September 15, 2016 - Issue 2.37 - 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.
Lots of changes in the boardroom this week! From public radio organization NPR to meal-delivery service Munchery, and from new streaming video platform IndieFlix to the social justice minded W.K. Kellogg Foundation, organizations everywhere are adding new directors to their boards. Korean electronics company Samsung formally nominated to the board Lee Jae Yong, the son of its chairman—who is struggling with failing health—to aid the company as it faces one of its most dire challenges: a plummeting stock price brought on by a faulty battery nightmare in its newest smartphone. We are keeping an eye on two evolving stories: new pressure on Wells Fargo to split the Chair-CEO role and how to replace two departing board members at digital note-taking service Evernote. To add some context to all of this activity, we highlight an insightful story from the archives: "How Much Board Turnover is Best?" It draws upon data to suggest that "companies that replaced three or four directors over a three-year period outperformed their peers, suggesting an optimal amount of turnover." In other words, all of this change is likely to have a positive result!

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The Hot Seat

Tough Days Ahead for Samsung's Newest Board Member

“Samsung Electronics Co. nominated Lee Jae Yong to its board in a move that allows the son of its ailing chairman to take a more active role just as Korea’s largest company faces its deepest crisis in years Samsung has lost $22 billion in market value over two days as the fallout widens over faulty batteries in its Note 7 smartphone. Regulators, airlines and the company itself have warned customers to stop using the devices immediately, while Samsung races to procure replacements. Lee, now co-vice chairman, would be formally elevated to the nine-person board after a shareholder vote in October.” BLOOMBERG

Across the Board

Curated news and insights from the world's boardrooms.

A Bumpy Ride on the Venerable Stage Coach

“The shareholder activist campaigning for Wells Fargo to split the roles of chairman and chief executive has seized on the bank’s fake accounts scandal to demand an even bigger boardroom shake-up. The most prolific of a group of activists argued the episode showed the need for Wells to refresh a clubby board and said he planned to resubmit a proposal for an independent chairman to the bank’s annual meeting next spring.” THE FINANCIAL TIMES

Will An Activist Investor Reshape Perrigo?

“The hedge fund that helped prod Yahoo into selling its core business has found a new target for its brand of shareholder activism: the drug maker Perrigo. The fund, Starboard Value, has taken a 4.6 percent stake in the pharmaceutical company and has urged it to take steps to bolster its sagging stock price, according to a letter sent to Perrigo’s board…. According to Starboard, Perrigo has mismanaged its core business of generic over-the-counter medicine and has failed to deliver on promises it made during its defense against [a takeover] bid from Mylan. Starboard also complained about bonuses that Perrigo executives received after successfully fending off Mylan.” NEW YORK TIMES

Advice For Women Directors on All-Male Boards

“For over a decade, I served on a board of directors, and it took me nearly 10 years to even realize that I was the only female on the board. Despite being the youngest and least-experienced board member, I eventually became the board’s vice chair. No, I am not completely devoid of any observation skills. Rather, I’ve long nurtured the belief that we all have strengths, and they’re often very different. In order to excel at work, we need to set aside our gender differences and combine our collective synergies. That doesn’t mean we need to be either more feminine or more masculine, but we need to truly operate as ourselves. Here are five strategies that have helped me progress my career in a male-dominated industry…” FORTUNE

Changes Afoot on Evernote Board

"Phil Libin is stepping down as executive chairman of digital note-keeping service Evernote, Fortune has learned. Also leaving the company’s board of directors will be Max Levchin, the former PayPal executive who has been with Evernote for more than a decade. Evernote spokesman Greg Chiemingo confirmed both pending moves, adding that the full board would meet later this week to discuss possible additions." FORTUNE  

Governance Principles for Private Companies

“Private companies in the U.S. tend to have a more insular corporate governance structure than public companies, but many of the Commonsense Principle [recommended by the leaders of 13 prominent public companies, asset managers, and pension and mutual funds in July] may be adopted to foster engagement and ultimately increase long-term value. … As in public companies, directors of private corporations exercise oversight of the corporation, consistent with state corporate law fiduciary duties. However, the boards of directors of private corporations tend to be smaller than those of public corporations, with fewer members providing needed expertise and oversight.  Thus, private companies and their constituencies may benefit from implementation of the following internal principles, derived from the Commonsense Principles of Corporate Governance…” INSIDE COUNSEL

