June 22, 2016 - Issue 2.25 - 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.
Sensational times in the boardroom. Volkwagen's board is accused of knowing more than previously believed about "Dieselgate." The Viacom board has been pretty well deconstructed and remade in just one week's time, with continuing repercussions. And Lululemon's board has been rumored to have a "ghost" in its midst. Meanwhile, Tom Monahan, the CEO of CEB, argues in Harvard Business Review that boards, in their necessary effort to mitigate risk, might miss out on some opportunities to add strategic value—and he has some suggestions for doing better, including being a bit more daring. Read all about it here—then guarantee yourself a bump in popularity by sharing Director's Domain with a friend or colleague.

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The Hot Seat

VW Board Accused of Possible Market Manipulation

“Germany's financial watchdog has widened its probe of VW leadership for misleading shareholders. It has seen ‘real signs’ that the board failed its collective responsibility to warn of the impending Dieselgate scandal. News agency Reuters reports that BaFin, Germany's financial supervisory authority, has filed a complaint against the entire VW board … citing possible market manipulation. This comes just one day before VW is set to put forth a motion at its annual shareholders meeting to clear its board and oversight committee of wrongdoing in connection with the scandal.” DEUTSCHE WELLE

Across the Board

Curated news and insights from the world's boardrooms.

An Argument for More Daring Directors

“Growing regulation, increased investor focus on governance issues, and scary new categories of corporate risk (e.g. cybersecurity) create two notable challenges for the modern board.  First, directors face a real challenge in making sure that protection and alignment of key governance and risk management issues doesn’t crowd out equally important dialogue around strategy and operations.  And second, they need to ensure that – even with respect to strategy and operations – board scrutiny doesn’t result in an over-emphasis on conforming to benchmarks and industry norms…. In an era where governance and risk agendas are driving board conservatism, there is real risk that these data sets will be used to drive conformity, not evaluate strategy.” HARVARD BUSINESS REVIEW

5 Viacom Directors Ousted...

“After months of intrigue and speculation about a leadership change at Viacom, Sumner Redstone moved last Thursday to remake the board of the embattled entertainment conglomerate, changes that are widely believed to signal the imminent ouster of Viacom chairman-CEO Philippe Dauman. Redstone’s National Amusements Inc., which holds controlling interests in both Viacom and CBS Corp., announced that five members of the Viacom board had been removed and replaced by new directors of the company. Pushed off the 11-member board were Dauman, George S. Abrams, Blythe J. McGarvie, Frederic V. Salerno and William Schwartz. The five replacements are: Kenneth Lerer, co-founder of the Huffington Post and chairman of Buzzfeed; Nicole Seligman, a lawyer and former Sony executive who represented President Bill Clinton during his impeachment trial; Judith McHale, former Discovery Communications chief executive;  Thomas J. May, the chairman of the Eversource Energy utility and director at Bank of America; and Ronald Nelson, chairman of Avis Budget Group and former co-chief operating officer of DreamWorks SKG.” VARIETY

… Including Some of the Board’s Oldest Members

“The five directors slated to go are among the oldest members of the board; two are in their 80s and one is in his 70s. Those who will remain on the board with the Redstones include Tom Dooley, Viacom’s COO (who was awarded $93.4 million over the last three years), along with two directors in their 50s, and one in her 40s. On Wednesday, before the announcement, Tom Freston, former Viacom CEO, had told CNBC the board needed younger members who understood current media culture.” FORTUNE

… But They Are Not Going Easily

“One of Viacom Inc.’s ousted directors wants a Delaware judge to make controlling shareholder Sumner Redstone undergo a physical and mental examination to determine whether he was lucid when he removed five board members last week. Fred Salerno filed his request on Wednesday in Delaware Chancery court, where he already suing over his removal, to have the 93-year-old billionaire’s mental capacity evaluated.” BLOOMBERG

Lululemon and Its Little-known Director

“Lululemon became a lightning rod for conspiracy theorists this week, with some outlets suggesting that its longest-tenured board member was a ‘ghost.’ … While I give TheStreet's Anders Kietz a lot of credit for tracking down details, a few clues make it highly improbable that Rhoda Pitcher — the board member in question — is a figment of one's imagination. More likely, she is a low-profile woman that's taken an unconventional route to Lululemon's board after doing consulting work for founder Chip Wilson back in 2005.” MOTLEY FOOL

