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February 10, 2016 - Issue 2.6 - 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.
Oh, Silicon Valley and its penchant for pushing limits. Jack Dorsey, already managing dual CEO roles at Twitter and Square, is looking to be re-elected to the Disney board—begging the question: Will stakeholders at all three companies be well served by such a plan? Marc Andreesen, the venture capitalist and Facebook director, shares his personal opinions about the Indian government's decision to block Facebook’s latest business move, then finds himself redacting an inflammatory Tweet. And Zenefits jumps into crisis management after its CEO departs amid allegations that an excessive focus on new business caused it to lose site of regulatory requirements for insurance sales. The company's response to right the wrongs include promoting its COO into the chief executive role and adding three high-profile board members: PayPal cofounder Peter Thiel, Valor Equity Partners founder Antonio Gracias, and TPG Growth founder Bill McGlashan. What a week!

The Hot Seat

 

Zenefits: Big-Name Board Members to the Rescue?


"Parker Conrad, a founder of the benefits software startup Zenefits, a fast-growing provider of software aimed at companies to manage employee health benefits, has stepped down as CEO and as a director of the company. David Sacks, the company’s COO, was named to replace him. Conrad’s departure comes after a series of embarrassing disclosures that its employees may have sold health insurance without being licensed to do so.… The company also added three new directors: Peter Thiel, co-founder of PayPal and of VC firm Founders Fund; Antonio Gracias, founder and managing partner of Valor Equity Partners; and Bill McGlashan, founder and managing partner at the private equity firm TPG Growth…. Sacks went on to say that Zenefits’ emphasis on winning in the marketplace weakened its attention to following proper procedures. ‘Our culture and tone have been inappropriate for a highly regulated company,’ he wrote. ‘Zenefits’ company values were forged at a time when the emphasis was on discovering a new market, and the company did that brilliantly. Now we have moved into a new phase of delivering at scale and needing to win the trust of customers, regulators, and other stakeholders.’" RECODE

Across the Board

Curated news and insights from the world's boardrooms.

 

All Work and No Play Makes Jack A Busy Boy

“You might think Jack Dorsey had his hands full as the CEO of two companies: Twitter and Square. But he's in the running again for another job, too. Dorsey, 38, is up for shareholder vote to renew his membership of the board of directors at media giant Walt Disney at the company's 2016 annual meeting to be held March 3 in Chicago. It's easy to see why Dorsey would want to be involved again given Disney's size and influence. Dorsey has served as a Disney board member since December 2013.” USA TODAY
 

Facebook Director Eats His Tweets …

“Marc Andreesen was forced to do something rare Tuesday night when he erased a comment on Twitter that set off a storm of criticism. The prominent venture investor is known for his multi-part ‘tweet storms’ on various issues and practically never backs down from a controversy in them. But when he criticized India's decision to ban the Free Basics service offered by Facebook, where he is a board member, he got more than he bargained for.” SILICON VALLEY BUSINESS JOURNAL
 

...And Could Give Up His Seat

“Twitter may leave the hot spotlight of the public markets…. Per [a report on The Information], private-equity firm Silver Lake Partners and Andreessen Horowitz founder Marc Andreessen are weighing a deal [to acquire Twitter]. The latter is particularly interesting, as Andreessen is on the board of directors of Facebook and has a significant equity position in the company…. If Andreessen becomes a major shareholder or board member with Twitter, questions of interlocking directorships will mostly likely be raised, especially as the two are considered competitors [and]… Andreessen is a member of Facebook's Compensation Committee. Dodd Frank legislation requires compensation-committee members to be independent … [besides,] having a major shareholder of your main competitor on your compensation committee is an odd structure.” THE MOTLEY FOOL


Viacom Sidesteps Request for “An Independent Voice”

“Viacom, the media company that owns Paramount Pictures, MTV and Nickelodeon, said [last] Thursday its board of directors appointed CEO Philippe Dauman as the new executive chairman to succeed the ailing Sumner Redstone, a move that clarifies its succession plans amid pressure from investors. … Dauman's elevation was approved despite an intimation from Redstone's daughter, Shari Redstone, that the new chairman should be someone with ‘an independent voice’ and not a trustee of Sumner Redstone's family trust.” USA TODAY


S&P 500 Boards: An Elite Club for the Elderly?

