September 8, 2016 - Issue 2.36 - 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.
Change is hard --- especially when it's someone else's idea.  But when it's clearly due, "resistance is futile" (we say, outing our inner Trekkie.)  So goes the news in the boardroom this week: investors in Mylan and Chipotle are complaining, as they point fingers at the boards for the companies' shortcomings and demand changes in board composition. Meanwhile, the Twitter board is reportedly meeting today to discuss whether to pursue a buyer or some other remedy for the troubled social media company. Plus, American and United Continental Airlines have settled some kind of executive poaching/CEO succession planning skirmish, with a long-time American Airlines exec moving into a top slot at United Continental, and both companies aiming to spin the move as a victory. Exciting times for those boards, no doubt.

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The Hot Seat

Activist Turns Up the Heat on Chipotle Board

“Activist investor William Ackman is hungry to repair Chipotle Mexican Grill after taking a stake in the burrito chain and could begin by shaking up a long-serving board and possibly replacing the two co-chief executives, analysts and investors said. Chipotle is struggling to revive sales after food-borne illness outbreaks and its share price is down nearly 40 percent in the last year. Ackman, who made his reputation by ousting what he considers underperforming board members and executives, in a filing on Tuesday called Chipotle shares undervalued and said he would speak with management but did not lay out specific next steps.” REUTERS

Across the Board

Curated news and insights from the world's boardrooms.

A Call to Remake "Weak" Mylan Board

“The withering scrutiny given to EpiPen pricing is now extending to the Mylan Pharmaceuticals board of directors and its oversight of the drug maker’s executive team. In a harshly worded letter sent Thursday, New York City Comptroller Scott Stringer chastised the Mylan board because the EpiPen controversy ‘appears to be the costly consequence of weak oversight of management decisions that prioritize short-term profit at the expense of long-term value creation.’ And Stringer charged that the Mylan board ‘failed’ to properly oversee legal, regulatory, and reputational risks, and align the compensation given to Chief Executive Officer Heather Bresch with her long-term performance…. After citing a litany of specific issues that he said have caused concern, Stringer demanded the drug maker name an independent board chair; remove board members who are not independent from audit and governance committees; and establish board-level oversight of key pricing decisions.” STAT

Board to Ponder Twitter's Fate at Meeting Today

“Twitter’s quiet summer may soon be coming to an end. The social communication company’s board of directors is set to meet this Thursday in San Francisco, and there are plenty of things to discuss. That includes, said sources, its fate as a standalone company. That’s no surprise, since Twitter has been the subject of numerous takeover and acquisition rumors over the last few months, each one sending the stock up as investors hold out hope that Twitter will find a buyer.” RECODE

Succession Planning That Packs a Punch

“American Airlines’ second-in-command Scott Kirby is out at the Fort Worth-based carrier after an executive shuffle [last] Monday that the company’s board of directors attributed to long-term succession planning. But the former American president wasn’t out of a job for long, with United Airlines immediately announcing Monday afternoon that it had hired Kirby to serve as president of the Chicago-based airline.” DALLAS NEWS

From Cybersecurity Guru to Board Director: How to Do It?

“Like most good planners, Jasper Ossentjuk is beginning to ponder how he’ll transition into retirement – even though it’s more than a dozen years away. ‘When I’m 60, do I still want to be coming into the office Monday through Friday from 9 to 5 and taking the pager home?’ he wonders. In his current role as senior vice president and CISO of TransUnion, and with almost a decade of similar roles under his belt, Ossentjuk has certainly cultivated cybersecurity skills and expertise. He hopes to share his knowledge on a board of directors or on an advisory role.  There’s just one thing standing in Ossentjuk's way. He needs to get on the radar of those key executives who are often asked to recommend someone for those rare and highly sought-after seats. So far ‘nobody is coming forward and saying, here is the manual on how this works,’ he says.” CSO ONLINE

Former Mexican President Joins Alcoa Board

“Alcoa Inc. named a former Mexican president among members of its new boards of directors to be formed when the company splits into two later this year…. The board of the new downstream company, Arconic, will include E. Stanley O’Neal, a former chairman and CEO of Merrill Lynch & Co. The upstream company’s board will include James Owens, a former chairman and CEO of Caterpillar Inc.; James Hughes, a former CEO of First Solar Inc.; and Ernesto Zedillo, a former president of Mexico.” BLOOMBERG

10 Leading Principles of Change Management

"Long-term structural transformation has four characteristics: scale (the change affects all or most of the organization), magnitude (it involves significant alterations of the status quo), duration (it lasts for months, if not years), and strategic importance. Yet companies will reap the rewards only when change occurs at the level of the individual employee. Many senior executives know this and worry about it. When asked what keeps them up at night, CEOs involved in transformation often say they are concerned about how the work force will react, how they can get their team to work together, and how they will be able to lead their people. They also worry about retaining their company’s unique values and sense of identity and about creating a culture of commitment and performance. Leadership teams that fail to plan for the human side of change often find themselves wondering why their best-laid plans have gone awry..." STRATEGY+BUSINESS

From the Boardspan Archives

Board Governance Depends on Where You Sit

“Over the years, I have had the privilege of serving on ten corporate boards, as well as being chairman and CEO of Medtronic, chairman only, and CEO only. I have also observed dozens of boards from outside the boardroom and engaged in numerous confidential conversations with members of these boards about the challenges they faced and how they handled them. What I have learned from these experiences is that one’s perspective about a board’s governance is strongly influenced by the seat one holds—independent director, chair and CEO, CEO only, or chair only. That’s why it is essential to look at corporate governance through the eyes of each of these positions...."  MCKINSEY & CO via BOARDSPAN

A Seat at the Table

  • Karen Bechtel, managing director of global alternative asset manager The Carlyle Group, joins the board of Massachusetts Mutual Life Insurance Company (MassMutual)
  • Michael Dell, chairman of the board and CEO of Dell Technologies, is elected chairman of the VMware board; Egon Durban, the managing partner at private-equity firm Silverlake who led Dell’s buyout, also takes a seat on the VMware board, as Dell Technologies completes its $60B acquisition of EMC Corporation
  • Semiconductor company Microsemi welcomes to its board Kimberly Alexy, a CFA charter holder who serves on the board of directors for FireEye, Five9, CalAmp and VIZIO
  • Michael Heaney, former global co-head of the fixed income sales and trading division at Morgan Stanley, joins the board of Legal & General Investment Management America (LGIMA), a Chicago-based investment advisor.
  • Selim Aisii, chief security officer at Ellie Mae and former global VP of information security at VISA, and Pete Chronis, chief information security officer for the Turner media company and an inventor of Internet security software, become founding board members of the National Technology Security Coalition, a membership association focused on information security
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