March 12, 2020 - Issue 6.09 - Your weekly news on all things board.
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The buck stops with the board—at least it should if you're hoping to forestall a crisis. Wells Fargo Board Chair Elizabeth Duke and another director found themselves in the crosshairs of lawmakers for not doing enough to fix the troubled bank, and resigned just ahead of a Congressional hearing on the matter. Boeing's new CEO Dave Calhoun apologized after upbraiding his predecessor in an interview, in which he also suggested that the Boeing board's trust in the former CEO kept them from questioning the strategy that brought the planemaker to the brink of disaster. Meanwhile, Twitter appeased activist investors with the promise of a $2 billion share buyback program, and will keep Jack Dorsey as CEO. Facebook brings two new women directors on board. And as the coronavirus pandemic continues to dirsupt live shareholder meetings, some predict that virtual meetings will become the new normal.

In the Spotlight

Wells Fargo CEO Calls Former Business Model "Flawed"

“Wells Fargo Chief Executive Officer and President Charles Scharf told lawmakers Tuesday that the scandal-plagued bank he now leads ‘had a flawed business model’ and a structure and culture that ‘were problematic.’ He said that while he is confident that reform plans he's implementing will work, such efforts will likely continue until at least 2021 …  After the hearing concluded, [Congresswoman Maxine] Waters sent a letter to the Department of Justice alleging previous Wells Fargo CEO Tim Sloan ‘willfully’ gave false statements to the committee last year. Waters said the matter involves ‘a potential violation of a criminal statue’ and urged the Justice Department to review Sloan's testimony.” NPR

... Wells Fargo Chair, Director Resign Under Pressure From Congress

“The former Federal Reserve governor who led Wells Fargo’s board as the bank tried to reform itself has stepped down, bowing to pressure from Washington over the company’s stumbling efforts to fix deceptive consumer practices that brought it billions in fines. The chairwoman, Elizabeth A. Duke, stepped down from her post on Sunday. She had led the board since January 2018. Another director, James H. Quigley, also resigned, the bank said. A report issued last week by the House Financial Services Committee was deeply critical of both board members for what it cast as their obstinately complacent response to the bank’s problems.” NEW YORK TIMES

Across the Board

Could Coronavirus Leave Its Mark On Shareholder Meetings?

“More U.S. companies are moving their annual shareholder meetings online to help contain the spread of coronavirus, raising concerns among corporate democracy advocates about investors losing access to top executives and board directors … Companies are hoping the digital meetings will help prevent the spread of the virus, while also providing access to shareholders who would not have attended the meetings physically.… Some investors see a worrying trend. They are concerned that these changes will become permanent, curtailing shareholders’ ability to demonstrate at the meetings and grill corporate management and boards of directors in person.” REUTERS

Boeing CEO Backtracks From Bold Critique of Predecessor...

“Boeing Co. Chief Executive Officer Dave Calhoun said he regretted berating his predecessor in an interview with the New York Times this week, backtracking almost immediately from a harsh critique that rattled employees of the embattled planemaker. ‘I am both embarrassed and regretful about the article,’ Calhoun wrote in a message to senior executives at the company…. The about-face suggests an attempt at damage control just two months after Calhoun took over as CEO following a decade of service on Boeing’s board.” BLOOMBERG

...In Which He Suggested The Board Never Questioned Strategy

"'Boards are invested in their C.E.O.s until they’re not,' Mr. Calhoun said, sitting in a dim conference room at the Boeing Leadership Center, a corporate campus outside St. Louis where Mr. Muilenburg’s photo is still displayed prominently.... He said the former chief executive had turbocharged Boeing’s production rates before the supply chain was ready, a move that sent Boeing shares to an all-time high but compromised quality.... Mr. Calhoun and the rest of Boeing’s board never seriously questioned that strategy, in part because before the first Max crash off the coast of Indonesia in October 2018, the company was enjoying its best run in years. What’s more, the board believed that Mr. Muilenburg, an engineer who had been at Boeing for his entire career, was so deeply informed about the business that he was a good judge of the risks involved in ramping up production." NEW YORK TIMES

Twitter Cuts Deal With Investors: $2 Billion Buyback, Keep Jack Dorsey

“Twitter has struck a deal to keep Jack Dorsey as CEO, after an activist hedge fund recently agitated for leadership change at the company. The deal will include a $2 billion share buyback program and give the hedge fund, Elliott Management, a seat on Twitter's board of directors …Technology investment firm Silver Lake will be investing $1 billion in Twitter as part of the agreement, and Silver Lake will also receive a board seat. The board will also work toward finding a third new board member, according to the press release.” NBC