“Even though Sumner Redstone isn't heading Viacom Inc. and CBS Corp. any more, you can still find him in a corporate club that's as elite as it is elderly: on the board of directors at Standard & Poor's 500 companies. Redstone, 92, will remain on the boards of both companies. A fellow 92-year-old, Charlie Munger, also holds seats on two boards. That fits with the pattern on U.S. corporate boards, a rarefied realm where directors are getting older and staying put longer.” BLOOMBERG BUSINESSWEEK


Try the "Triangle" for Smarter Startup Board Meetings

“I spend a lot of time in board meetings. Specifically, private company startup board meetings. Rooms filled with some of the most talented, bold, daring and dedicated people on the planet, devising solutions to some of the economy’s toughest problems. More often than not, however, most of these board meetings fail. Despite the good intentions and great experience in the room, the painful truth is that precious time and energy is frequently squandered by directors and startup CEOs.” TECHCRUNCH
 

The Odd Couple of Governance

“It is one of the oldest battle lines in corporate governance: managerial autonomy versus shareholder rights. The battle is particularly acute in the US at present. And now, as the Financial Times revealed last week, we have an initiative by Jamie Dimon, chairman and chief executive of JPMorgan Chase and Warren Buffett, the sage of Omaha, to discuss ways to encourage longer-term investment and reduce friction between companies and shareholders. Will this tilt the balance one way or the other? They are, it has to be said, an odd pair to pioneer a new set of governance principles.” FINANCIAL TIMES (subscription)


“Only 10 Openly LGBT Directors in Fortune 500”

"Global audit and tax advisory service KPMG has been announced as the Founding Sponsor of a recently launched initiative from Out Leadership to boost the number of openly LGBT directors on corporate boards…‘We estimate that there are currently fewer than 10 openly LGBT directors of Fortune 500 companies – less than 0.3%,’ said Out Leadership Founder and Principal Todd Sears in a statement. ‘Only two companies in the Fortune 500 reference sexual orientation or gender identity in their board diversity statements. But board diversity enhances corporate performance, mitigates risk, and helps create market opportunities.'” GAY STAR NEWS
 

The Trouble with Talkative Board Members

"How should a university board respond to a board member who publically criticizes its decisions and chooses to disregard the board’s preferences for how it communicates with its constituencies? This is the question facing Carleton University of Ottawa, Ontario. A member of their board, Professor Root Gorelick, writes about, and criticizes, the board’s decisions on his personal blog. The board of Carleton would prefer to keep its deliberations confidential … Professor Gorelick refuses to comply…. As a person voted onto the board to represent the faculty, he argues that it is particularly problematic to prevent him from reporting back to that constituency." NONPROFIT QUARTERLY
 

What’s True for Credit Unions Is True for All

"The last couple of decades, many credit unions have implemented plans to help increase diversification among their boards of directors. Typically, this diversification is thought of primarily along racial, occupational or geographical lines. While it is important for your board to offer a true mirror of your overall membership, many credit unions are missing the boat when it comes to an even more important diversification area — age. The average age of a credit union board of director is typically somewhere in its mid-to-late 60s. If your credit union wants to grow (and a growth strategy must be a part of your overall strategic plan) it only makes sense that you work now to diversify your board’s age." CU INSIGHT


From the Archives

6 Hot Topics for Your 2016 Board Agenda

"The road ahead for companies in 2016 will be particularly challenging given the level of global volatility and uncertainty—e.g., the geopolitical environment, commodity prices, interest rates, currency fluctuations, slowing growth in emerging markets—as well as technology advances disrupting established industries and business models. In this environment, the spotlight on corporate directors will continue to intensify as investors and regulators scrutinize the board’s involvement in strategy, risk, and compliance. Drawing on insights from our interactions with directors and business leaders over the past year, we’ve highlighted six items for boards to keep in mind as they consider and carry out their 2016 agendas. 1. Deepen the board’s engagement in strategy and assess the continuing validity of assumptions at the core of the strategy." KPMG via BOARDSPAN

A Seat at the Table


HP appoints Aida Alvarez, former administrator of the Small Business Administration and current Walmart director to its board; HP's board now includes five female leaders, representing 38% of its composition, positioning HP with the most diverse board in the tech sector. Chip Wilson, founder of Lululemon Athletica and a holder of 14.5 percent of the outstanding shares of the company, exercised his board nomination rights to appoint Kathryn Henry as a director. Margo Georgiadis, president of Google Inc., Americas, has been named a vice chair of the AdCouncil's board of directors, and will assume the role of board chair on July 1. Toymaker Hasbro welcomes Sir Crispin Davis, former CEO of publishing and information solutions company Reed Elsevier as an independent director to its board.  OnDeck, a platform for small business loans, adds former E*Trade CFO Bruce Nolop to its board. Prudential Financial elects three new independent directors to its board: Peter Rupert Lighte, former vice chairman of J.P. Morgan Corporate Bank and founding chairman of JPMorgan Chase Bank, China; George Paz, chairman and CEO of Express Scripts; and Michael A. Todman, former vice chairman of the Whirlpool Corporation.  Michael Zeisser, chairman of U.S. investments for Alibaba Group, joins Time Inc.'s board of directors. MGM Resorts Resorts launches its inaugural board of directors of MGM Growth Properties LLC with two independent directors: Thomas Roberts, a corporate governance consultant and former partner at Weil, Gotshal & Manges, and Michael Rietbrock, former head of global equity research at Nomura Securities.
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