DIRECTOR'S DOMAIN: Politics landed in corporate boardrooms this week, with a thud. On Monday, Merck CEO Kenneth Frazier, after talks with board members, resigned from one of President Trump’s business advisory groups to “take a stand against intolerance and extremism.” The CEOs of Intel and Under Armour soon announced their resignations from the president's council on manufacturing, too, after the president blamed “many sides” for the white supremacist violence in Charlottesville, Virginia. A comment posted Tuesday night on a New York Times article about the resignations caught our eye: “I'd imagine there are plenty of emergency board meetings going on right now with the actors deciding what to do.” It does seem “Ed from Silicon Valley" was on to something: By midday Wednesday, several more CEOs had publicly departed the presidential council, as civil rights activists pressured others. Then the members of Trump’s Strategic and Policy Forum—a separate group of high-profile executives headed by Blackstone Group CEO Steven Schwarzman—disbanded rather than find its members pressured to decide, individually, whether to stand by the president. As commentators remark, the political tensions in the country mark a new challenge for corporate leadership…. Meanwhile, Uber's directors appears to be locked in a battle for control of the company, and are firing off lawsuits, accusatory letters, and, allegedly, attempts to oust fellow directors. Wells Fargo announced that three of its longest tenured directors, including its chairman, will step down—and Betsy Duke will become the first woman board chair of a major bank. Plus, a new study of CEO pay suggests that smart bets on technological innovation tend to pay off handsomely for executives. Read on.

DIRECTOR'S DOMAIN: Company culture. It’s a hot topic, as executives and pundits of all stripes weigh in on Google’s decision to fire an employee for posting a memo that questioned women’s inherent ability to be engineers. It’s also at the root of recent crises at Uber, whose CEO was fired after the company was accused of fostering chronic sexual harassment and discrimination, and at Wells Fargo, where experts say that a spate of scandals can no longer be written off as rogue behavior by one department or a few managers. When cultures cause crises, they become a problem for the board to address—and critics like to ask “Where was the board?” So, today we ask a more helpful question: "What can a director do to ensure a healthy culture is being nurtured?" Below are some answers, and here are a few hints: If you aren’t already, start evaluating the organization’s culture, character and values just as you would the financials. And get the right internal controls in place, including risk management and corporate governance, as well as executive compensation plans that favor good behavior. Then, you can carry on with the week’s news about activist investors, why directors leave boards, and how leaders can train themselves to be more agile thinkers. Read all about it.

DIRECTOR'S DOMAIN: There is one place that no board wants to find itself: At the center of the story. Nevertheless, a week after rumors flew fast and furious about the various CEO candidates approached by the Uber board (to replace a leadership mired in accusations of sexual harassment and discrimination), the board itself landed in the spotlight. Various reports suggest that infighting and power struggles have upended the recruiting process and, perhaps, knocked out of the running the women being considered. As if on cue, its competitor Lyft announced a powerful addition to its board -- former Obama administration senior advisor Valerie Jarrett joins as the company's first independent director.... Big news for champions of women in leadership: A new study shows that, yes, women-run companies (where women are either CEO or board chair) do indeed outperform the market. And in somewhat less encouraging news, results from a large survey suggest that many directors find their boards are not performing as well as they could, and face special difficulty in these areas: Trust, Regard for Other Directors, and Communication. To remedy the issue, experts suggest director assessments to pinpoint issues, followed by board education to address them. We concur! Click here for more of the latest board news.

DIRECTOR'S DOMAIN: Vote loudly and carry a big stick? That could be an adage of institutional investors lately, as more shareholders engage in board-level activism. State Street reported this week that it is making good on its promise to pressure boards to diversify—voting against the reelection of 400 boards that have no women directors. Massachusetts's $66 billion state pension fund voted against 69 percent of director elections this year, taking a stand against boards that don’t include women and people of color. And the International Brotherhood of Teamsters, which has been a longtime shareholder of drug distributor McKesson, was successful in rallying shareholders to vote against an executive pay plan, as a protest against the company’s alleged involvement in the opioid crisis. Perhaps not surprisingly, critics are calling for an end to voting rights for index funds and other so-called passive investors. Meanwhile, Hewlett Packard Enterprise CEO Meg Whitman steps off the HP board while rumors also circle that she’s under consideration for the role of chief executive at Uber. Google CEO Sundar Pichai steps onto the Alphabet board. And the Chicago Tribune has dug deep to help us understand the case of the mysteriously missing Hampton Creek board. All in all, a fascinating week for board watchers.

