March 17, 2016 - Issue 2.11 - 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.

Great judgment. It's a requirement for any decent board member, but all the more so for directors of companies engaged in battles with activist investors—especially as the battles seem to be growing in ferocity. Yahoo’s board appointed two new members in a gesture that was widely interpreted as an affront to vocal investors allegedly hoping to oust chief executive Marissa Mayer, while Viacom re-elected its entire slate of directors, despite investors’ calls for a leadership change. Meanwhile, Harvard Business Review suggests that CEO resistance to activists may have more to do with self-preservation than company performance. In other news, Germany and Japan are both struggling to fulfill their aims of bringing more women into the boardroom.

The Hot Seat


The Real Reason CEOs Don’t Like Activists?

“When executives complain about activist hedge funds, it’s often under the cover of short-termism. Activists are bad, the thinking goes, because they pressure companies to prioritize quarterly profits over long-term value creation. That view isn’t well supported by the evidence. Instead, there’s a more obvious reason why CEOs dislike activists, backed up by a new research paper by Thomas Keusch of Erasmus University in Rotterdam. Perhaps the reason CEOs don’t care for activists is that activist investors often fire CEOs, change their compensation, and harm their reputations.” HARVARD BUSINESS REVIEW

Across the Board

Curated news and insights from the world's boardrooms.


Yahoo Board Snubs Activist

“Beleaguered Internet company Yahoo appears to be thumbing its nose at threats of a board battle Thursday by adding two new directors to its slimmed down board. The Sunnyvale, Calif., company increased the board to nine directors from seven by adding Catherine Friedman, a former Morgan Stanley executive, and Eric Brandt, former chief financial officer of Broadcom Corp. The new directors will take seats that were vacated in recent months by tech entrepreneur Max Levchin and brokerage founder Charles Schwab…. Meanwhile, activist hedge fund Starboard Value is still prepared to nominate an opposing slate of candidates to the board at the end of March, according to two people with direct knowledge of the hedge fund’s activities, but who were not authorized to talk about them on the record.” USA TODAY

Viacom, Too, Spurns Activists ...

“Viacom's 11 board members were re-elected at the company’s annual meeting in Miami on Monday and a proposal to give every shareholder the same voting power was defeated as CEO Philippe Dauman spoke at his first such meeting since adding the chairman title, acknowledging that ‘we are not satisfied’ with recent financial results…. While there has been a recent flurry of shareholder activism, the voting results at the meeting were not in doubt given that chairman emeritus Sumner Redstone, who like last year missed the annual meeting due to weak health, controls 80 percent of the voting power….” HOLLYWOOD REPORTER

... And Chooses a New Lead Independent Director

“Viacom’s board of directors has elected former Verizon vice chairman Frederic Salerno to the newly created role of lead independent director. The move is seen as an effort to assuage critics of Viacom’s corporate governance and the composition of its 11-member board of directors. As lead independent director, Salerno will coordinate among the other independent directors and liaise with Viacom chairman-CEO Philippe Dauman. Dauman recently took on the chairman role in addition to serving as CEO as controlling shareholder Sumner Redstone is in failing health. The Viacom board has been criticized for approving a $54 million pay package for Dauman last year even as the company’s share price sank more than 40%.” VARIETY

Meanwhile, Shari Redstone Preps for Viacom Battle

“Now, Mr. [Sumner] Redstone is 92, in poor health and confined to his $20 million Beverly Hills mansion. After he dies, or is deemed incompetent, [his daughter Shari] Redstone is expected to face off against Viacom’s current leadership, including some of her father’s closest confidants, to determine what becomes of his media empire — and by extension her children’s inheritance and family’s legacy.” NEW YORK TIMES

GE Board Enjoys a “Refreshment”

“General Electric Co. said the value of Chairman and Chief Executive Jeff Immelt's total compensation fell about 11.5% last year to $33 million, and that three board members would leave this year in a ‘refreshment.’ Two of GE's longest-serving directors, Douglas Warner III and James Cash, aren't seeking re-election to the board after serving 24 and 19 years, respectively. Mr. Warner is the former chairman of J.P. Morgan Chase, and Mr. Cash is an emeritus professor at Harvard Business School. Also retiring from the board after 14 years is Robert Swieringa, dean emeritus of the Johnson Graduate School of Management at Cornell University. GE has nominated Sebastien Bazin, 54, CEO of hotel chain Accor SA; Peter Henry, 46, a professor of economics and finance at NYU's Stern School of Business; and Lowell McAdam, 61, CEO of Verizon Communications Inc.” MARKETWATCH

5 Key Competencies of Effective Leaders

“What makes an effective leader? This question is a focus of my research as an organizational scientist, executive coach, and leadership development consultant. Looking for answers, I recently completed the first round of a study of 195 leaders in 15 countries over 30 global organizations. Participants were asked to choose the 15 most important leadership competencies from a list of 74. I’ve grouped the top ones into five major themes that suggest a set of priorities for leaders and leadership development programs. While some may not surprise you, they’re all difficult to master, in part because improving them requires acting against our nature.” HARVARD BUSINESS REVIEW

Board Ousts Execs from Wounded Warrior Project

“The Wounded Warrior Project’s board of directors fired the charity’s chief executive officer and chief operating officer Thursday following years of scandal and suspect management. The massive charity spent lavishly on snacks, company retreats, and more, whistleblowers [said]… The Wounded Warrior Project raised more than $340 million in 2014, making it one of the largest veterans’ charities in America.” THE DAILY BEAST

Good Governance: What is It?

