Charlene Barshefsky as the only two women on Intel’s board. Ambassador Barshefsky, who served as United States Trade Representative, has served since 2004. Liu, who teaches at University of California at Berkeley, has worked at the Xerox Palo Alto Research Center and Synopsys and holds over 90 patents.” FORTUNE

4 Steps to Strategically Focused Growth

“When it comes to growth, making sure your board has practical steps and defined metrics will make the process more strategic…. [1] Strategize: First, have your board conduct a self-assessment. Chief executives rate boards that have done so as more effective (55 percent) than those that have not (38 percent)… [2] Identify Your Future: Your board must work within your strategic pillars and the goals that define success for each pillar." ASSOCIATIONS NOW

From the Boardspan Archives

Integrity is Free

“Researchers are now able to show that companies with high integrity cultures reap financial benefits. ... Perhaps the most important, but also most concealed, benefit is that integrity forces individuals and companies to invent. When we commit to confronting reality head-on, we close the door to managing impressions.” STRATEGY+BUSINESS via BOARDSPAN

A Seat at the Table

Boardspan announces the appointment of a new outside director to its own board: Mary Cranston, a recognized national governance expert.  Currently on the boards of VISA, Chemours, MyoKardia, CSAA Insurance and Lucile Packard Children's Hospital at Stanford (Chair), she brings a wealth of experience to Boardspan. She has served on numerous other public and private company boards, as a trustee of many major non-profits including Stanford University, and as the former Chair and CEO of Pillsbury LLP, a leading international law firm.

Congratulations to all who have recently gained new board seats:
  • Lauren Zalaznick, a former NBCUniversal executive and who sits on the boards of The Nielsen Company, Shazam and Penguin Random House, joins the board of "action camera"-maker GoPro
  • Veteran retailer Fiona Dias of Ryan Retail Consulting, joins Home Shopping Network as the fifth female director on the 10-person board.
  • Professional services firm Accenture appoints to its board Nancy McKinstry, CEO and chairman of the executive board of Wolters Kluwer, a professional information services and solutions company headquartered in the Netherlands.
  • Medical solutions company Boston Scientific welcomes to its board Yoshiaki Fujimori, an adviser and former CEO to the LIXIL Group and previously a senior executive with GE who ran several Asian business divisions.
  • Hotel operator Extended Stay America appoints to its board Kapila Kapur Anand, who recently retired from KPMG, where she was a liaison partner with its Audit Committee Institute.
  • Bob Iger, chairman and CEO of The Walt Disney Co, will serve as vice chair of the board of directors for the Los Angeles bid committee for the 2024 Olympic Games.
  • Fiserve, a global provider of financial services technology solutions, appoints to its board John Kim, president of New York Life Insurance Company.
  • Susan Kantor, a former national advisory partner at PwC, joins the board of Lionsbridge, provided of cloud-based translation, online marketing, and global content management and application testing services.
  • Plex Systems, a cloud-based enterprise resource planning for manufacturing company, appoints to its board Mike Hilton, co-founder of expense management solutions provider Concur and chief product officer at Accolade, an on-demand healthcare concierge for employers, health plans and health systems.
  • The Ford Foundation elects to its board of trustees Gabrielle Sulzberger, a general partner and investment manager of private equity firm Rustic Canyon/Fontis Partners.
  • Phyllis R. Yale, a former advisory partner with Bain & Company, joins the board of medical group DaVita HealthCare Partners.
  • Disaster recovery firm Cotton Holdings welcomes to its board former Louisiana governor Bobby Jindal.
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