DIRECTOR'S DOMAIN: Board diversity stats remain dismal. Women hold less than 20% of board seats in the Fortune 1000. Nearly half the companies that went public last year did not have a single woman director. And, as reported last week, men are more likely than women to get a seat without prior board experience…. But the good news is that change is on the horizon! Powerful investment managers like BlackRock are using their clout to champion the idea that diverse boards make better business decisions—and using their votes to challenge boards that fail to diversify. And companies that know these benefits are starting to lead by example. Next-generation real estate brokerage Redfin, asserting that early-stage board composition can have an outsize influence on company culture, has rallied an influential group--including four venture firms and Boardspan to commit to greater diversity in early-stage startup boards. We are excited to be part of this movement to strengthen boards. Read below for the details of the #DiverseFromTheStart campaign and for this week's other board news: activist investor Nelson Peltz's friendly outreach to Proctor & Gamble, Tesla's new board members, Hampton Creek's vanishing directors, the new breed of "digital directors" and more.

DIRECTOR'S DOMAIN: Coming off a midweek holiday, board news is a bit thin this go-round with people away on vacation (or focused on politics).Yet, there are still dramas like the courtroom accusation that Martin Shkreli, when he was CEO of drug maker Retrophin, refused to obey his board’s directions and lied to its chairman. There is speculation about the Uber board’s search for a new CEO. And there are vocal shareholders questioning executive pay packages at Burberry. Nonetheless, this general lull in the action could be a boon to directors who take this time to dig into difficult issues, such as how to tackle risk oversight in light of increasingly prevalent cyberattacks. We feature two important stories on that theme this week: One suggests no business is immune from damage by hackers and that companies need to reconsider not just security but response to attacks. Another proposes that the entire Internet could be shutdown at some point and companies with a strong digital presence should plan now for such a possibility. Not exactly beach reading, but … taking cyber risk seriously could be just the thing to keep you relaxed all year round. Read all about it.

DIRECTOR'S DOMAIN: Do the right thing. That is the message institutional shareholders increasingly are sending to boards by voting against directors who are slow to embrace governance reforms like board diversity or corporate social responsibility. Not surprisingly, some of those “right things” are translating into positive company results: A new study shows that greater board independence, separation of CEO and Chair roles, and other governance shifts have an impact on the bottom line. Meanwhile, the insistence of activist investors to achieve better results faster is prompting boards to remove CEOs from large, established companies at a rapid clip. With these added pressures on boards, cybersecurity oversight seems to have taken a backseat in the boardroom—but at an average cost of $4 million per breach, can a board afford not to take it seriously? Do the right thing, indeed! Read all the week's news.

DIRECTOR'S DOMAIN: Another week, another firestorm thanks to a spectacular lack of decent behavior. Silicon Valley venture firm Binary Capital has been asked to exit the boards of several startups after six women came forward to accuse partner Justin Caldbeck (lead investor in GrubHub and TaskRabbit) of making inappropriate sexual advances. Knowing that a female CEO had him removed from her board years ago for unacceptable behavior makes the situation even more troubling. Meanwhile, Uber watchers accuse its board of looking the other way while the company’s leadership engaged in unethical and illegal behaviors: commentators say the board forced out CEO Travis Kalanick not because they cared about the company’s many alleged improprieties but because they worried about their investment value. And the allegations against Uber piled on with court documents claiming the board knew that the company was receiving stolen technology, and other sources reporting that Kalanick’s parting shot was to force Benchmark’s Bill Gurley off the board. Whew, that’s a lot of boardroom drama! To add insult to injury, another disappointing study was just released showing that men still have an easier time than women getting their first board seat. Now might be the time to take a deep breath and focus on how core values in the boardroom affect a company’s profitability, (see our featured article from the Boardspan Library). Executives and board members alike need to recognize that values will always have an impact. Act with integrity – or count on disaster. Read more.