Big Board Moves for New Streaming Movie Start-up

“Streaming service IndieFlix, based in Seattle, has just added a number of executives to its board, including Tucker Tooley, CEO of Tooley Productions, Eric Eisner [son of Michael] of Double-E Productions and filmmaker Leopoldo Gout (Zoo, Molly’s Game). The company, founded by CEO Scilla Andreen, is a membership-based streaming service ($40/yr) that gives its members access to over 9,000 high quality shorts, features, documentaries, web-series and television shows… Others who have just joined the board are Sarah Imbach, former COO at 23andMe, chief of staff and VP at LinkedIn and SVP at PayPal along with Cory Finnell, Chief Analytics Officer at Churchill Downs and CIO at Big Fish Games.” DEADLINE

Oprah Seeks New Chair for Weight Watchers Board

“Oprah Winfrey will help Weight Watchers International Inc pick a new leader, the diet company said on Monday, about a year after the media mogul announced she had bought a 10 percent stake in the company. Weight Watchers said its chief executive, James Chambers, would resign at the end of September after three years on the job. He and the board of directors, which includes Winfrey, made a ‘joint decision’ that he should leave, according to the company.” REUTERS

From the Boardspan Archives

How Much Board Turnover is Best?

"Some criticize boards for leaving the evolution of their composition to chance, allowing director retirements to dictate the pace of change. Support for annual director elections and for increased transparency around director nominations suggests that some shareholders would like to see more turnover. Is there evidence that companies and shareholders actually benefit when boards add fresh blood? If so, how much change is desirable?" HARVARD BUSINESS REVIEW via BOARDSPAN

A Seat at the Table

Boardspan highlights the newest member joining the board of directors of our client, the W. K. Kellogg Foundation: Dr. Khan Nedd, President and Medical Director of Infusion Associates, interim CEO of the Answer Health clinical network of physicians, and a board member of several Michigan-based organizations. We were delighted to advise the Kellogg Foundation and we offer our warm congratulations to Khan—and to the many others who are assuming new board seats:
  • Rita Lane, currently the principal at supply chain advisor to start-ups Hajime and previously VP of operations at Apple, joins the board of Sanmina Corporation, an integrated manufacturing solutions company
  • Meal-delivery company Munchery welcomes two new directors to its board: Ron Burkle, founder of The Yucaipa Companies, an investment firm focused on food and retail companies including Whole Foods, Wild Oats, Golden State Foods, Dominick's, Fred Meyer, Ralphs and Food4Less; and Jeff Housenbold, former president and CEO of Shutterfly and a previous VP of business development and internet marketing at eBay
  • Beauty brand Avon elects to its board Jose Armario, former group president, Latin America and Canada, for McDonald’s
  • Global Sources, an English-language media company facilitating trade with China, welcomes two new board members: Fumbi Chima, CIO at luxury clothier Burberry and former CIO for Asia at Wal-Mart Stores; and Michael Scown, Asia managing director, treasury, (and former Asia regional counsel) at Intel Capital
  • Dianne Ledingham, partner and director at global management consultancy Bain & Company, joins the board of Pegasystems, maker of customer engagement software
  • Diversified manufacturing firm Carlisle elects to its board Jonathan Collins, VP and head of ecommerce for Mylan, the pharmaceutical company best known for its patent on the epiPen
  • CDK Global, a provider of IT and digital marketing solutions to auto retailers, appoints to its board: Eileen J. Martinson, CEO of enterprise quality management software company Sparta Systems; and Stephen F. Schuckenbrock, CEO of sales and merchandising services company Crossmark, who formerly held leadership roles at Dell
  • NPR (National Public Radio) adds three new board members: Carlos Watson, co-founder and CEO of the daily digital magazine OZY Media; Gary Fernandes, chairman and president of commercial real estate firm FLF Investments; Jay Pearce, CEO and general manager of WVIK-FM in Rock Island, Illinois
  • Media executive Betsy L. Morgan, previously CEO at media companies TheBlaze and HuffingtonPost, joins the board of TheStreet, a financial news and information company
  • Visteon, a supplier of vehicle cockpit electronics, elects to its board Nomi Bergman, former president of cable media company Bright House Networks
  • NanoString Technologies, a provider of life science tools for translational research and molecular diagnostic products, appoints to its board Kirk Malloy, Ph.D., founder and principal at BioAdvisors
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