Activist Investors Seek More Seats On eBay Board

“EBay Inc. is facing a renewed challenge from activist investor Starboard Value LP, which has nominated a slate of directors to the board of the online marketplace, according to people familiar with the matter. Starboard, which last year won the right to help fill one seat on eBay’s board, privately nominated an additional minority slate of directors recently, the people said … Another activist, Elliott Management Corp., has board representation in the form of a seat for Jesse Cohn, a senior official at the hedge-fund firm.” WALL STREET JOURNAL 

Facebook Appoints Two New Directors

“Facebook announced Monday that Nancy Killefer and Tracey Travis are joining the company’s board of directors, boosting its female presence to 40%. Killefer was a longtime director at McKinsey & Company and held various U.S. government roles. Travis is Estee Lauder’s chief finance officer and served on the board at Accenture. Travis will serve as a member of the Audit & Risk Oversight Committee of the Board, effective March 9, 2020.” CNBC

Goldman Sachs Goes Global With Women-On-Boards Pledge

“Goldman Sachs Group Inc.’s fund-management unit wants a woman on every corporate board, and the Wall Street firm said it’s now willing to vote that way across the globe. In a first-of-its-kind global policy, Goldman Sachs Asset Management said it will vote against nominating committees anywhere in the world that fail to include at least one woman on the board. In the U.S., more than 20% of corporate board members are women, so the policy may have a more significant impact in places like Japan where a much smaller percentage of companies have female directors.” BLOOMBERG

OPINION: When It Comes to Chair and CEO, Two Jobs Need Two People

"Beneath all the reporting on fatally flawed airplane design, serial ten-figure operating losses from big name startups, and Russian-linked presidential election information hackings, there lies an organizational leadership truth from the debacles at Boeing, WeWork, and Facebook: Be wary of giving the CEO job and the board chair job to one person. As the complexity around and scrutiny of corporate leaders have intensified in recent years, proposals to abandon the Two Job – One Person model have become the most common type of governance proposal submitted by shareholders.” HARVARD BUSINESS REVIEW

Sonia Syngal Named CEO of Gap

“Gap Inc. today announced that its Board of Directors has named Sonia Syngal, an accomplished retail leader and CEO of the portfolio’s Old Navy business since 2016, as the company’s next chief executive officer, effective March 23. She will also join the Gap Inc. Board of Directors. As Gap Inc.’s new CEO, Syngal’s top priority will be strengthening the performance of the portfolio.” OA ONLINE

From the Boardspan Library

Leadership Matters: What Boards Can Learn from the Wells Fargo Calamity

“... After examining what we know about Wells Fargo’s challenges, we’ve identified four governance pillars that we would advise boards to approach with extra vigilance: 1. Information: What should a board know? ...  2. Independence: How does a board maintain its objectivity? ...3. Oversight: What is expected of a board when it comes to providing oversight of a leadership team? ...  4. Culture: How does the board align itself around goals and values?”

Seat at the Table

  • Former Chief White House physician Dr. Richard Tubb joins the board of legal research company LexisNexis Special Services
  • Archana Deskus, SVP, and CIO of Intel, joins the board of Cognizant, a digital technology company
  • GameStop Corp. appoints to its board three directors: Reginald Fils-Aimé, former president and COO of Nintendo of America; William Simon, former president and CEO of Walmart; and James Symancyk, president and CEO of PetSmart
  • Towing and trailering equipment manufacturer Horizon Global Corporation  appoints Debra S. Oler, former SVP at the manufacturing company W.W. Grainger
  • Susan Mashiko, a retired U.S. Air Force major general, is welcomed to the board of VOX Space, a small satellite launching company
  • Cloud security company Zix Corporation appoints to its board Marcy Campbell, VP and head of global sales operations at PayPal
  • Former chief digital officer at Microsoft, Jacqueline Wright, joins the board of electrical manufacturer nVent Electric
  • Pharmaceutical company BioDelivery Sciences International appoints to its board Jeffrey A. Bailey, chair of pharmaceutical company Aileron
  • Dr. Wendy Arienzo, VP of operations at Fujifilm Dimatix, joins the board of semiconductor manufacturer Ichor Holdings
  • Insurance company Palomar Holdings elects to its board Martha Notaras, former partner at investment firm XL Innovate
  • Martina Hund-Mejean, former CFO of Mastercard, joins the board of personal health products manufacturer Colgate-Palmolive
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