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May 5, 2016 - Issue 2.18 - 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.
A relatively quiet week in the boardroom gives directors a chance to focus on some of the more important, if less urgent, matters that must be attended to. Supporting management in creating and sticking to a long-term strategic vision is paramount for a board to prevent “short-termism” from derailing more productive initiatives, notes Forbes. Setting expectations for good corporate behavior is a value-enhancing virtue — not just an item on the compliance checklist — that gives companies an edge in managing risk, suggests Harvard Business Review. HBR also encourages celebrating a team's resilience by taking the unusual step of publicly acknowledging an organization’s failures, not just its victories. And as long as we’re reflecting on best practices for success, don't miss the Boardspan Blog post from our archives featuring CEO Abby Adlerman’s advice for getting yourself on a board.

The Hot Seat


Valeant, Faces New Investigations, Reshuffles Board

“Valeant Pharmaceuticals International Inc. filed its long-delayed annual report and further reshaped its board Friday, defusing the danger of a debt default and positioning the company for a fresh start after months of concern over its accounting and business practices. But the Canadian drugmaker also disclosed new and broadened regulatory investigations—in addition to the Securities and Exchange Commission probe it already faces—indicating it isn’t out of the woods yet…. Separately, Valeant nominated three independent directors for election to its board. The new nominees are Argeris Karabelas, a former drug-industry executive and a partner at life-sciences venture-investment firm Care Capital LLC; Russel Robertson, a BMO Financial Group executive and former auditor; and Amy Wechsler, a New York dermatologist…. Five current directors—including Mr. Pearson and Mr. Schiller, who refused a request from Valeant’s board to resign as a director—won’t stand for re-election.” WALL STREET JOURNAL

Across the Board

Curated news and insights from the world's boardrooms.

 

Boards Have the Power to Halt "Short-termism"

“In response to unprecedented levels of activist campaigns and other factors driving short-term thinking on the part of corporate America, there is a groundswell of conversation about what companies can do to overcome the mentality of ‘short-termism.’ BlackRock Chairman and CEO Larry Fink is lobbying for companies to clearly articulate their strategy for long-term sustainable growth in their communications with investors. He also suggests ‘the board is managements’ first line of defense against short-term pressures’ and advocates for boards to ‘support management during periods where performance has deviated from the long-term trajectory’ – which he notes is difficult to do in the absence of a ‘clearly articulated long-term vision, strategic direction and credible metrics against which to assess performance.’” FORBES
 

Ethics: A Virtue Not a Risk-Management Strategy

“At companies across the globe, the layers of compliance mechanisms are growing. At first blush this seems to make sense: Perhaps the most obviously straightforward method of preventing unethical or damaging behavior is increasing the number of rules designed to curtail it. However, one of the more unsettling and unintended consequences of a singular focus on ethics-as-compliance is a checkbox mentality that gives the illusion of reducing risk without really doing so. Moreover, unless an organization is careful, a compliance-focused approach to eliminating unethical behavior can stunt a company’s efforts to innovate and to take intelligent risks. So what can a company do to excel ethically? Instead of focusing on the poor choices you want employees to avoid, focus on the positive virtues you want them to exhibit.” HARVARD BUSINESS REVIEW
 

Deutsche Bank Director's Departure Raises Eyebrows

“Deutsche Bank AG director Georg Thoma’s decision to step down after criticism that he went too far in probing potential wrongdoing raises concern that the bank’s board cannot investigate itself, according to a shareholder advisory group. Thoma, a Shearman & Sterling LLP lawyer, is stepping down two years before his contract ends, the Frankfurt-based lender announced last week. His exit raises questions about ‘potential conflicts of interest’ among board members, Institutional Shareholder Services Inc. wrote in a report prepared for the Frankfurt-based lender’s annual general meeting.” BLOOMBERG BUSINESSWEEK
 

Did a Strategy Move in Proxy Battle Unleash Turmoil at DuPont?