DIRECTOR'S DOMAIN: Summer and the livin’ is BUSY. Especially for the Uber board, which had already begun a much-talked-about search for a COO and a CFO, and now, following a shareholder revolt that ousted founder Travis Kalanick, is looking for a CEO as well. Sounds daunting. Plus the Uber board must now onboard two new directors, (Wan Ling Martello’s appointment was announced last week and David Trujillo's seat at that table was revealed this week), while considering shareholder demands to add additional independent directors. Meanwhile, the latest research shows that “fewer than 30% of organizations are able to find the right C-suite leaders” and Harvard Business Review suggests that often the trouble stems from a bad cultural fit. That news only underscores the complexity facing Uber’s board, which must pull together an all-new executive team that can not only deliver on the promise of a high-valuation company, but simultaneously lead a cultural turnaround. In other news… the Fortune 500 has seen its percentage of women directors dip to 28 percent, the first downturn in nearly a decade. What to think? Well, there's probably never been a better time to read Redfin's article in the Boardspan Library: How to Triple the Number of Women Appointed to Boards in Three Years! (Linked below.) Click to read.

DIRECTOR'S DOMAIN: Leadership issues dominate the boardroom this week. First up, Uber: A seven-hour Sunday board meeting to discuss the results of former U.S. Attorney General Eric Holder’s investigation into the company’s culture and policies precipitated a leave of absence for the CEO, the exit of another senior executive, and the appointment of a second woman director. Then, at an Uber employee meeting where the news was announced on Tuesday, board member David Bonderman made an inappropriate comment about women in the boardroom that led to his resignation later in the day. Given that Holder’s recommendations include changes to the board and management structures, we expect more news from Uber in the weeks to come… Next came a handful of big CEO exits, with Marissa Mayer saying her goodbyes at Yahoo as the acquisition by Verizon was completed, Jeffrey Immelt announcing his retirement from GE sooner than many had expected, and Sheri McCoy reportedly leaving Avon amid pressure from an activist… It is a great time to give some thought to leadership—what it means, how to do it well, and whether the very nature of it is changing along with our changing world. See the Strategy+Business article below to consider a new view on the type of leadership most likely to make a difference today. Read on.

DIRECTOR'S DOMAIN: We hope you enjoyed the past couple of weeks of specialized content… and now back to our regularly scheduled program of scintillating board news: Shareholders are commanding a good deal of attention both in victories, such as requiring Exxon to report on the impact that climate change has on its business, and in failings, such as being unsuccessful in getting GM to move to two classes of stock or getting the Tesla board to accept annual elections. We note a trend of evolving investor interests, and our lead story highlights activist investors shifting focus beyond the board and straight to the C-suite. In addition, a Bloomberg columnist’s piece addresses hedge fund managers and other activist investors who claim to have the answers: How right are they? Thus, you may want to pay attention to our featured Boardspan Library story on how to ensure confidence in a CEO. And speaking of being active, both tennis champ Serena Williams and swimmer Michael Phelps picked up technology company board seats this week. Read on.

DIRECTOR'S DOMAIN: (SPECIAL EDITION) If you read last week’s Director’s Domain, you might have noticed a brief break in our regular programming…just to be provocative. As you think about the three essential responsibilities for boards – Strategy, Performance and Governance – you may be wondering how you put them in play in your boardroom. Our best advice sits in the Boardspan Library. We curate board-specific content from thought leaders such as Deloitte, KPMG, Strategy&, McKinsey, BCG, Harvard, Stanford, MIT, and scores of others. They’re yours for the taking. Sign up now for a free Boardspan account and you will not only have access to a wealth of relevant information, you can save articles to your own personal library and share them with colleagues. Here’s a head start with some of our favorite articles. Click to see more.

