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Director's Notes: News & views for today's boardroom. Brought to you by Boardspan.

Welcome to the first issue of Director’s Notes, Boardspan’s weekly news digest. What a great moment to launch—with an activist investor attack on Bank of America’s board and a hostile takeover bid in the pharmaceutical industry sparking heated debates and creating real-time case studies on governance, the CEO-Chairman role, activist threats, and more. Find it all here, plus "must reads" on delegating risk management, when boards should ignore shareholders, and the causes of board failure.

The Hot Seat

BofA’s Board Under Attack

“Opposition to the board’s decision to once again combine the positions [of chairman and CEO] is coming from both big public pension funds and influential shareholder advisory firms that counsel investors on how to vote on corporate issues…. The proxy firm [Institutional Shareholder Services] was careful to note that the vote is not a referendum on Mr. Moynihan’s stewardship of the bank, but rather of the bank’s board, which has shown questionable leadership, it said. Just four of the board’s 13 members, the proxy firm said, have significant banking experience. NEW YORK TIMES

Across the Board

Curated news and insights from the world's boardrooms.


Accidental Invitations: Welcome Hedge Fund Activists!

“At Bank of America, like so many other companies across the country, governance and operational weaknesses act like an open invitation to hedge funds. When boards allow these vulnerabilities to fester—or create them themselves—they might as well lay out the welcome mat and say, ‘Howdy, y’all, come on in.’” FORTUNE

The Combined Chairman-CEO Role: Good or Evil?

“This September, investors get a powerful contrast of good governance language vs. good governance practice, in particular the superstitious worship of independent board chairmen as precursors of good governance, while combined chairman/CEO roles are summarily condemned. In reality there’s a lack of any research justifying that link and ample evidence debunking it…”  FORTUNE

Lessons from an Attempted Takeover

“Who decides when a company will be sold in a hostile takeover, the shareholders or the board? Although the answer varies widely depending on the company in question, many investors probably don’t pay enough attention to the issue before such a bid materializes.” WALL STREET JOURNAL (Paywall)

You Can't Just Delegate Risk Management

“There’s been a big push for risk management given the financial crisis and many other things impacting the economy now. So, institutional investor companies’ regulators have been pushing boards to do more oversight of risk management. The question is: Is it real or is just window dressing?.... Does it have an impact on the risk management practices of the companies? And ultimately, does it pay off? Do firms have lower risks when they have more board oversight, and higher stock returns?” KNOWLEDGE@WHARTON

Must the Board Be Loyal to Shareholders?

“We routinely hear board directors, CEOs, and CFOs of publicly-listed corporations refer to shareholders as owners of the corporation. Under this thinking, it is natural to conclude that the board’s duty is to its shareholders. Contrary to this popular belief, however, a board’s real duty is to the interests of the corporation itself.” FORBES/HBS WORKING KNOWLEDGE

Why Boards Fail

“The headlines scream about leadership failure after failure at the world's leading companies, but not a peep is heard ahead of the disastrous events. As big business suffers blows to its already bruised image, the public loses trust and looks to blame someone for this mess. Where is the leadership?” HUFFINGTON POST

Activist Investors Take on Ethan Allen

“Tom Sandell’s Sandell Asset Management has been ramping up its activist push against furniture maker Ethan Allen Industries, nominating six candidates for the company’s board of directors and describing the company’s chief, Farooq Kathwari, as an ‘imperial CEO.’”  FINALTERNATIVES

Down Under: Big Money from Bad Governance?

“Tens of millions of dollars are being spent employing a growing number of prominent Australians, accounting firms, lawyers and specialist consultants to review the past practices of companies which have experienced corporate governance failures… Why are highly paid managers not being called upon to clean up their own mess? Do the troubleshooters really have the appropriate skills? Are independent reviews leading to changes in entrenched practices which encouraged bad behavior?” AUSTRALIAN FINANCIAL REVIEW

A Seat at the Table

HP CEO Meg Whitman joins Sheryl Sandberg on the SurveyMonkey board.★ Former Juniper Networks, Microsoft and IBM executive Gerri Elliott is the newest addition to the board of Puppet Labs, an IT automation software company.Another reshuffle of the Pinnacle Foods board includes the appointment of Yannis Skoufalous, Global Product Supply Officer at Proctor & Gamble.★ Thomson Reuters adds two new members to its board: Ed Clark, former CEO of TD Bank Group, and Barry Salzberg, former Global CEO of Deloitte Touche Tohmatsu Limited. Zein Abdallah, former president of PepsiCo, joins the Cognizant board of directors. 
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