November 19, 2015 - Issue 10 - 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.

CalPERS, one of the world's largest public pension funds with $293 billion in assets, is throwing its weight behind change. Calling for a major boardroom makeover, the behemoth investor is asking the most common face in the boardroom—the older white man—to step aside and make way for people of color and women. Meanwhile, the biotech industry, one of Wall Street's liveliest darlings, is learning the hard way that better corporate governance is essential to good performance. In the Hot Seat this week is that old buzzword "Sustainability", as investors join environmentalists in asking: What did the Exxon board know about climate change research and could a greater emphasis on sustainability in the boardroom have reduced risk for the company (and the planet)?

We hope you enjoy this issue of Director's Domain and won't be too disappointed to learn that we will not be publishing next week. Look for our next issue on Thursday, December 3. And have a very happy Thanksgiving!

The Hot Seat


Did Exxon's Board Know About Climate Change Research?

“Exxon, [accused of deliberately misleading the public on climate change], presents a perfect case for examining how building sustainability into board governance can help prevent and manage risk. In the case of Exxon, climate risk is a sustainability issue that has been raised by investors through shareholder resolutions for well over a decade. So it's logical to ask how much did Exxon's board know about the company's research on climate change, and did any of the board members have the expertise necessary to question it?” HUFFINGTON POST

Across the Board

Curated news and insights from the world's boardrooms.

Thanks and Goodbye, Older White Guys

“California’s big public pension fund has a message for corporate board members like Lee Raymond, the 77-year-old lead director at JPMorgan Chase & Co.: It’s time to retire. The $294 billion California Public Employees’ Retirement System is taking aim at older, white men on corporate boards with a proposed policy aimed at adding more women, minorities and gays to key positions at the largest U.S. companies.” BLOOMBERG BUSINESS

“What the Heck, Biotech?”

“Distracted by the biotech sector’s promise of improving society’s health, some investors are ignoring unhealthy governance practices. Iconic financial institutions and revered investors are infected with biotech fever, and many have suspended their normal good judgment and have blessed unsavory practices at firms such as Mylan, Theranos, Valeant, and Turing Pharmaceuticals…. Here is a rundown of the governance nightmares that are surfacing at these former stock market darlings. FORTUNE

Wells Fargo's Success In Succession Planning

"Wells Fargo is showing rivals what a real succession plan looks like. America’s most valuable bank, with a $282 billion market cap, has just promoted veteran Tim Sloan to president and chief operating officer. He now seems set to take the top job when Chief Executive John Stumpf hits mandatory retirement in 2018. It’s a lesson in leadership that other banks have had a hard time learning." REUTERS

When Two Leaders Are Better Than One

“Companies that separate the roles of CEO and chairman and appoint strong outsiders to the latter position may have one advantage: they are more likely to benefit from strong governance. The Volkswagen debacle, just like other big crises, reminds us how expensive weak governance can be. With a strong, competent, and independent chair able to step in and assume responsibility (and possibly act as interim CEO), a company in a crisis that destroys its leadership is better placed to navigate the storm.” HARVARD BUSINESS REVIEW

The Toshiba Scandal & Japan’s New Governance Guidelines

“Toshiba Corp's lawsuit against former executives linked to a $1.3 billion accounting scandal is a defensive maneuver that highlights a lack of sincere reform, lawyers and corporate governance experts said. The 300 million yen ($2.44 million) in damages Toshiba is seeking pales in comparison with the over $7 billion decline in its stock market value since the accounting problems came to light in early April. Moreover, lawyers said, Toshiba has yet to fully explain why it is limiting its lawsuit to just five former executives, effectively absolving some current officials who were in senior roles during the years it was padding profits. Such doubts highlight worries that Japan's newly-implemented corporate governance guidelines could fail to bring about substantial improvements in management accountability.” REUTERS

Since When Have Activist Investors Been Respectable?

