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May 26, 2016 - Issue 2.21 - 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.
Power plays. Exxon Mobil shareholders demand greater influence over the company’s climate change policies and win a vote to allow minority shareholders to nominate board candidates—eco-director to come?… Viacom is roiled, as 92-year-old chairman emeritus Sumner Redstone strips his long-time protégé and CEO Philippe Dauman of his seat on the family trust that will ultimately control the company… The Google/Alphabet board is accused of supporting the company’s alleged use of Android as a “Trojan Horse” to advance anti-competitive practices for other services the company offers...  With so many throwing their weight around the boardroom, you would be forgiven for missing the news of a host of interesting board appointments in our Seat at the Table department. It's a packed list this week.

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The Hot Seat


Imagine a Climate Activist on the Exxon Board

“Voters at Exxon Mobil Corp's annual meeting on Wednesday approved a measure to let minority shareholders nominate outsiders for seats on the board, meaning a climate activist could eventually become a director at the world's largest publicly traded oil company. The so-called proxy access measure was the first Exxon shareholder proposal since 2006 to be approved, and it was the only one of 11 proposals related to climate change to pass at meetings held on Wednesday by Exxon and fellow U.S. major Chevron Corp. This year's meetings were arguably the tensest ever, coming on the heels of the Paris accord to curb fossil fuel emissions and as New York's attorney general investigates allegations from environmentalists that Exxon misled the public about climate change risks.” NEW YORK TIMES
 

... And how Could This Come About?

“Calpers, the largest US state pension fund, is pushing for greater access to the board of ExxonMobil as it seeks to raise concerns over the energy group’s climate change policies. The fund, which manages about $290bn in retirement funds for California state employees, said it was ‘extraordinary’ that large shareholders could not speak to Exxon’s directors…. Calpers argues that shareholders need more influence over the board to ensure the company takes seriously the risks that climate change could pose to its business. Anne Simpson, Calpers’ head of corporate governance, said: ‘As a director, your job is to reflect the owners’ wishes. And if you don’t feel able to do that, you should step aside.’” FINANCIAL TIMES

Across the Board

Curated news and insights from the world's boardrooms.

 

Redstone Rocks Viacom...

“Viacom employs a lot of accomplished storytellers. But few of them could dream up a drama that’s more compelling — and potentially important — than the one taking place right now at the company’s own offices in New York and Hollywood. On Friday night, Sumner Redstone — or people around him — rocked his media empire by kicking Viacom CEO Philippe Dauman and board member George Abrams off of his family trust and the board of his privately held theater chain, National Amusements. That effectively would give Redstone’s daughter, Shari, control of Viacom and CBS…. This story is important, but complicated. Here are some of the things you’ll need to know to keep up with it…” DEADLINE HOLLYWOOD
 

...What Will It Mean for Paramount?

“[Viacom CEO Philippe] Dauman announced in February he was looking to sell a minority interest in [Paramount Studios]. It was his first big move after succeeding Redstone as chairman three weeks earlier. The sale, which could raise $1 billion or more, is part of his strategy to reduce Viacom’s $11.5 billion in debt, reinvigorate cable TV networks like Comedy Central and find a partner to restore Paramount’s luster. Instead, it has led to a falling out between the executive and his longtime mentor and put those plans at risk…. Viacom will press ahead with those plans despite opposition from its largest shareholder.” BLOOMBERG BUSINESS
 

Might That Board Seat Get You a Promotion?

“More than 25 years ago, William Sahlman wrote the HBR article ‘Why Sane People Shouldn’t Serve on Public Boards,’ in which he compared serving on a board to driving without a seatbelt, that it was just too risky—to their time, reputations, and finances—for too little reward…. So why would a busy executive agree to sit on a board? … What do executives gain from serving on boards? This question was at the heart of a recent study…. Specifically we studied whether or not board service increased an executive’s likelihood of receiving a promotion, becoming a CEO, and/or receiving a pay increase…” HARVARD BUSINESS REVIEW
 

CEO Pay: The Sky’s the Limit

“CEOs at the biggest companies got a 4.5 percent pay raise last year. That's almost double the typical American worker's, and a lot more than investors earned from owning their stocks — a big fat zero. The typical chief executive in the Standard & Poor's 500 index made $10.8 million, including bonuses, stock awards and other compensation, according to a study by executive data firm Equilar for The Associated Press.... While many Americans say they're angry about how much CEOs are making, the boards of directors who set their pay aren't. They say they're setting pay for performance, and in line with their competitors. That culture of benchmarking compensation against peers is one reason why pay keeps escalating...” NEW YORK TIMES


Did Google Board Support Anti-competitive Measures?

