February 4, 2016 - Issue 2.4 - 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.

In through the out door? While this week saw the departure of several high-profile board members from unsettling situations—including Charles Schwab from the Yahoo board as the company grapples with an uncertain future, and executive chairman Sumner Redstone from the CBS board after a lawsuit alleged that the nonagenarian was mentally incompetent—it also brought at least one unlikely appointment: Famed attorney David Boies, (the man who represented Al Gore in the disputed 2008 presidential election), has taken on the dual role of litigator and director at the beleaguered blood-testing startup Theranos. The New York Times ponders the wisdom here, asking if it is possible to simultaneously protect shareholder interests as a director and management interests as a lawyer. What do you think? Drop us a line and share your thoughts.

The Hot Seat


Is New Theranos Director Testing His Luck?

“[Blood testing startup] Theranos is in trouble, and David Boies, a star lawyer, has placed himself at the heart of it, a decision that he may come to rue…. That Mr. Boies is representing an embattled client is nothing new. But this time, the lawyer has raised the ante by becoming a director of Theranos. Let’s stop here and note that this has the potential to blow up. Mr. Boies is taking on two different roles at Theranos. A lawyer represents a client — here Theranos — while a director, even at a privately held company like Theranos, represents the company’s investors. Depending on what unfolds at Theranos, Mr. Boies may be put in a position where he either has to protect the company (as its lawyer) or the shareholders (as a director)." NEW YORK TIMES

Across the Board

Curated news and insights from the world's boardrooms.


Yahoo Says Goodbye to Many, Including Charles Schwab

"Yahoo Chief Executive Marissa Mayer unveiled plans Tuesday to cut the payroll of the struggling Web portal by 15 percent and said the board would explore “strategic alternatives” for its enfeebled Internet properties. The elimination of 1,700 jobs comes as Mayer fights for her own position. Activist shareholders have pressed the board to replace top brass at the Sunnyvale, Calif., company — which has seen its stock price tumble 34 percent in the last year… Meanwhile, Yahoo reported in a filing that board member Charles Schwab is exiting. He is said to have been unhappy about the chaos inside Yahoo. A second board member, Max Levchin, exited in December. Activist investor SpringOwl responded to the strategic plan, saying in a statement that while its voice had been heard, “We believe the strategic plan does not fully address the core issues which have destroyed shareholder value.” NEW YORK POST

Xerox CEO to Board: Just Do What’s Best

“On Friday, Xerox confirmed the news that it will be joining the ranks of legacy businesses opting to split themselves in two, dividing the 100-year-old provider of business services and maker of copiers and scanners into two publicly traded companies... What's less certain about Xerox's future is the fate of its CEO, Ursula Burns, a 35-year veteran of the company who has held the top job since 2009….Burns ... said she pushed the board to not think about her future as it evaluated its options. ‘What I wanted our board and our management team and me to do was to think about what the best path for the company is going forward, not what the best role is for me,’ she said.” WASHINGTON POST

92-Year-Old Chairman Takes His Leave

“CBS Corporation announced on Wednesday that the ailing 92-year-old media mogul Sumner M. Redstone had resigned as executive chairman of the entertainment company, and that Leslie Moonves, the company’s chief executive, would assume the role of chairman… A lawsuit challenging Mr. Redstone’s mental competence had raised questions among analysts and investors about whether Mr. Redstone should continue in the role of executive chairman of CBS and Viacom. Mr. Redstone controls about 80 percent of the voting stock in the two companies.” NEW YORK TIMES

Unlikely Leader of New Governance Effort?

“U.S. campaigners for improved shareholder rights may well be skeptical of a new set of corporate governance principles for public companies being hammered out by the country’s largest asset managers. The group convened by JPMorgan Chase chief executive Jamie Dimon and investment guru Warren Buffett to work on the project are among the least likely to vote against management in contentious shareholder votes…. BlackRock, Fidelity, Capital Group, T Rowe Price, Vanguard and other asset managers had met to discuss ways to encourage longer-term investment and reduce friction between companies and shareholders….” FINANCIAL TIMES (subscription)

When Startups Stumble, Directors Get Busy

“Ups and downs are nothing new in the fast-moving technology industry. And as soon as a company hits turbulence, calls for a management shake-up almost always follow.” NEW YORK TIMES

IBM Board Taken to Task Over CEO Pay

“'Ginni Rometty! You've led IBM to 15 straight quarters of declining revenue! Your profit was down 15% last year! Your stock price has plummeted by 36% from its peak! What are you going to do next?’ ‘I'm going to the bank, to deposit my $4.5-million bonus!’ For IBM shareholders, Ginni Rometty's four-year reign as chief executive officer hasn't been anything to go to Disneyland about. But her company has become a leader in one corporate category: board members willing to shovel incentive pay at a CEO turning in a mediocre performance.” LOS ANGELES TIMES

Climate Scientists Get Wish as Koch Leaves Museum Board

“For 23 years, David Koch, the billionaire industrialist who made a fortune off fossil fuels, ranching, fertilizers … has served on the board at the American Museum of Natural History. Koch’s position on the board is controversial, not least because of his position on climate change: The Koch family has spent millions funding climate change denier groups and disinformation campaigns, and scientists around the country have called for Koch to be removed from the museum board. Well, they finally got what they wanted — the American Museum of Natural History announced Koch’s resignation this week.” GRIST

New Scorecard on Proxy Access

“‘Proxy access’ – or the ability of shareholders to propose board members for companies in which they invest – is an issue that gets people very excited, arguing either for or against. A scorecard just out is likely to enliven that debate, pointing an accusing finger at how some mutual funds have voted on this issue….” FORBES

Alcoa Avoids Arguing with Activist, Adds Directors

 “Ahead of Alcoa’s split into two separate entities, the company announced the addition of three new directors (board members) to add manufacturing experience in order to avoid a board fight with activist Elliott Management Corp., which now holds 7.5% of the company. Elliott has worked with Alcoa behind the scenes rather than starting a public fight.” VALUE WALK

From the Archives

Corporate Data Privacy: Time To Grow Up

"Eavesdrop on company conversations anywhere from a meeting with the audit committee to front-line managers at the proverbial water cooler, and you will realize that data privacy has risen to the top of business agendas. Given 43% of companies know they experienced a data breach in the past year, in-house lawyers and others who handle privacy dealings are under pressure to safeguard their companies from angry customers, investors, lawmakers, and suppliers. CEB via BOARDSPAN

A Seat at the Table

As it expands its board of directors to “to reflect a broader range of perspectives on people, products, technology and diversity,” Mozilla Corporation appoints Karim Lakhani, a Pakistan-born scholar in innovation theory and an associate professor at Harvard Business School. Former CEO of the New York Stock Exchange Duncan Niederauer joins the board of Realogy Holdings, the real estate group that includes Century 21, Coldwell Banker, the Corcoran Group, Better Homes & Gardens, and Sotheby’s. Southwest Airlines welcomes new board member Grace D. Lieblein, former VP of global quality for General Motors. Lowe’s appoints to its board Sandra B. Cochran, CEO of Cracker Barrel Old Country Store. Mattress maker Tempur Sealy International says five current members of its 12-person board of directors have chosen not to stand for re-election; the company will shrink its board to seven directors for re-election at the annual meeting, saving about $1 million annually. McGraw-Hill Education appoints Jonathan Mariner, chief investment officer of Major League Baseball, to its board of directors. Solar company Sunrun welcomes Katherine August-deWilde, vice chair and former president of First Republic Bank, to its board.
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