October 8, 2015 - 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.

CEO Ellen Kullman’s surprise departure from DuPont was the talk of the boardroom this week, with pundits wondering why the chemical giant didn’t appear better prepared for a CEO transition. Many are speculating that DuPont may now bow to activist-investor pressure to split its business into multiple units—pressure Kullman had seemed to successfully deflect earlier this year. Another CEO transition, the appointment of Jack Dorsey to the power seat at Twitter, emboldened billionaire investor Chris Sacca to push for a shake-up of the ailing social media company’s board. Meanwhile, the drumbeat grows louder for increased diversity, better succession planning, and a greater focus on cybersecurity in the boardroom.

The Hot Seat


DuPont: A Shocking Lack of Succession Strategy?

“When DuPont announced [CEO Ellen] Kullman’s retirement yesterday, it announced also that Ed Breen, who became a director only eight months ago, would become interim CEO ‘while the Board completes its search for the next executive to lead DuPont.’ It might more accurately have said ‘while the board begins, conducts, and completes its search…’ since the company announced it had retained an executive search firm. In addition, while Kullman remains CEO until October 16, Breen became ‘Interim Executive’ as of Monday. She isn’t a lame duck CEO; she’s gone. In short, this all seems to have happened very quickly, perhaps on Monday or maybe over the weekend, and DuPont’s board was entirely unprepared for it. This is shocking…” FORTUNE

Across the Board

Curated news and insights from the world's boardrooms.

Time for a Shake-Up of Twitter's Board?

“Now that Jack Dorsey has been officially named the permanent CEO of Twitter, it's time for a shake-up at the company's board of directors, early Twitter investor Chris Sacca said Tuesday. ‘I think this board was inactive for too many years, saw the writing on the wall for some of these problems that we're hitting in terms of growth and didn't act when they should have acted before,’ the founder of Lowercase Capital said in an interview with CNBC's Closing Bell. ‘I'm looking forward to a new board that will both inspire Jack to be his best as well as hold him accountable.’" CNBC

Are You Prepared for a Challenge by Activist Investors?

"According to the [National Association of Corporate Directors] 2015–2016 survey, more than 20% of respondents' boards were approached by activist investors during the past year. Yet 46% of those surveyed have no plan in place for responding to activist investor challenges. The survey also found that preparedness and market capitalization are highly correlated: smaller-cap boards are less prepared than larger-cap boards, with only a minority of smaller-cap boards having a formal playbook to address such challenges.”  GLOBE NEWSWIRE

The Old Boys’ Club is Just Fine, Say Most Men...

“Sixty-three percent of women on corporate boards said that having female board members was ‘very important’ in PriceWaterhouseCoopers's annual survey of public company directors, while only 35 percent of men felt this way. The company polled over 700 board members for its report, released on Tuesday. On racial diversity, women were less gung-ho, but still valued it more than men did: 46 percent of female directors said that it was highly valuable to have people of color on boards, compared with 27 percent of men.” BLOOMBERG

... And Long-Term Planning Gains Support

(Another take on the PWC Survey)
“Directors see themselves as very sensitive to time horizons in the enhancement of shareholder value. Some 57% of them now say their strategy time horizon is greater than five years, compared to 48% in 2011 – and that is despite the growing influence of activist investors. Only 39% of directors now say they use a one-to-three year time horizon in evaluating strategy, compared to the 52% who said so four years ago.” FORBES 

VW Criticized for Naming Insider as Chairman

“Volkswagen’s decision to nominate a long-serving executive as chairman has once more highlighted the carmaker's corporate governance and culture, which some experts argue were a root cause of the diesel-emissions scandal. Top directors on Thursday announced that Hans-Dieter Pötsch, VW's chief financial officer since 2003, would become chairman in the coming weeks, filling the spot vacated by patriarch Ferdinand Piëch, who resigned in April. Hans-Christoph Hirt, a director of Hermes Equity Ownership Services, an adviser to pension fund investors in companies including VW, said the appointment created a ‘serious conflict of interest.’” CNBC

A 92-Year-Old Chairman and a Murky Succession Plan

“Boardroom drama is intensifying at Viacom Inc. amid questions about the health of Executive Chairman Sumner Redstone, as Wall Street ponders what the struggling media giant might look like without him. The 92-year-old Mr. Redstone has overwhelming control of Viacom, with a roughly 80% voting stake. The company has said little on the subject of his health. Mr. Redstone’s daughter, Shari Redstone, and Viacom Chief Executive Philippe Dauman, who at times have been at odds, each have claims to a major role in Viacom after Mr. Redstone’s death.” WALL STREET JOURNAL

Whole Foods and Shareholders Tussle Over Board Seats

“Whole Foods got into hot water this proxy season with investors and the SEC because of their approach to the proxy access issue [which would allow shareholders, under certain conditions, to put board candidates on the company’s ballot]. Instead of just putting the shareholder proposal on the ballot, the company tried to end run it by suggesting their own, less robust proposal—and then asked the SEC to allow them to drop the shareholder’s version.” FORTUNE

Boards Taking Cybersecurity More Seriously

“There has been a dramatic increase in the number of boards actively addressing cybersecurity risks at Forbes Global 2,000 companies, with the financial industry a leader, according to a new 2015 Governance of Cybersecurity report …. Cybersecurity is now a boardroom-level issue for nearly two-thirds (63 percent) of the companies surveyed, which is a significant jump from 2012 when only 33 percent of boards were actively addressing computer and information security.“ HOMELAND SECURITY TODAY

When to Say No to a New Board Position

“A spot on a corporate board can be a plum post. It means compensation, usually stock, and often cash. Other perks include invaluable connections to fellow board members and executives, along with a profile boost in one’s given industry. But the job comes with drawbacks—public scrutiny, the potential for lawsuits, and of course an added time commitment. With regulators focusing more closely on the role of directors at public companies, and with activist investors circling, more candidates invited to join corporate boards are doing what was once unthinkable: They’re saying no." BLOOMBERG

A Seat at the Table

Apple Inc fills a void on its board and a call for greater diversity with its appointment of former Boeing CFO James Bell, now the company’s sole African American director. ★ The Home Depot appoints Linda R. Gooden to its board, where she will serve on the audit and leadership development and compensation committees; Gooden was formerly EVP of information systems at Lockheed Martin. ★ The eBay board welcomes former Gap Inc. CEO Paul Pressler, who will serve on the audit committee as well as the corporate governance and nominating committee. ★ Former Kraft Foods CEO Anthony “Tony” Vernon joins the board of White Wave Foods Company, a leading maker of plant-based packaged foods and beverages with distribution across Europe, the U.S. and China.★ Y&R Global CEO David Sable has been named vice chair of the non-profit Ad Council’s board of directors; Sable has led Y&R’s pro bono support of several Ad Council initiatives including the United Negro College Fund’s A Mind Is A Terrible Thing to Waste campaign, which has raised more than $2 billion and helped graduate over 400,000 minority college students. ★ Diplomat Pharmacy, Inc. welcomes two new independent directors: Shawn Cline Tomasello, most recently chief commercial officer of Pharmacyclics, and Benjamin Wolin, founder and CEO of Everyday Health. ★ Healthcare technology firm Quartet welcomes to its board former Congressman Patrick Kennedy, son of Senator Edward “Ted” Kennedy and author of a controversial new family memoir, A Common Struggle: A Personal Journey Through the Past And Future of Mental Illness and Addiction.
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