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August 25, 2016 - Issue 2.34 - 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.
The end of summer. And the end of a gripping season of board drama at Viacom, as CEO Philippe Dauman is forced out (with a widely criticized $72 million settlement package), while the Redstone family wins the privilege of a board makeover. Never fear… a new and fascinating board drama begins airing in its stead, as an activist investor (and Carl Icahn protégé) looks to replace the entire board of the Williams gas pipeline company, months after half the board resigned following a failure to oust the CEO. Follow these storylines, plus news on employee pay raises, the board’s role in managing cyber risks, and the preponderance of Republicans on boards in this week’s newsletter.

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The Hot Seat


An (Unfortunate) Twist on the Term "Board Oversight"

“Awkward, embarrassing, distracting, time-wasting: just some of the verdicts on the months–even years–of corporate shenanigans at Viacom… What has been strikingly absent from this Medici intrigue has been any serious concern for shareholders. In theory, boards exist to protect and defend shareholder interests. In fact, at Viacom as elsewhere, boards do little to recognize, represent or protect investors…. In some cases, the failure to meet financial targets or to control costs has been missed by board members who never got around to reading the hundreds of pages of preliminary papers. In other instances, industry ignorance or CEO forcefulness has blinded boards to emerging opportunities that might have ensured a company’s future. Both of these omissions are routine and give a whole new, ironic, twist to the word ‘oversight.’” OBSERVER

Across the Board

Curated news and insights from the world's boardrooms.


New Era for Viacom and Its Board

“Viacom announced Saturday that CEO Philippe Dauman had been ousted after nearly a decade in control, with his long-time lieutenant, Viacom chief operating officer Thomas Dooley, taking the interim helm of a conglomerate that controls Nickelodeon, MTV, Comedy Central, VH1, BET and the Paramount Pictures studio. Five new board members proposed back in June by controlling shareholder National Amusements, the holding company owned by Shari Redstone and her father, Sumner Redstone, will also join the board.” VARIETY
 

Unusual Activist Play to Remake Pipeline Co. Board

“Activist investor Keith Meister is seeking to remove the entire board of Williams Cos. this fall, prolonging the drama that has already gripped the pipeline company for a year. The move comes just two months after Mr. Meister and five other directors quit Williams’s board and ahead of a Thursday deadline to nominate new directors, leaving him scrambling for names. Mr. Meister plans to nominate 10 employees of his own hedge fund, Corvex Management LP, as placeholders, he told CNBC. In the coming weeks, Corvex will seek nominees, including from other investors, and plans to identify a new board before shareholders vote in November. The Corvex employees, unlikely to be very appealing as a board on their own, would resign their first day and appoint the identified board, of a size yet to be determined.” WALL STREET JOURNAL
 

7 Steps to Address Cybersecurity Risk

“In addition to posing fundamental business, security, contracting and reputational issues, cybersecurity presents a governance challenge for boards of directors. However, boards can take practical steps to reduce the possibility of a catastrophic cyber attack and defend their conduct in the wake of an event. The best-designed network security plan in the world will be as ineffective as the compromised system on which it is saved if the board of directors is not committed to developing a corporate culture that takes cybersecurity seriously. This process does not require that directors become technical experts on such threats, but rather that the board emphasize and cultivate a culture of awareness and accountability throughout the organization.” NATIONAL DEFENSE MAGAZINE
 

Rethinking Raises: New Employee Comp Plans

“As companies shake up the way they measure and review employees, a handful of firms and pay experts are starting to question the practice of giving annual raises to almost all staffers. Managers say that once-a-year raises often are so small that they do little to motivate or differentiate employees. Some pay experts contend that giving out larger and more frequent bonuses might spur better performance.” WALL STREET JOURNAL


How Do Politics Play Out in the Boardroom?

“Are corporate boards as polarized politically as the general population? That’s one of the questions we asked ourselves as we conducted a survey of directors of public and private companies headquartered in the United States. We and our research partners found that Republicans are more highly represented on boards than in the general population: they were 50% Republicans, 24% Democrats, and 26% Independents, while the American public, according to Gallup, is 28% Republicans, 31% Democrats, and 39% Independents. But affiliation doesn’t guarantee enthusiasm, as this sample of survey comments reveals: ‘On sabbatical from the Democratic party’; ‘Republican, unless they keep acting like goofballs’; and ‘Independent (especially this year!).’" HARVARD BUSINESS REVIEW
 

4 “Ritual Questions” to Improve Leadership Skills

"High-impact leaders are insatiably curious — about themselves, the people who work for and with them, and the world in which they operate and beyond. Inquisitive leaders are effective because building knowledge and wisdom are essential to professional success. Naturally curious people ask lots of questions and take time to reflect on the answers. Even if you aren’t naturally curious, you can build this type of reflection into both your agenda and the agendas of your employees by asking so-called ritual questions (example: 'What have I learned today?')." STRATEGY+BUSINESS

From the Boardspan Archives

Collaborate Better!

“'The teams that can meet the creative challenges posed to them are the hallmark of the most successful organizations,' writes Leigh Thompson, the J. Jay Gerber Professor of Management and Dispute Resolution at the Kellogg School… Yet, she argues, most of the time collaboration fails to live up to its potential, largely because teams fall victim to pervasive myths about how to succeed. Drawing on hundreds of studies, Thompson shows what the latest research actually says about collaboration and lays out step-by-step instructions for putting it to work… 'There are a lot of organizational forces that you need to work to remove in order to be creative,' she says. 'The really smart leader or manager needs to be prepared to pull the rug out.'” KELLOGG INSIGHT via BOARDSPAN

A Seat at the Table

  • Kelly A. Kramer, EVP and CFO of networking company Cisco Systems, joins the board of bio-pharmaceutical company Gilead Sciences.
  • Quick Base, a low-code application development platform (formerly a division of Intuit), welcomes to its board Robert Hughes, former president of worldwide operations at Akamai, and Gray Hall, CEO of Alert Logic.
  • Integrated circuit maker Maxim Integrated Products increases its board of directors from seven to nine with the election of MaryAnn Wright, group VP, technology and industry relations at Johnson Controls; and Tracy Accardi, former VP of global research and development, breast and skeletal health solutions at Hologic.
  • Jive Software, maker of communication & collaboration software  solutions, welcomes to its board Balaji Yelamanchili, EVP and GM at Symantec.
  • Gary L. Crittenden, a former Citigroup CFO and current managing director and chairman of Palo Alto private equity firm HGGC, joins the board of bank holding company Zions Bancorp.
  • Healthcare technology company CitiusTech, welcomes to its board Dr. Mohit Kaushal, a special advisor at General Atlantic, an adjunct professor at Stanford University and a former member of the White House Health IT task force.
  • Wynn Resorts appoints to its board Jay L. Johnson, a retired Admiral in the U.S. Navy, former Chief of Naval Operations and former member of the Joint Chiefs of Staff.
  • Charles Szwes, former CEO of specialty truck maker OshKosh, joins the board of drilling services provider Rowan Cos.
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