“There’s no doubt that good governance is a key ingredient in the formula for sustainable growth. Yet many entrepreneurs, and perhaps even some corporate managers, remain uncertain as to what the term actually means, and what they should be looking for when thinking about the governance of their businesses.  The following are three major elements every entrepreneur should consider when making governance considerations, be it putting together or updating a governance manual, or seeking shareholder or board approvals on authority and systems. 1. How the organization should look and function…. 2. Managing the delegation of authority…. 3. Setting policies….” WAMDA

Germany’s “Women on Boards” Law Lacks Teeth

“Germany’s new law requiring that women hold 30% of top board seats went into effect this January—but many companies don’t seem to have noticed. Women now hold about 22% of supervisory board seats at Germany’s top companies, according to a new study from the Hans Böckler Foundation, which researches workplace issues. While the share of women in those top board positions has doubled during the past five years, it falls dramatically short of the new federally mandated quota.” FORTUNE

Good Intentions, No Results for Women in Japan's Boardrooms

“Sakie Fukushima remembers the novelty of being the only woman on Korn/Ferry International’s board of directors, which she joined in 1995. Ditto when she joined the Sony Corp., Kao Corp. and Benesse Corp. boards years later. Even now, three years after Prime Minister Shinzo Abe made increasing women’s participation in the workplace a tenet of his prescription for reviving Japan’s fortunes, the proportion of females on Japanese boards has hardly budged -- at around the lowest in the developed world. While companies strive to follow Abe’s lead and narrow the gender gap, there’s a confluence of obstacles so deeply rooted in Japan that overcoming them may take another generation.” BLOOMBERG BUSINESS

Secret to Greater Diversity: The Spreadsheet

“Diversity is a routinely trumpeted goal in the museum world. Many a meeting revolves around how to draw new audiences, and exhibitions increasingly feature the work of artists from varying backgrounds. But it has proved a lot harder to diversify the people who run museums. And that’s why Ghislain d’Humières, the French-born director of the Speed Art Museum in Louisville, Ky., uses a long and detailed spreadsheet to recruit people for the museum’s board of governors and board of trustees. His ‘board matrix’ assigns columns to race, age, gender and profession, and to less concrete categories like ‘creative thinker.’” NEW YORK TIMES

From the Archives

Kiss A Lot of Frogs: Strategies for Innovation

"Regardless of the challenges innovation poses, business growth is tied directly to maintaining competitive differentiation, and that requires innovation to avoid stagnation. This article takes a hard look at what is really required to succeed in business innovation and provides a roadmap for business leaders to consider implementing in their own organizations." METHOD FRAMEWORKS VIA BOARDSPAN

A Seat at the Table

Best Buy Co’s former CEO Brad Anderson is retiring from the company’s board of directors, while Claudia Fan Munce, a venture advisor at New Enterprise Associates and former managing director of IBM Venture Capital Group, becomes a Best Buy director. iRobot, maker of consumer robotics,  appoints to its board Michael Bell, president and CEO of Silver Spring Networks, a solutions provider for smart energy networks; iRobot investor Red Mountain Capital responds with disappointment that its board nominees were not also appointed, and hints at an upcoming proxy battle. Colgate-Palmolive Company elects C. Martin Harris, CIO of the Cleveland Clinic Foundation to its board of directors. Real estate investment firm CBRE Group welcomes new director Paula R. Reynolds, former CEO of insurance company Safeco Corp and former director at Coca-Cola Enterprises, Delta Air Lines and others.  Rachna Bhasin, chief business officer of Magic Leap, a pioneer in digital lightfield technology, joins the board of Ryman Hospitality Properties, a REIT specializing in hotel and resort properties.  Rent-a-Center, a furniture and electronics rent-to-own company appoints to the board Rishi Garg, former VP of corporate development and strategy for Twitter. Green Dot Corp., an issuer of prepaid credit cards, receives notice from activist investor Harvest Capital Strategies of its intent to nominate three new board members: Saturnino "Nino" Fanlo, president and CFO of Social Finance Inc.; George Gresham, former CFO of NetSpend Holdings; and Philip Livingston, who has 25 years of public company executive experience as well as substantial boardroom experience. The Open Networking User Group, which advocates for interoperable hardware solutions, appoints Chris Drumgoole, CTO at GE to the ONUG board, which includes 20 IT executives from companies including BNY Mellon, Bank of America, Cigna, Citigroup, Credit Suisse, FedEx, Fidelity, Gap Inc., Intuit, JPMorgan Chase, Morgan Stanley, Pfizer, UBS, and Yahoo.
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