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October 6, 2016 - Issue 2.40 - 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.
Lest you think that debates are for the politically minded only, one can only imagine what conversations are going on across many a boardroom this week.  With Twitter’s board deciding its future – and it may not be entirely up to them – and Wells Fargo playing “whack-a-mole,” there’s some tough talk at the board table this week we surmise. Speaking of tough talk, see what the activist investors are voicing opinions about this week: woes at Samsung in one case and the need for more women in the boardroom in another case. You go, girl. And batting clean up this week, a broad range of views on compensation from top to bottom, from the US and the UK. With compensation season just ahead of us, we can’t resist the temptation to go deep into the archives and share an opinion that feels like it was written yesterday.

The Hot Seat


Two Opinions...

"Leading up to Twitter's Sept. 8 board meeting, CEO Jack Dorsey had conflicting views with former Chief Executive Ev Williams on the future of their company, according to a report from Bloomberg. Dorsey wanted the decade-old social media business to not change course and remain focused on products that users are familiar with, the Bloomberg report said. Williams wanted to explore selling Twitter, the article said, and explained that ultimately Dorsey lost the disagreement." CNBC.COM


…Resulting in Three Conversations…

“Twitter Inc. has told potential acquirers it is seeking to conclude negotiations about selling itself by the time it reports third-quarter earnings on Oct. 27, according to people familiar with the matter. The timeline is hugely ambitious in the context of most mergers and acquisitions, given that Twitter began mulling a sale only last month. It is the clearest sign yet that Chief Executive Jack Dorsey is pushing to provide clarity to shareholders and employees over the company's future as quickly as possible. Binding acquisition offers are due in the next two weeks, and Twitter has already whittled down the field of potential acquirers, the people said this week. Salesforce.com Inc. is in the running, while Google parent Alphabet Inc., and Walt Disney Co have also been contemplating bids, the people added."  REUTERS


…And One Finalist Still Standing

“According to sources close to the situation, Google does not currently plan to make a bid for Twitter…In addition, several sources Recode has spoken to this week also said that Apple was unlikely to be one of the possible suitors, with one saying Twitter should have ‘low expectations’ of getting an offer from the tech giant. Disney, which had also considered a bid, is not going to make an offer, according to sources familiar with that company. That should tamp down the frenzied speculation around a possible Twitter sale since Salesforce began no-commenting noisily with regard to possible interest in acquiring it a few weeks ago.” RECODE

Across the Board

Curated news and insights from the world's boardrooms.
 

More Findings for Wells Fargo in DC

"The scandal over improper sales practices at Wells Fargo & Co extended to thousands of small-business owners, according to a U.S. lawmaker, raising questions about the scope of the bank's issues with unauthorized accounts. In a Sept. 29 letter viewed by Reuters on Tuesday, Sen. David Vitter, a Louisiana Republican, demanded that Wells Fargo Chief Executive John Stumpf provide a ‘full accounting’ of customers affected.  Discussions between congressional staffers and Wells Fargo ‘have indicated that the fraudulent activity of your employees was not limited to Wells Fargo's consumer banking operations,’ Vitter wrote. ‘Thousands of small business owners were impacted by this fraud.’ " REUTERS
 

And More Clients Pulling In The Reigns Elsewhere

“The Chicago City Council on Wednesday approved a one-year suspension for Wells Fargo & Co from city business because of its scandal over phony accounts, joining the states of Illinois and California in punishing the bank. The ban includes bond underwriting, brokerage, trustee and other services the bank has provided to the city. Wells Fargo has earned $19.5 million in fees from Chicago since 2005….Also on Wednesday, Connecticut's state treasurer Denise Nappier told Reuters in a statement that Morgan Stanley was added as a co-bookrunner for an October bond sale because of troubles at Wells Fargo. ‘The addition of Morgan Stanley ... was made in an abundance of caution to help ensure the success of the sale,’ the statement said. ‘Wells Fargo had been assigned as the sole bookrunner prior to the recent revelations of regulatory actions against the bank.’ “ REUTERS


What Women Bring To The Table

“According to the research [by Dr. Daehyun Kim at the University of Toronto], women board members were likely to bring a half-dozen skills important to decision making that weren't well-represented on their boards before their arrival: risk management, human resources, sustainability, politics or government, regulatory or compliance, and corporate governance…Dr. Kim also found that four of the five least-represented skills on boards were more likely to be possessed by female than male board members.” WALL STREET JOURNAL
 

Hence, an Activist’s Case for Women

“Ides Capital, led by Dianne McKeever, aims to shake up boards at floundering firms, but it’s also tackling the “boys’ club” mentality it says holds companies back. ‘The board’s chumminess and insularity were impediments to making those difficult, but necessary, decisions,’ Ms. McKeever said recently. To her, the episode amply illustrated how a lack of gender diversity could contribute to deficient corporate governance, like a distracted chief executive, and board entrenchment. And yet activist hedge funds are also often guilty of nominating only men as candidates for a board.” NEW YORK TIMES


A Different Activist Gets Vocal Overseas

“Last year, a big American hedge fund took aim at plans to revamp a part of Samsung, the South Korean giant that dominates many of its home country’s industries. Though it lost that battle, the hedge fund now has its sights on the crown jewel of the Samsung empire. Elliott Management proposed in a letter on Wednesday that Samsung essentially split its electronics business into two separate companies as part of a broader reshaping of the business. It is one of the most ambitious efforts yet by a foreign investor to inject American-style activist investing into the world of Asian business, where families often retain control of huge publicly traded companies.” NEW YORK TIMES

 
Why Parachutes Have Become De Rigueur in the U.S.