Yahoo’s Secret Deal to Placate Activist Investor

“After weeks of negotiations, Yahoo Inc. Chief Executive Marissa Mayer struck a secret truce in April 2015 with the activist investor who was threatening a battle for boardroom seats at the troubled Internet company. Ms. Mayer and her executive team agreed to be more mindful about Yahoo’s rising costs. In return, the activist investor, Starboard Value LP CEO Jeffrey Smith, agreed to withdraw his board nominations. The talks haven’t been previously reported. At an employee meeting later, Ms. Mayer played down the threat from Starboard. One person at the meeting recalls her saying: ‘Some of our investors think they own more of the company than they actually do.’ Then Yahoo’s costs ballooned.” WALL STREET JOURNAL

Peter Thiel Re-elected to Facebook Board

“Apparently launching a covert multi-million dollar revenge campaign to bankrupt a large media organization isn't enough to get booted from the Facebook board. Mark Zuckerberg, Facebook's founder and CEO, allowed for re-electing billionaire Peter Thiel to the company's board of directors at an annual shareholder meeting on Monday, despite revelations in recent weeks about Thiel's legal efforts to destroy Gawker and his role as a delegate for Donald Trump.” MASHABLE

Another View: Women Are Advancing on Boards

“Another day, another report bewailing the number of women on corporate boards of directors. According to a tally released last Tuesday by Catalyst, a nonprofit group that focuses on women in the workplace, 27 percent of new appointments to the boards of companies listed on the Standard & Poor’s 500 Index in 2015 went to women. … Catalyst gloomily describes these findings as ‘dismal.’... But is ‘dismal’ really the right word for the advance of women onto boards of directors? BOSTON GLOBE

From the Boardspan Archives

How Well-Run Boards Make Decisions

“Directors looking to revamp their own decision-making processes have been hampered by the veil that typically obscures the workings of corporate boards. Boards can turn to other boards, investors, and researchers for guidance on the best governance practices visible to outsiders, but they usually lack the vantage point to draw lessons from other companies’ best inside practices. This article—based on interviews that my colleague Andy Zelleke and I conducted with directors and executives of 31 large, publicly traded companies, along with a detailed study of three particular boardroom decisions—is meant to help corporate boards learn from one another. It identifies some formal processes and informal norms and principles companies can use to improve the quality of decisions that their directors make behind closed doors.” HARVARD BUSINESS REVIEW via BOARDSPAN

A Seat at the Table

Boardspan celebrates two new directors joining the board of e.l.f. Cosmetics: Sabrina Simmons, CFO of apparel giant The Gap and Lauren Levitan, CFO of the licensed sports merchandise retailer Fanatics. We were delighted to advise e.l.f. Cosmetics, a TPG portfolio company, and congratulate Sabrina and Lauren.

Props to all who have recently gained new board seats:
  • Talbott Roche, CEO and president of the prepaid and payments technology supplier Blackhawk Network (and, full disclosure, she is an investor/advisor to Boardspan), joins the board of video game developer Electronic Arts.
  • Logan Green, cofounder and CEO of ridesharing company Lyft, joins the board of ecommerce behemoth eBay.
  • Carol Lindstrom, vice chairman of Deloitte, president of the Deloitte Foundation, and a former executive at Deloitte, joins the board of Genpact Limited, a multinational business process and information technology services company.
  • Hillary Krane, EVP, CAO and general counsel of NIKE joins the board of home furnishings retailer RH (Restoration Hardware Holdings).
  • Impact Health, which uses data analytics and machine-learning to help consumers make healthcare choices, welcomes two new directors: Sean Ammirati, formerly COO at ReadWriteWeb and cofounder and CEO of mSpoke, and Alex Iskold, formerly Chief Architect at DataSynapse (acquired by TIBCO), Founder, CEO of Information Laboratory (acquired by IBM), and founder and CEO of GetGlue (acquired by
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