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April 21, 2016 - Issue 2.16 - 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.

Once upon a time, boardrooms had a reputation for being cloaked in secrecy. No more. These days a lot of interested parties are paying a good deal of attention to boards and placing high expectations on them to maximize shareholder value, diversify their ranks and more. This week federal agencies are putting pressure on the boards of eight of the country’s biggest banks to get their “playbooks” in order and show their preparedness for responding to potential crises. Investors are turning up the heat on Berkshire Hathway, Coca-Cola and other companies with long-tenured board members to turn over some seats and refresh their boards. Another batch of investors has pushed United to reshape its board and is pressing Yahoo to speed its movement toward a sale. Meanwhile, the insistence on change that is being felt in the boardroom is not sweeping the c-suite in the same manner: the percentage of new women CEOs named in 2015 was the lowest in years.

The Hot Seat

Big Bank Boards Not Prepared for Crises

“The boards of directors of eight behemoth U.S. banks are in hot water. The Federal Reserve or the FDIC (and in some cases, both) have determined that Bank of America, Bank of New York Mellon, Goldman Sachs, JP Morgan, Morgan Stanely, State Street, and Wells Fargo have failed to produce 'credible' crisis plans, despite some progress by all the banks…. The regulators’ analyses specifically cited governance among the weaknesses in the plans of seven of the banks (not Bank of New York Mellon’s). The criticisms included, among other problems, inadequate board of directors’ ‘playbooks’ and lack of detail regarding what specific actions the boards would take and when.” FORTUNE

Across the Board

Curated news and insights from the world's boardrooms.

 

Turnover Time for Long-held Board Seats?

"Berkshire Hathaway and Coca-Cola are among a number of large US companies that will come under pressure from two of Europe’s biggest investors over the composition of their boards. Legal & General Investment Management and Aberdeen Asset Management , two of the UK’s largest asset management companies, will begin voting against company directors who have held board seats for more than 15 years.… Ric Marshall, corporate governance expert at MSCI, … said ‘US boards have been pale, male and stale for a long time. The fact there has been such little change is really distressing. There is huge resistance to change, but the US economy would be healthier if we had greater [board] diversity.’” FINANCIAL TIMES


Wal-Mart's Revamped Board: Smaller, Younger

Wal-Mart Stores Inc. is bringing in the next generation of Walton family members to its board, nominating a grandson of founder Sam Walton. Steuart Walton, a 34-year-old lawyer and pilot, would be the first of his generation of Waltons to have a presence on the retail giant's board. He would join at the same meeting where his father, Jim Walton, steps down… Aida Alvarez, Roger Corbett and retired Chief Executive Mike Duke will [also] leave the board. Ms. Alvarez and Mr. Corbett are rotating off the board after a decade, in line with the company's governance guidelines. Wal-Mart is one of the few S&P 500 companies with term limits for directors.…The changes mean Wal-Mart will have a board that is younger than most of its peers. NASDAQ
 

Poor Results Increase Pressure on Yahoo Board

“Yahoo said on Tuesday that its business continued to deteriorate in the first quarter, putting more pressure on the company to find a buyer quickly for its Internet operations. Marissa Mayer, Yahoo’s chief executive, said during a webcast to discuss the financial results that a review of potential suitors was proceeding at the ‘fastest responsible pace,’ but she declined to be more specific. She also disputed news reports that the company was dragging its feet on a potential sale and refusing to share information with bidders. ‘Let me be unequivocal: Our board, our management team and I have made the strategic alternative process a top priority,’ Ms. Mayer said.” NEW YORK TIMES
 

United Board Reshaped by Investors

“United Continental Holdings settled a very public dispute with two big investors over its board, a fight CEO Oscar Munoz faced just as he was returning to work full-time last month after a heart transplant. The Chicago-based airline said Wednesday that three of its independent directors, including Henry L. Meyer III, the board's nonexecutive chairman, would retire from the board and not stand for re-election at the company's annual meeting.… Robert Milton, a former chairman and CEO of ACE Aviation Holdings as well as Air Canada and a recent addition to United's board, will succeed Meyer as nonexecutive chairman at the annual meeting.” CHICAGO TRIBUNE
 

High CEO Pay, Once Again, Under Scrutiny

“With annual meeting season under way, investors across the U.S. can express their anger about high pay for top corporate officers. So-called say-on-pay votes don’t give shareholders the power to cut executive rewards. But boards fear a thumbs’ down on the nonbinding referendum, required since 2011, because the rebuke suggests deeper investor discontent. Last week, for instance, BP PLC saw a majority of votes cast against the oil company’s compensation decisions for 2015. The only thing worse than losing a say-on-pay vote is losing two votes. Or three. Several businesses with multiple defeats, such as TCF Financial Corp., Oracle Corp. and Spectrum Pharmaceuticals Inc., likely will face shareholder outcries over related pay or corporate governance issues this year.” WALL STREET JOURNAL