“Golden parachutes can’t seem to stay out of the news. Last year, Jeff Smisek, the former CEO of United Airlines, received a separation payment of $4.875 million in cash along with additional equity awards and other benefits for a total of close to $37 million after being ousted from his company. FOX News Chairman Roger Ailes was reported to have received an exit package worth $40 million after being ousted from his job amid sexual harassment claims. And Wells Fargo CEO John Stumpf, already under fire for a fraudulent bank account scheme, has faced tough questions about his salary and the multimillion-dollar retirement package of Carrie Tolstedt, a key executive tied to the scandal. Both Stumpf and Tolstedt have been forced to forfeit millions in stock options and other compensation. “ HARVARD BUSINESS REVIEW

 
Why Say-On-Pay Could Become De Rigueur in the U.K.

“Boardroom bosses should meet employees every year to justify pay practices, according to proposals put forward by one the City’s biggest fund managers as it warned that wage inequality needs to be addressed by major companies. But Legal & General Investment Management (LGIM) – which last month called for ratios between the chief executive and that of median employee to be published – fell short of supporting the call by Theresa May to put workers on boards. The prime minister has raised the prospect of putting employees on company boards, and making shareholder votes on executive pay legally binding. ‘Employee representatives should play a role by meeting with the remuneration committee annually to ask why the committee considers the pay practices applied in the organisation to be fair,’ said the senior corporate governance manager at LGIM in a research paper.” THE GUARDIAN

From the Archives

Debunking The Myths of Compensation Best Practices

“There’s a major concern out there for all of us: the perception of excess compensation received by CEOs. And it’s getting worse year by year. I’d like to deal with this concern by describing several myths about compensation.”  DIRECTORS & BOARDS VIA BOARSPAN

A Seat at the Table

  • Amazon elects to its board Daniel Huttenlocher, currently Dean and Vice Provost of Cornell Tech.
  • WellCare Health Plans, Inc. welcomes H. James Dallas, former SVP of quality and operations for Medtronic, to its board of directors.
  • Fast food company Yum! Brands, Inc., announced that Paget Alves will join its board of directors, effective November 17, 2016.
  • Elizabeth Robinson, the former global treasurer of The Goldman Sachs Group, joins BNY Mellon as an independent director serving on the Finance and Risk Committees.
  • Socket Mobile, data capture and delivery solutions company, announces that former CEO of Magellan Corporation and SanDisk executive, Nelson C. Chan to its Board of Directors.
  • CPI Card Group, financial and EMV chip card producer, announce the addition of Silvio Tavares, President and CEO of The CardLinx Association and Scott Scheirman, CEO of JKL Ventures LLC, to its board of directors.
  • MasTec, an infrastructure construction company, named former MasTec VP and CFO, C. Robert Campbell to its board of directors as a class III director.
  • Biopharmaceutical company, Chiasma, announced that Mark J. Fitzpatrick, joins the board and has been promoted to president and chief executive officer of the company.
  • Millstone Medical announces that Edward Mackey, EVP of Global Operations at Boston Scientific, joins its board of directors.
  • Biotechnology company, X4 Pharmaceuticals, welcomes biopharmaceutical industry leader Nancy Lurker as Chair of the Board of Directors.
  • Teresa DeLuca appointed as a Board of Director serving on the Audit Committee to Surgery Partners, a healthcare services company.
  • Landauer, Inc., a radiation science and services company appoints Teri G. Fontenot, current President and CEO of Women’s Hospital, as Board of Director.
  • Brett Cope joins the board of directors and promoted to president and CEO of Powell Industries, Inc., a provider of packaged solutions for the control, monitoring, and distribution of electrical power.
  • Southwest Airlines EVP and Chief Operating Officer, Michael G. Van de Ven, joins financial company Comerica Incorporated as a board of director and will serve on the Enterprise Risk Committee.
  • Jay S. Duker joins Biotechnology company pSivida Corp’s board of directors.
  • Pulmatrix, a pharmaceutical company, appoints Matthew L. Sherman, EVP and Chief Medical Officer of Acceleron Pharma, to its board of directors and brings extensive experience in drug development.
  • Medifast, Inc., a nutrition and weight loss company, announced that Daniel R. Chard joins as a member of the board of director and been appointed as CEO.
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