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January 5, 2017 - Issue 1 - 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.
Happy New Year! Prognosticators have been busy chronicling what to expect in 2017. Their best guesses include more corporate scandals, more cyber attacks, and less regulation all around. One might also assume that individual directors will be appointed to fewer seats, as both ISS and Glass Lewis have placed new focus on the issue of directors “overboarding.” Meanwhile, some new board appointments have garnered attention, including former DuPont CEO Ellen Kullman’s election to the Goldman Sachs board, and the announcement that former Genetech CEO Ian Clark will begin serving on three biopharmaceutical company boards. There is also talk of a handful of young, female technology entrepreneurs becoming sought after as directors for larger company boards. While it's likely terrific for those invited and the boards they serve, we still have a long way to go before women are included as a rule, not an exception, given that only 20 percent of large company board seats are currently filled by women.
 
Here’s wishing you a successful 2017! Let us know how Boardspan can help turn your board aspirations into reality this year.

The Hot Seat
 

The New Corporate Scandals & How to Avoid Them

“Virtually every 21st century business scandal is reducible to a morality tale of a technology that allows us to do things we couldn’t before, coupled with major institutional failures that were enabled by failures of omission and commission of corporate leaders. Consider the major, self-inflicted crises at Wells Fargo, where two million accounts were opened without customers’ knowledge, or at Volkswagen, where emissions data was falsified, or News Corp, where editors illegally hacked cell phones to publish private information. These are different from the kind of product-safety scandals we grew accustomed to in the 20th century. And yet most business schools and leadership development programs still focus on those…” HARVARD BUSINESS REVIEW

Across the Board

Curated news and insights from the world's boardrooms.
 

What Does a Trump Administration Mean for Executive Pay?

“As speculation mounts that the incoming Trump administration will usher in a new era of deregulation, we asked corporate-governance experts to preview trends in executive pay for 2017 in the U.S. Their predictions: Tim Bartl, president and chief executive officer, Center on Executive Compensation:‘You could see a big push down the line, depending on who’s selected chair of the Securities and Exchange Commission, on disclosure…. So we’re paying attention to whether there may be regulatory relief in more succinct and yet impactful disclosure. [Plus opinions from many others.]” BLOOMBERG
 

Could Trump Era Hold Promise for Corporate Governance?

“Having just turned 90, Weil, Gotshal & Manges senior partner Ira Millstein discusses his decades-long fight to reform corporate boards and his new book on the topic, published this month. Millstein believes directors of companies have a responsibility to improve Americans' view of the corporations they depend upon.” AMERICAN LAWYER
 

Ellen Kullman Joins Goldman Sachs Board…

“Goldman Sachs Group Inc named former chair and chief executive officer of E.I. du Pont de Nemours and Co Ellen Kullman to its board of directors…. Kullman had served as DuPont's CEO since 2009, where she derailed an attempt by billionaire activist investor Nelson Peltz and his Trian Fund Management to land board seats.  Goldman Sachs's activism defense team had advised DuPont, the maker of Kevlar and Teflon, in its fight against Trian. The defeat was a watershed moment for activism, illustrating that companies can successfully fend off large investors pushing for change. In recent years, many corporate boards have chosen to settle with activists rather than engage in lengthy and expensive battles.” REUTERS
 

…And Co-Chairs a New Gender Equality Group

“For those who admire Kullman—and who were saddened to see the departure of one of the few female CEOs of a Fortune 500 company—her reemergence as the co-chair of the Paradigm for Parity is a welcome development. The group is a coalition of 28 CEOs and founders who are coming together to push for gender equality at the top of major corporations by 2030.” FORTUNE
 

“Recruiting Wars” to Put Women on Tech Company Boards

“Even by Silicon Valley standards, where recruiting wars are legion, attracting women to join tech company boards has become intense. While many companies still want the highest-profile women in the industry — think Sheryl Sandberg of Facebook or Meg Whitman of Hewlett Packard Enterprise — a new pool of candidates is also being hotly pursued. And those women are younger, tend to be ethnically diverse and have grown up in digital businesses for much of their careers.The competition for these women is thriving as tech companies are under growing pressure to diversify their boards.” NEW YORK TIMES
 