“The antitrust controversy swirling around Alphabet, the holding company for Google, just escalated a bit further.... In a 53-page complaint filed in state court, shareholder Robert Jessup accuses Alphabet CEO Larry Page, President Sergey Brin, and Executive Chairman Eric Schmidt of mismanagement that could lead to $7.4 billion in fines at the hands of the European Commission, which is suing Google on a raft of antitrust charges. ‘For years, the Board has allowed Alphabet to use Android as a Trojan Horse for other services offered by the Company – imposing anticompetitive restrictions on device manufacturers and developers through licensing arrangements for proprietary Android technology and applications,’ the complaint reads.” FORTUNE
 

Facebook Director Secretly Funded Defamation Suit

“The First Amendment grants all American citizens freedom of speech. That means whatever venture capitalist oddball Peter Thiel thinks about the U.S. Constitution, and how he expresses that view, is up to him.  As a director at Facebook, the $340 billion social-networking company embroiled in a free-speech imbroglio of its own, Thiel has a different set of standards to consider, however. They do not seem to be consistent with a report by Forbes that he is backing a defamation case against Gawker Media by former professional wrestler Hulk Hogan...” CNBC
 

All-White, All-Male Board Draws Attention

"Discovery Communications over the years has taken steps to appeal to female and minority audiences, expanding its lineup to include Discovery Familia, the Oprah Winfrey Network and Investigation Discovery, which focuses on domestic violence and civil-rights issues. But the Silver Spring, Md.-based company still has an all-white, all-male board of directors — and shareholders are increasingly speaking up. Last week, during an annual meeting at Discovery’s headquarters, shareholders presented and voted on a proposal urging the company to outline the steps it has taken to 'foster greater diversity on the board.'” WASHINGTON POST
 

A Tale of Shared Board Secrets, Insider Trading

"[Thomas C.] Davis retired from investment banking at Credit Suisse First Boston in 2001, the government said, but not from the free-spending lifestyle it enabled. His finances were so troubled, the authorities said, that he even misused money from a charity. [The country’s most successful sports bettor William T. 'Billy'] Walters also lent him money. Mr. Davis, then the chairman of Dean Foods, returned the favor by feeding Mr. Walters boardroom secrets as far back as 2008, the authorities say…." NEW YORK TIMES

From the Boardspan Archives

The Myths of Executive Compensation

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. The first myth is that CEO pay is driven by competition. To that I say 'bull.'" DIRECTORS & BOARDS via BOARDSPAN
A Seat at the Table

Jim McKelvey, co-founder and director of Square, joins the board of Calpian, a mobile money solutions provider. ★ Retailer Chico's FAS nominates to the board Bonnie Brooks, vice chairman of Hudson's Bay Company, and Bill Simon, former president and CEO of Walmart U.S. ★ Bob Ridout, former VP and CIO of DuPont, joins the board of RF Code, a provider of data center asset management, environmental and power monitoring solutions. ★ Deborah A. Jorn, former EVP and group company chair at Valeant Pharmaceuticals, joins the board of Orexigen Therapeutics, a biopharmaceutical company focused on the treatment of obesity. ★ The yet-to-be-built Lucas Museum of Narrative Art, which will house George Lucas’s collection, names former U.S. Secretary of Education Arne Duncan to its board of directors; the museum, originally proposed for San Francisco’s Presidio, is now planned for Chicago’s lakefront, but faces opposition by park preservationists. ★ Joule, a low carbon fuels company, appoints to its board William J. Brady Jr., CEO, director and co-founder of Enchi Corporation, an industrial biotechnology company developing advanced organisms to convert cellulosic biomass to fuels. ★ Randall Spratt, former EVP, CIO and CTO at McKesson, joins the board of Imperva, a provider of cyber-security solutions that protect business-critical data and applications. ★ Chemistry professor Cynthia Friend, Ph.D., director of the Rowland Institute at Harvard University and of the DoE Energy Frontier Research Center for Sustainable Catalysis at Harvard, joins the board of Bruker Corp, maker of high-performance scientific research instruments. ★ The Wingstop restaurant chain appoints to its board Wesley McDonald, CFO of Kohl’s Corporation. ★ Home Bancorp and its subsidiary Home Bank appoints three new board members: Kathy J. Bobbs, CEO for The Regional Health System of Acadiana, including Women's & Children's Hospital and Lafayette Surgicare; Chris P. Rader, CEO of IT security firm Rader Solutions; and Donald W. Washington, a partner in the law firm of Jones Walker LLP. ★ Auxilio, a provider of managed print services and IT security for the healthcare industry, adds two new board members: Drex DeFord, a long-time healthcare industry executive and co-founder of Next Wave Connect; and Mark Roberson, COO of restaurant operator Chanticleer Holdings. ★
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