Bad Year for Aspiring Women CEOs

“The outlook for women in the CEO chair dimmed last year. Even with the highest turnover rate among chief executive officers in more than a dozen years, women captured less than 3 percent of new CEO positions, the lowest since 2011, according to a PwC study of 2,500 global public companies released on Tuesday. In the U.S. and Canada, less than 1 percent of new CEOs were female, the worst showing in the 16-year history of the study and the third straight annual decline.” BLOOMBERG BUSINESS


Farewell to a Prized Apple and Intuit Board Member

“Former Intuit chairman and Apple board member Bill Campbell has passed away following a prolonged battle with cancer, reports Re/code. Known as ‘The Coach’ around Silicon Valley, Campbell was known for providing sage advice to the leaders of some of the Bay Area's biggest companies, including Apple and Google. At one point, he was even assisting Apple and Google at the same time, something Steve Jobs wasn’t happy with.” MACRUMORS


Keys to C-Suite Success

“The single greatest reason companies get into trouble is because CEOs are bad at strategy. Consider these two rather shocking statistics: 81% of the time when major shareholder values is destroyed it’s because of bad strategy decisions. And only 8% of all executives are good at both strategy and execution—that is, betting on the right strategy and doing the right things to make it happen…. But the good news is, there are five things companies and CEOs can do to help close this strategy-to-execution gap. And interestingly—they’re the opposite of what most companies and leaders think.” WALL STREET JOURNAL


What’s Keeping You from Networking Like a Pro?

“For every person who sees the value of maintaining a far-reaching and diverse set of professional connections, many more struggle to overcome innate resistance to, if not distaste for, networking. In my 20 years of teaching about how to build and use networks more effectively, I have found that the biggest barriers people typically face are not a matter of skill but mind-set. Listening closely to my MBA students’ and executives’ recurrent dilemmas, I have concluded that any one or more of five basic misconceptions can keep people from reaping networking’s full benefits. Which of these are holding you back? Misconception 1: Networking is mostly a waste of time…. 2. People are either naturally gifted at networking or they are not, and it’s generally difficult to change that…. 3: Relationships should form naturally…. 4. Networks are inherently self-serving or selfish…. 5: Our strong ties are the most valuable….” HARVARD BUSINESS REVIEW


How to Tap into Your Most Creative Ideas

“Here’s a familiar scenario: You’re sitting at your desk trying to come up with creative solutions to a problem. You rack your brain for a while, scribble down half a dozen ideas, and then hit a wall. Have you already reached your creative peak? Or should you force yourself to keep brainstorming? According to new research from the Kellogg School, persisting in a creative task may pay off more than you think. In fact, your best ideas are likely to come later in the process— and if you stop prematurely, you could miss a big insight.” KELLOGG INSIGHT

From the Archives

Do CEOs Make the Best Board Members?

“When you join the board of a public company, you are making a long-term commitment that carries with it the risk of tarnishing your professional reputation if things go seriously wrong. You might also have to endure the burden on your time of protracted litigation. There is even the possibility of unlimited personal liability. Thus, before joining a board, a systematic approach to conducting your diligence on the company is in order.” WOODRUFF-SAWYER & CO via BOARDSPAN

A Seat at the Table


Popular fitness apparel maker Lululemon Athletica welcomes to its board Jon McNeill, president of global sales for electric car-maker Tesla. As part of a CEO succession plan, Wendy’s Co. will name Gunther Plosch as CFO to take the place of Todd Penegor, who will assume the top spot at the burger chain when current CEO Emil Brolick retires next month. Jonathan Chadwick, former CFO and COO of VMWare joins the board of directors at cybersecurity startup Tanium. Mindbody Inc, a provider of cloud-based business management software for the wellness services industry, appoints to its board Gail Goodman, former president and CEO of the online marketing firm Constant Contact.  Pegasystems Inc., maker of strategic business application software, appoints to its board Sharon Rowlands, CEO of ReachLocal, a provider of digital marketing solutions. Capnia Inc., a maker of diagnostics, devices and therapeutics addressing unmet medical needs appoints former ReLIA Diagnostic Systems CEO Rajen Dalal to its board. Aerospace company BAE Systems Inc. adds retired Navy Adm. Jonathan W. Greenert to its board of directors.
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