New Scrutiny for "Overboarded Directors"

“Institutional Shareholder Services (ISS) and Glass Lewis (GL), the two most influential proxy advisory firms, recently released updates to their voting policies for 2017.… Under the new policies, ISS will recommend withholding votes from directors who are not CEOs (or, in the case of GL, from directors who are not executive officers) of public companies who serve on more than five public company boards. The prior threshold was six public company boards…. GL will consider public company executive officer – not just CEO – directors overboarded if they serve on the boards of more than two public companies (including their own companies)….” COOLEY ALERT
 

One Idea to Get Boards To Take Security More Seriously?

“Major cyberattacks against organizations of all sizes seem to happen almost weekly. On Dec. 14, Yahoo announced the largest-ever data breach, involving more than 1 billion customer accounts. Despite the scale and potential harm from such attacks, there's wide recognition that corporate leaders, especially boards of directors, aren't taking the necessary actions to defend their companies against such attacks. It's not just a problem of finding the right cyber-defense tools and services, but also one of management awareness and security acumen at the highest level…. Gartner analyst Avivah Litan, a longtime cybersecurity consultant to many organizations… supports state and federal laws to require organizations to report cyber attacks: ‘Having a requirement to disclose is a great motivator to increase security to prevent future attacks,’ Litan said. ‘No one wants their names in the news.’” COMPUTERWORLD
 

Intrigue Across the Pond 

“Richard Cousins, the chief executive of the catering group Compass, has abruptly left his position as senior independent director of Tesco just days before Britain’s biggest retailer unveils its Christmas trading figures. The surprise departure of Cousins after just two years on the board will be seen as a blow for the supermarket chain by the City. The Compass boss has a heavyweight reputation in the financial world.” THE GUARDIAN

 

Compliance Committees Face New Challenges

“The board's compliance committee will encounter a challenging agenda in the coming year. A series of recent corporate controversies, regulatory developments and judicial decisions combine to prompt the committee to take a closer look at its own level of diligence, the key elements of the company's compliance program and, most significantly, employee acceptance of the compliance culture. The outcome of this review could transform both the way the committee exercises oversight of the compliance program, and the focus of compliance officers. The general counsel is well-suited to provide guidance in this process.” CORPORATE COUNSEL

From the Boardspan Archives

In Boardrooms, the Same Is a Shame 

"I suspect that some of the most pervasive causes of corporate failure can be traced back to the common sets of experiences shared by many boards and executive teams. When business leaders say, 'We didn’t see it coming,' after their companies fail to recognize the legitimacy of upstart competitors or customers’ changing tastes, who is the 'we'? Our corporate directors and CEOs. In the global economy, the markets a company serves become less predictable and more heterogeneous every day. When too many people at the top are looking at our dynamic world through the same static scope, they are far more likely to miss seeing the full landscape in all of its fast-evolving glory." MIT SLOAN MANAGEMENT REVIEW via BOARDSPAN

A Seat at the Table

  • Ian Clark, who was CEO and a director of biotech giant Genentech through the end of 2016, has been appointed to the boards of three pharma companies this week: Irish-based Shire, Agios Pharmaceuticals, and Corvis Pharma
  • Richard Henriques, former CFO of the Bill & Melinda Gates Foundation, joins the board of Nativis, a bioelectronics company developing noninvasive treatments for cancers
  • Donald J. McCarty, a former American Airlines CEO who served as chairman of the board of Virgin America through its merger with Alaska Airlines, joins the board of Hawaiian Airlines—where he previously served two separate terms
  • Restaurant chain Wingstop appoints to its board Lynn Crump-Caine, formerly EVP of worldwide operations for McDonald’s
  • Real estate investment trust MTGE Investment elects to its board Julia L. Coronado, the chief economist for Graham Capital Management, an alternative investment firm, who previously held economist roles at Paribas and Barclays
  • Infrastructure company Aegion appoints to its board Rhonda Germany Ballintyn, former corporate VP, chief strategy and marketing officer for Honeywell International
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