February 18, 2016 - Issue 2.7 - 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.

They are active all right. Activist investors are seemingly everywhere: reshaping the board of insurer AIG, demanding changes in the corner office and boardroom of media giant Viacom, even looking for some action in the UK at luxury automaker Rolls-Royce. A writer for Harvard Business Review makes the case that the presence of activist investors often leads to better company performance. If, however, you would prefer to avoid such interference, you’ll find some expert advice here as well. Hint: It’s not just lagging stock prices that catch the attention of activists--a board that fails to adopt best practices, like diversity among its directors, is more vulnerable to outsiders wanting to have their say.

The Hot Seat


Activist Takes Aim at Viacom's CEO and Board

“After Viacom’s stock hit a 52-week low this week, the activist investor [SpringOwl Asset Management] called for the embattled media conglomerate to elect six independent board members. SpringOwl, which owns an undisclosed stake in the company behind Paramount, MTV and Comedy Central, is also pushing for Viacom to oust Philippe Dauman, its CEO and newly appointed executive chairman. The hedge fund is agitating for change at a difficult time for Viacom. On an earnings call on Tuesday, Dauman slammed ‘naysayers, self-interested critics and publicity seekers’ and bristled when asked about his elevation to the chairman role. Viacom’s stock plunged 21% that day.”  VARIETY

Across the Board

Curated news and insights from the world's boardrooms.


More Profitable, More Productive, More Innovative!

"Research shows that activists apparently make companies more profitable and productive, on average—not just in the next quarter but three years after the fact. And although their intervention may be followed by a decrease in R&D spending, the companies appear to become more innovative in the years following. One study found that activists often target firms that are lagging in IT and then help them catch up to their competitors. The social impact of activists is less well understood.” HARVARD BUSINESS REVIEW

A Stale Board Can Invite Activists

“Shareholder activists are targeting companies of all sizes, in all industries, with all reputations and history. They’re asking about company strategies, performance, and where to unlock shareholder value. But activists don’t only go after weak performance and mismanaged strategies. Often, governance issues are front and center in their target range. In 2015, 46% of all 656 public actions against U.S. public companies were board related ... mean[ing] that activists think the board isn’t sufficiently independent of the CEO, that the board has sitting 'zombie' directors who serve despite failing to receive majority shareholder support, or that there’s no shareholder-engagement program.” CFO MAGAZINE

AIG Agrees to Give Icahn a Seat

“American International Group Inc., the insurer being pressured by billionaire investor Carl Icahn to split up, agreed to nominate one of the activist’s allies to the board of directors along with hedge fund manager John Paulson. The board will be expanded to 16 directors from 14, the New York-based insurer said Thursday in a statement. Joining Paulson is Samuel Merksamer, a managing director at Icahn Capital.” BLOOMBERG BUSINESS

Rolls-Royce On Receiving End of U.S. Activism

“Rolls-Royce is said to be preparing to allow ValueAct a seat on its board after the US activist investor sought to reassure the company and its shareholders that it was a long-term backer with the right experience to help revive the embattled engineer. Allowing a US activist fund a board seat at a FTSE 100 company would be highly unusual, but ValueAct has been working behind the scenes to convince Rolls-Royce and its shareholders that it is not an opportunistic investor seeking a rapid break-up or trying to extract cash from the business.” THE GUARDIAN

3 Guesses As To Why More Women Aren’t on Boards?

“While the researchers touch on a number of questions, there’s one that stands out: ‘What is the primary reason that the number of women on boards is not increasing?' ...” FORTUNE

What Should You Worry About in 2016?

“With the 2016 U.S. presidential election season upon us, what political issues most concern business leaders? Leading the list are the economy; the regulatory environment; and cybersecurity, according to our global survey of over 4,000 corporate directors…. Aside from these three broad worries, directors are also anxious about corporate tax rates, political instability, and healthcare costs.” HARVARD BUSINESS REVIEW

Why You Need A New Cybersecurity Plan

“I wish I could tell you that if you have a cybersecurity plan then you’re covered. But you are not. Why? Because the hackers and the black hats and the pursuers on the Dark Net and the Dark Web are one or more steps ahead of all of us all the time. If they weren’t, then there would be no security breaches or identity thefts or deadly hacks. With that said, here are three key reasons why your cybersecurity plan is outdated and needs to be revised. 1. If it wasn't created yesterday, then it's outdated…CIO.COM

First Step to a More Diverse Board

"Effective succession planning requires routine assessment of board members’ collective attributes, experience, expertise and, most importantly, diversity. And by diversity, I mean gender and ethnic diversity, as well as diversity of skills, backgrounds, personalities, and opinions. Boards should consider the company’s strategy when thinking about director succession and upcoming board member retirements. What aspect of diversity will the board need to help the company deliver on its strategy and stay one step ahead of the competition?" FORTUNE

Tips for Success: Think Like a Startup + "Do Your Job"

"The airline industry is noted for hardball tactics and large egos. But [American Airlines CEO Doug] Parker counsels teamwork, relationship building, and old-fashioned hard work. The way to get noticed within a large and complex organization is to 'show up and do your job,' he recently told a group of Stanford Graduate School of Business students. Here are lessons on management, work-life balance, and how to make a mature organization function like a startup that Parker shared…." QUARTZ

From the Archives

The Creative Power of Many

"Imagine you asked two teams to tackle the same challenge, and the groups came back to you with entirely different proposals. Would you instinctively green-light the one that seemed more promising? Or would you allow both teams to play out their approaches for some time (maybe even years) before deciding how to proceed?" Strategy+Business via Boardspan

A Seat at the Table

Amazon elects Corning chief executive Wendell Weeks to its board of directors. The UPS board appoints the company's CEO David P. Abney as chairman, and creates a new lead independent director position and fills it with William R. Johnson, a former chairman, president, and CEO of the H. J. Heinz Company.  Cosmetics giant L’Oreal is recommending Eileen Naughton, Google’s managing director and VP for UK and Ireland sales and operations, to join the board. Global IT services provider Unisys elects to its board Philippe Germond, chief executive of Europcar Groupe, a publicly traded European car rental operator with a presence in more than 140 countries. Network communications provider Windstream Holdings appoints two new independent directors: Jeannie H. Diefenderfer, CEO of courageNpurpose and a former Verizon Communications executive, and Larry Laque, EVP global real estate and facilities for Discovery Communications.
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