DIRECTOR'S DOMAIN: (SPECIAL EDITION) Today’s boards operate amid the pressures of ever-increasing business complexity, technological disruptions, fluid regulatory environments, shareholder activism, cybersecurity threats, and more. Through these choppy seas, a board is charged with keeping the ship pointed toward success in both the short and long term, while scouting risks and opportunities, steering the organization to respond appropriately. It’s a lot to navigate, and yet—that’s the job, mates! How, then, does one do it well? Not surprisingly, success in the boardroom begins with alignment around clarity of purpose. For a board to thrive, its members need to understand their mission and know exactly what is (and is not) in the board’s mandate. The three essential activities of all boards are Strategy, Performance, and Governance. While every productive board will, of course, interpret and enact these activities as they see fit, it helps to have a common understanding of the tasks themselves. Learn more...

DIRECTOR'S DOMAIN: Not if—but when… Cyber attacks, like last week’s global ransomware episode, are becoming common enough that no company can guarantee immunity. Increasingly, boards are held accountable and must ensure that policies and practices are in place to prevent egregious hacks. One CTO and Board Advisor makes the case for boards to not only educate themselves about “security hygiene” and cyber disaster planning, but also discuss with management the risks inherent in decisions like managing costs by deferring software upgrades. On a different matter of deferring decisions, with every year that passes, Disney CEO Robert Iger gets closer to retirement and the board seems to get farther from a succession plan. Also intriguing, major shareholders of Occidental Petroleum won a vote—against the board’s recommendation—to require the oil company to report on the business impacts of climate change. And more CEOs are being ousted for unethical behavior—why? This and more in today's newsletter.

DIRECTOR'S DOMAIN: What makes a board successful? Differing opinions on that topic are roiling boardrooms this week, as shareholders signal their displeasure with the board composition at many companies. Repercussions include mounting pressure to unseat the chairman of Canadian plane- and train-maker Bombardier and to reshape the board at shopping-mall operator Taubman Centers. The mere threat of shareholder activism prodded Whole Foods to announce it will replace half of its board this year, while Pandora announces a voluntarily board restructuring as it prepares itself for sale. Two Wells Fargo directors, who scored razor thin margins of support in last month’s re-election vote, also plan to step down, though only as a result of the bank’s age limits for board members. In the context of so much change, the question ‘What makes a board successful?’ deserves serious contemplation. You may want to look at the qualifications currently in vogue among large-company boards (see the Harvard Law School study immediately below) and consider the suggestions put forth by McKinsey in “Making Boards Work”, the culminating article in this week's newsletter.

DIRECTOR'S DOMAIN: Ousted. It seems to be the word of the week as the CEOs of Etsy, Molina Healthcare, and money manager AllianceBernstein were all asked by their boards to step down. In all three cases, falling revenues precipitated the ousters and at Etsy the board appears to have been responding to pressure by activist investors. The president of the conservative think tank Heritage Foundation, former senator Jim DeMint, was also giving his walking papers, along with some blame for shifting the foundation’s focus from the formulation of intellectual and academic political arguments to political activism. For boards and executives who don’t want to find themselves at such odds, there’s no time like the present to revisit an organization’s strategy, ensure that the board and chief executive are truly aligned, and that the CEO has the feedback he or she needs to course correct if necessary…. In other news, the boards of BlackRock and Urban Outfitters are both drawing criticism for the long tenure of some of their members. And Mylan disclosed that, even amid financial controversy, such as the drugmaker experienced in 2016, its chairman was one of the best paid. Read on.

DIRECTOR'S DOMAIN: What’s a CEO worth? Well, from the standpoint of company success, a lot. So it’s no wonder that directors devote serious time and energy to finding and retaining the right person for the top spot. Unfortunately, a new study suggests that boards are often not taking the right qualities into account when evaluating potential, or current, executives. (Suggested reading below: “What Boards Need to Know to Choose a Successful CEO.”) Regardless of how they are chosen—and sometimes even regardless of how successful they are—CEOs keep seeing their salaries race upward. Witness Yahoo CEO Marissa Mayer’s $200 million total take-home pay for five bumpy years and IBM CEO Gina Rommety’s new $50 million salary. The commentary on whether today’s CEOs are worth all that they’re paid makes for fascinating reading… And in other news: All the members of the beleaguered Wells Fargo board were re-elected, some by such a small number of shareholder votes that observers expect to see director turnover at the bank soon. Read more.

