October 15, 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.

Boards behaving badly… It’s not the kind of thing we like to dwell on, but this week former board members of Chicago Public Schools were called on the carpet for failing to provide oversight of the organization’s chief, who has pled guilty to serious corruption charges. Plus, governance expert and professor at Yale School of Management Jeffrey Sonnenberg offers a long, detailed look at flawed corporate boards and the trouble they’ve caused. For something more uplifting, spend a little time with the world’s best CEOS, who balance their drive for financial gains with attention to environmental and social issues.
This is the fifth issue of Director’s Domain and we are thrilled with the positive feedback we’ve received. If you have comments, suggestions or story tips to share, please write to us:

The Hot Seat


Chicago School Board Fails to Stop $23M Scandal

“Prosecutors laid out a narrative Thursday in a 23-count indictment against former Chicago Public Schools chief Barbara Byrd-Bennett …. It alleges an elaborate conspiracy to grease deals [worth $23 million for a local consulting firm where she was previously employed, in exchange for] kickbacks for Byrd-Bennett. Former CPS board member Andrea Zopp, who is now running for U.S. Senate … said the board was aware Byrd-Bennett had ties with the company and it did not raise red flags. ‘To me it was [Byrd-Bennett saying], “I worked there. I know what they do is good."’ —No alarms? Really? It's clear from the indictment that Byrd-Bennett sought to improperly leverage her position—and to hide her deal … from the school board. That doesn't excuse board members for making it so easy." CHICAGO TRIBUNE

Across the Board

Curated news and insights from the world's boardrooms.

"Best CEOs" Focus Beyond the Bottom Line

“Harvard Business Review just released its annual ranking of the world's best-performing CEOs on Monday, and this year's winner is a leader in health care who remains laser-focused on diabetes treatments, doesn't fly in private jets, and will be relatively unknown to many readers in the United States. Lars Sørenson, the CEO of Denmark-based Novo Nordisk … leads the pack partly due to his nearly exclusive focus on diabetes treatment, which has boosted sales and stock returns ... [but], ‘his standing also reflects Novo Nordisk’s deep engagement with social and environmental issues.’” WASHINGTON POST

Strong CEO, Strong Succession Plan

“The reign of one of the most successful chief executives in retailing will come to an end early next year, when TJX’s Carol Meyrowitz plans to step down. In her nine years as CEO of the discount fashion and home goods retailer, sales soared 67 percent to $29.1 billion and income nearly tripled to $2.2 billion.… Ernie Herrman, 54, was widely expected to take over once Meyrowitz decided to bow out, and investors pushed TJX’s stock up on the news.... Retail analysts said TJX has been plotting a succession plan for Meyrowitz for more than a year.” BOSTON GLOBE

On Boards Behaving Badly

“The boards of some of the nation’s most venerable enterprises are especially susceptible to self-destructive behavior. Many directors at such storied firms are anxious to preserve a legacy they worry they could not have built on their own. At the same time, many are fearful of appearing as mere custodians of past grandeur if they don’t make big, bold changes. They often destroy the greatness of their cultures in the process.” FORTUNE 

Carnegie Hall: Out with the New, In with the Old

“The philanthropist Mercedes T. Bass was elected the acting chairwoman of Carnegie Hall on Thursday, succeeding Ronald O. Perelman, the billionaire businessman who stepped down from the post after eight months, amid clashes with the hall’s leadership and its board. Ms. Bass, an arts and opera patron who has been on the board for 26 years and has served as a vice chairwoman since 2006 ... [said]: 'As someone who has long loved Carnegie Hall—its unparalleled commitment to artistic excellence and its service to education and community—I feel privileged to assume this new post.'” NEW YORK TIMES

Corporate America Listens to Shareholders

“Snacks giant Mondelez International Inc. on Wednesday said it had adopted a so-called proxy access policy that would allow certain shareholders to nominate members to its board. Separately, BlackRock Inc., the world’s largest asset manager, said it plans to put forth a similar proposal, subject to shareholder approval, at its next shareholders’ meeting. The two companies join a growing swath of big U.S. companies who are making it easier for shareholders to nominate candidates for board seats. These include Coca-Cola Co., Microsoft Corp., General Electric Co., and Monsanto Co.”  WALL STREET JOURNAL (paywall)

Twitter's New Chairman: A Friend with Benefits

"Last week, when Twitter named Jack Dorsey permanent CEO, the company said it was looking to bring in an outsider to replace Dorsey as chairman of its board. That outsider: Omid Kordestani, long-time chief business officer of Google.... The appointment is a big one, and particularly interesting given how chummy Twitter and Google have become over the last six months. The two companies have announced numerous partnerships, including an important one to bring tweets into Google search results, and it was widely speculated that Google would acquire Twitter during the company’s tumultuous summer." RECODE

Think Like An Activist ...

“The growing drumbeat of investor activism isn’t just a trend; it’s a fundamental change in relationship between shareholders and companies. The past decade has seen activist investors pursuing more than 2,000 campaigns to redirect business strategies, activities, and resources, about 40% of which involved some form of merger or acquisition…. Activists increasingly are coming prepared with ideas for growing shareholder value and improving business performance..” DELOITTE/WALL STREET JOURNAL

... Or Not

"‘If every company were well managed, there would be no reason for activists,’ said [Warren] Buffett. ‘The truth is, at some companies, the managers forget who they’re working for.’ The Berkshire Hathaway boss had some words of wisdom for companies that are looking to stay off activists’ radar. ‘The best way to keep activists away is to perform reasonably well in your business and to communicate with your shareholders,’ he said. ‘They should be treated as partners.’" FORTUNE

A Seat at the Table

★ BlackBerry Limited appoints to its board the Honorable Wayne G. Wouters, PC, formerly the clerk of the Privy Council of Canada and Deputy Minister to the Prime Minister. ★ Brad Maiorino, chief information security officer at Target Corporation joins the board of Onapsis, a maker of enterprise application security solutions. ★ Harvard Management Company, which manages the university’s $37 billion endowment, elects Amy Falls to its board; Falls is chief investment officer at The Rockefeller University, which manages a $2 billion endowment. ★ Porsche Cars North America’s CEO Detlev von Platen moves from Atlanta to Porsche's German headquarters for a new role as executive board member responsible for global sales and marketing. ★ The board of Sucampo Pharmaceuticals welcomes Timothy P. Walbert, CEO of Horizon Pharma. ★ Chesapeake Energy Corporation appoints Brad Martin as board chairman; Martin is the chairman of RBM Ventures and the retired chairman of Saks Incorporated and a director of FedEx Corporation and First Horizon National Corporation.
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