"Once reviled as villains operating on the fringes of the market, activist investors like Carl Icahn are now powerful forces at work in the mainstream of business… And their influence is only growing. (Working Knowledge Editor’s Note: Carl Icahn is in the news again. On Monday, SEC filings revealed the militant investor has sold his entire stake in eBay, after successfully pushing the company to spin off its PayPal operation. Harvard Business School professor Joseph Fuller looks at the rise in respectability and influence that activist investors such as Icahn are gaining on Wall Street.)" WORKING KNOWLEDGE

Activists Take Europe by Storm

"Globally there have been 860 shareholder activist actions so far this year and Europe has seen a 126% increase in activist actions since 2010, with the U.K. as the primary focus. Large and mid-cap companies are most ‘at risk’ from an activist approach, says research from Linklaters, the international law firm. Its research concludes that ‘an increasing number of publicly active activists with ever-deeper pockets, combined with attractively priced corporates sitting on large cash piles, is leading to a "perfect storm" of shareholder activism activity in Europe.'" FORBES

All's Quiet After Carnegie Hall Clash

“Carnegie Hall — whose former chairman, Ronald O. Perelman, stepped down last month after clashing with its executive and artistic director, Clive Gillinson — announced on Monday that a legal review that it commissioned had found no evidence to support allegations that Mr. Gillinson had tried to undermine Mr. Perelman’s oversight responsibilities…. Over the summer, Mr. Perelman, a hard-charging billionaire businessman, suspended Mr. Gillinson [accusing him of a “troubling lack of transparency”], only to see members of the board reinstate him the next day.” NEW YORK TIMES (subscription)

Stanford Governance Experts Dispel 7 Popular Myths

“Because of the scope of the board’s role and the vast responsibilities that come with directorship, companies are expected to adhere to common best practices in board structure, composition, and procedures. While some of these practices contribute to board effectiveness, others have been shown to have no or a negative bearing on governance quality. We review seven commonly accepted beliefs about boards of directors: 1. The chairman should be independent 2. Staggered boards are bad for shareholders 3. Directors that meet NYSE independence standards are independent 4. Interlocked directorships reduce governance quality 5. CEOs make the best directors 6. Directors have significant liability risk 7. The failure of a company is the board’s fault.”  VALUE WALK

A Guide to Better Non-Profit Board Meetings

“If you want to run a successful board meeting, start with a successful agenda, says Denise Fellows of Cass Business School. —I sit on a number of charity boards, both as chief executive and as trustee and I have, on occasion, been known to need a stiff drink when I get home (tea, two sugars obviously!)…. Depressingly, many good trustees will turn tail and run after a few dire meetings, however committed they may be to the cause. Well-run meetings are an essential part of good governance and being able to make strategic change within charities, and the best board meetings start with a well-planned agenda, to ensure that trustees are able to contribute meaningfully.” CIVIL SOCIETY 

A Seat at the Table

★ Glassdoor welcomes former DreamWorks CFO Kristina Leslie to its board.★ Groupon co-founder and chairman Eric Lefkofsky takes a seat on the board of DRIVN, a Chicago-based tech company aiming to revolutionize used-car sales. ★ High-heeled fashion purveyor Jimmy Choo appoints to its board Elisabeth Murdoch, founder of the TV production company Shine Network, and daughter of newspaper magnate Rupert Murdoch.  Facebook CTO Mike Schroepfer joins the board of investment management firm Wealthfront. ★ Melanie Healey, former Procter & Gamble group president for North America, joins the board of Target. ★ Influential, a mobile-first platform for social media marketing, welcomes to its board Hope Frank, one of Forbes’ “Top 50 CMOs” and the current global chief marketing officer for Nexusguard. ★ Media holding company InCapta welcomes Richard Newman, former head of Microsoft’s Xbox game studio in Japan. ★ Security vendor vArmour announces that former Cisco COO Gary Moore has landed a seat on its board. ★ Lowe's welcomes Bertram L. Scott, SVP at Novant Health and former CEO of Affinity Health Plan. ★ Tesla's former CPO Peter Carlsson joins the advisory board of Elementum, maker of a software platform for supply-chain management.
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