DIRECTOR'S DOMAIN: Today the board of 21st Century Fox is schedule to meet, and the Fox network’s long-time star and cash-cow Bill O’Reilly surely will be on the agenda. O’Reilly’s departure from the network was announced yesterday, following reports that the TV personality had been accused by at least five women of harassment, spurring advertisers to leave the show in droves. One can only speculate what the male dominated 13-person board conversations might be in the midst of this turmoil. On another gender (in)sensitive note, others are speculating whether Wells Fargo's board appropriately and fairly doled out the consequences to its top two executives in its recent scandal. And on the more optimistic side of gender conversations, the CEO and CTO of Redfin (the online real estate company) suggest in a new article in the Boardspan Library, that it may be easier—and more valuable—than many have imagined to get more women into the boardroom. Read on.

DIRECTOR'S DOMAIN: Tone at the top: Defining and demonstrating a company's values and culture is one of the most important responsibilities of the executive team and board of directors. So, when companies make major mistakes, as United Airlines did this week and as Wells Fargo did in recent years, customers, partners, shareholders and observers all swivel their heads toward the corner office and boardroom. One of the best commentaries on this comes from the Los Angeles Times, where columnist Michael Hiltzik suggests that if the leadership at United and Wells Fargo had created a culture of employee empowerment, they would not be fighting PR fires or paying fines for bad behavior. A Boardspan Library article from the Kellogg School of Management at Northwestern University points to research showing that companies whose employees perceive the firm to be ethical perform better financially. It makes sense that setting the right tone spares headaches and makes for greater success, but one hopes that boards and executives will promote values-based, ethical corporate cultures because it's just the right thing to do. Get all of the week's board news here.

DIRECTOR'S DOMAIN: Moving the dial. Slowly but surely, women are making their way onto larger company boards, yet as they do, some observers note that surprisingly few are in the influential chair seats for executive, compensation, strategy or audit committees. Meanwhile, board member Arianna Huffington is again in the spotlight for her outspoken support of Uber CEO Travis Kalanick and her attempts to resolve widespread claims of a sexist culture at the company. At Snap, Inc., however, the lone woman on the board is likely in the same situation as her male colleagues: pondering what leverage the board has in a case where the founders have retained 90 percent of voting rights in the now public company. And, given the ongoing concerns about cybersecurity in all facets of life, you may want to learn about some common myths that, if not debunked, could undermine your company's ability to protect itself. Read more.

DIRECTOR'S DOMAIN: When boards at the 100 largest companies in the U.S. set CEO pay last year, a few cut salaries, but many more increased executive pay, sending median salaries for some of the best paid people in the land up nearly 7 percent—to $11.5 million. Now institutional investors including CalPERS want to know how those salaries compare with what rank-and-file workers take home. The investors have sent a letter to the S.E.C. asking the Trump administration to push through an Obama administration rule that would require public companies to disclose the pay gap between CEOs and workers. And in other news: investment firm BlackRock, which manages more than $5 trillion in assets, is pressing for more board diversity of all kinds--expertise, experience gender, race, age. The firm will surely be interested in a study out this week showing that boards are heavily dominated by a single age group. Read more here.

DIRECTOR'S DOMAIN: Reporters and critics have a lot to say about an SEC disclosure made by Yahoo on Monday stating that CEO Marissa Mayer will leave with a golden parachute of $23 million, after failing in her bid to turn the company around. The noise is even louder around the revelation that her successor, current Yahoo director and former IAC chief executive Thomas McInerney, will be paid double Mayer's salary for what some consider a less-demanding job. Meanwhile, the chairman of the British supermarket chain Tesco suggested the days are numbered for white men on boards of directors—even as Boardspan CEO Abby Adlerman sheds light on why some male-dominated boards are reluctant to respond to calls to change their composition. Read more.