“In less than a year since DuPont shareholders cheered [former CEO Ellen] Kullman's successful efforts to block [activist investor Nelson] Peltz and his four nominees from the board of directors, things have taken an unimaginable turn for the chemical giant. Fresh off her proxy victory, Kullman was unceremoniously dumped by the board. In her place, new CEO Ed Breen … outlined what could be the end of the DuPont that has existed for more than two centuries when he announced the Delaware stalwart would be merging with The Dow Chemical Co. to create a $130 billion conglomerate that would later be broken up into three separate companies…. How DuPont got here is not entirely clear. Some trace the transformation's origins back to a strategic move made by DuPont during the proxy war.” DELAWARE ONLINE
 

In Takeover Bid, Gannett Aims Squarely at Tribune Board

“Gannett is escalating its pursuit of rival newspaper company Tribune, telling shareholders of Tribune not to vote for its board member nominees up for election in June. Gannett, the publisher of USA Today and other newspapers, said Monday that withholding a vote at Tribune's annual meeting next month will send a message to the management team that it needs to engage in takeover talks.” ABC NEWS
 

Invite Success: Write a Resume of Your (Company’s) Failures

"In a world defined by hypercompetition and intense pressure, where business breakthroughs and career advancement demand a willingness to take risks and defy convention, the notion that any person can achieve meaningful success without experiencing setbacks and disappointments seems hopelessly naïve. A willingness to chronicle your failures helps to create the kind of resilience that allows you to get beyond them. That’s true for companies as well as for individuals." HARVARD BUSINESS REVIEW

From the Archives

How Do I Get On a Board?

“I am often asked for advice on how to get on a board. To help people figure out their best paths, I suggest they start off by asking themselves 'Why do I want to be on a board?' Articulating one’s own interests and motivations often helps chart a course to make both the journey and destination more rewarding… In addition to answering this high level question, I encourage people interested in joining boards to do three simple exercises…” BOARDSPAN BLOG
 

Board Responsibilities Include Environmental & Human Rights

“Board members are at risk of being seen as negligent — and therefore potentially accountable — if they fail to pay adequate attention to environmental and human rights issues.”
MIT SLOAN MANAGEMENT REVIEW via BOARDSPAN
A Seat at the Table

★ Warner Music Group welcomes new director Ynon Kreiz, former CEO of multi-channel media network Maker Studios. ★ MasterCard’s board votes to elect new director Oki Matsumoto, chairman and CEO of Monex Group, a Japanese online investment banking and asset management firm. ★ General Mills elects to its board Jorge A. Uribe, former Global Productivity and Organization Transformation Officer at Procter & Gamble. ★ Nielsen Holdings appoints former NBCUniversal executive Lauren Zalaznick to its board as an independent director. ★ Air France-KLM Group selects new CEO and chairman Jean-Marc Janaillac to oversee Europe’s largest airline. ★ Vox Media welcomes to its board Susan Decker, former Yahoo president and current director for Berkshire Hathaway and Costco Wholesale Corp. ★ Online marketing and sales platform HubSpot names a new director: Julie Herendeen, formerly VP global marketing at Dropbox, group GM at Yahoo, and founding VP marketing at Shutterfly. ★ Gary Haroian, former CFO of Bowstreet and Concord Communications and CEO of Stratus Computer, joins the board of Brightcove, a provider of cloud services for video. ★ Cloud communications provider Cloud9 Technologies welcomes new independent director Steven T. Clontz, a 43-year veteran in the telecom industry and current senior executive VP International Operations for Singapore based ST Telemedia. ★ Michael Klayko, CEO of MKA Capital and former telecom and network solutions executive joins the board of data center operator CyrusOne. ★ Search technology firm Algolia welcomes to its board former Salesforce Cloud CEO and current AppDynamics CMO Kendall Collins. ★ Retired Lieutenant General Michael Flynn, an informal foreign policy advisor to Donald Trump, joins Drone Aviation Holding Corp as vice chairman of its board. ★
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