DIRECTOR'S DOMAIN: Women directors: Where are they? Financial services firm State Street wants to know. In an impressive display of shareholder activism, the world’s third largest investment firm with $2.47 trillion in assets is demanding that companies it invests in have at least one woman director. It promises a vote against the reelection of those board members responsible for nominating new members, should they fail to bring a woman on the board. Meanwhile the one female director at Uber, Arianna Huffington, is publicly defending CEO Travis Kalanick, as the company reels from a slew of scandals. And the institutional investors in Wells Fargo are considering withholding their votes from board members who might have moved faster to contain last year’s fake accounts scandal. Word to the wise: Shareholders are watching! Get all the news here.

DIRECTOR'S DOMAIN: “Culture starts at the top.” The adage, which applies to management and boards alike, is something the boards of Uber, Wells Fargo, and others are likely grappling with this week. Commentators are prodding Uber’s board to probe into allegations that the car-service company has fostered a culture of sexual harassment and to consider whether CEO Travis Kalanick, who was recently caught on video disparaging an Uber driver, is the right man to lead the $69 billion company. Wells Fargo’s board meanwhile slashed bonuses for the whole executive team to “reinforce accountability of the company's leadership” following last year’s sales scandal, in which more than 2 million fake accounts were created by employees trying to reach mandated quotas. Certainly allegations of widespread unethical and/or illegal behavior should prompt a board to hold executives accountable and to press for meaningful cultural change. Even better would be for boards to take a proactive stance regarding culture and accountability—and avoid the scandals all together! Some basic suggestions to help any board get in front of these issues: Commit to transparency; pursue rumors or complaints until the board is satisfied it knows the truth; refresh directors frequently enough to avoid cronyism and complacency; and regularly undertake assessments of both CEO and board. It wouldn't hurt to meditate on that old adage, either, and assure yourself that the board is setting the tone you want others to follow. Read on.

DIRECTOR'S DOMAIN: Big, bold shareholder activism. That’s what we’re talking about, as some of the nation’s most engaged shareholders disclose interests in major companies. Nelson Peltz targets P&G, with a $3.5 billion stake in the packaged goods firm. Carl Icahn steps in to ask for more changes at Bristol-Myers Squibb, which already this week bowed to demands from Jana Partners. Starboard Value takes a 6.6% stake in Tribune Media and signals its intent to shake things up. And that’s just the big players! One way to get ahead of this curve, and possibly forestall an outsider from making demands of your board, is to bring in more “activist directors” now. Most importantly, don’t let the drama swirling around shareholder activism keep your board from one of its most important and least understood tasks: Addressing cybersecurity threats. These are costly mistakes and the board should do all it can to avoid them. Read on.

DIRECTOR'S DOMAIN: Another week of intrigue in the boardroom: Snapchat clarifies the compensation of the only woman sitting on its board, suggesting that the company will, in fact, pay her more than the previously stated 10 percent of what her male colleagues make. Fortune 500 boards report that they have welcomed more black women to their ranks in recent years, but have not increased the percentage of black men sitting on those boards. And, as the Volkswagen board denies new allegations that its members were warned ahead of the U.S. government’s probe into the automaker’s falsified emissions tests, Germany amends its corporate governance code to require companies and their directors to conduct business ethically and take responsibility for their behavior. Read more here.

DIRECTOR'S DOMAIN: The year of activism? So far in 2017, American citizens have taken to the streets and corporate shareholders have taken up proxy fights with a vengeance. Autodesk, Buffalo Wild Wings, Perrigo, and Cognizant have all been in activist shareholders’ crosshairs this week. Mark Zuckerberg, too, is getting a little heat from shareholders looking for him to abdicate the chairman role at Facebook. Meanwhile, there is a lot of talk about a new report showing that, after initially driving hard to achieve greater diversity and bringing more women into the boardroom, the United States has fallen behind much of the developing world. Will we see would-be women directors taking to the streets? Unlikely. But we wouldn’t be surprised to see some creative form of board diversity “activism” on the horizon. Keep reading to get this week's news.

DIRECTOR'S DOMAIN: ExxonMobil adds an atmospheric scientist to its board? Yes, you read that right. Some critics are crying ‘too little too late,’ but the Union of Concerned Scientists gives the oil company a thumbs up for appointing a climate scientist as a director. Meanwhile, a new activist investor-defense group at Lazard is using big data to help companies spot potentially vocal shareholders before they raise their voices. And boards looking to help their CEOs succeed (and thereby give activists no grounds for complaining) are turning to a timeless tactic: More and better feedback! Read on for the whole story.

DIRECTOR'S DOMAIN: Wells Fargo is back in the news, with press reports alleging that early investigations into the bank’s cross-selling debacle were tainted: employees were apparently tipped off to internal inspections, giving them time to cover up illegal maneuvers before inspectors arrived. Also the bank now says it has found evidence that some employees who came forward to report the illegal activities were fired. Not a pretty picture. For some time now the culture at the bank and the role of the board in preempting bad behavior has been called into question. Today, Boardspan releases its own analysis of the responsibilities and challenges of board membership in this special report Leadership Matters: What Boards Can Learn from the Wells Fargo Calamity. Read it today!

DIRECTOR'S DOMAIN: Ch-ch-ch-ch-changes. On the eve of the presidential inauguration, the news is thick with reports about the new administration: Incoming Transportation Secretary Elaine Chao will apparently continue receiving substantial compensation from Wells Fargo related to her prior role as a director at the bank. General James Mattis has reportedly left his board seat at Theranos to prepare for his new role as Defense Secretary. And President-elect Donald Trump’s lack of board service is examined—would he have a better sense of conflict of interest if he had ever sat on a public company board? Meanwhile, boards across the country are looking at expected changes to the economy, regulations, and more and wondering what’s in store for them. To answer this question and more, we’ve just released Boardspan’s Guide to 2017: 8 Key Issues Boards Face This Year, which we link to below. Please have a read and pass it on to colleagues who would benefit from knowing what to expect in the boardroom. We look forward to keeping you up-to-date and ready for what 2017 holds, all year long.

DIRECTOR'S DOMAIN: We talk frequently about the increasing pressure boards feel, as everyone from regulators to shareholders holds directors accountable for a company’s actions. This week, we see that consumers, too, can take aim at boards for behaviors they don’t agree with. Witness the boycott called against L.L. Bean after one of its board members was reported to have contributed to the Trump campaign. There's not much directors can do about increased scrutiny, besides ensuring we act with integrity and consider decisions carefully, knowing they might be perceived differently by others. As Harvard Business Review suggests, we can all get better at identifying ethical decisions and perhaps seeing the potential consequences before we make a move. Meanwhile, Yahoo announced this week that many directors—including CEO Marissa Mayer— will be leaving the company’s board once the deal with Verizon closes. And a dispiriting new report shows that at many companies, “diverse directors,” i.e. women and people of color, are paid less than their white, male counterparts. Read on.

DIRECTOR'S DOMAIN: Happy New Year! Prognosticators have been busy chronicling what to expect in 2017. Their best guesses include more corporate scandals, more cyber attacks, and less regulation all around. One might also assume that individual directors will be appointed to fewer seats, as both ISS and Glass Lewis have placed new focus on the issue of directors “overboarding.” Meanwhile, some new board appointments have garnered attention, including former DuPont CEO Ellen Kullman’s election to the Goldman Sachs board, and the announcement that former Genetech CEO Ian Clark will begin serving on three biopharmaceutical company boards. There is also talk of a handful of young, female technology entrepreneurs becoming sought after as directors for larger company boards. While it's likely terrific for those invited and the boards they serve, we still have a long way to go before women are included as a rule, not an exception, given that only 20 percent of large company board seats are currently filled by women. Here’s wishing you a successful 2017! Let us know how Boardspan can help turn your board aspirations into reality this year. Read more.

It's a quiet time in the board room -- the lull before the storm of regulatory changes and strategy updates as organizations sort out what the new year and new players could bring? Two of this week's articles reflect opinions about what a Trump administration might mean for board rules and Dodd-Frank regulations. Another examines how those companies with directors likely to take part in the new administration are already faring well. Meanwhile, research shows that the number one skill that innovative CEOs have in common is their ability to manage risk. That seems like an important competency to hone in the year to come. See the piece from our archives, below, to learn more.

Transition time. Next year is shaping up to be one of big changes: Starbucks will try an unconventional CEO transition with Howard Schultz handing off the chief role to his number two, but staying on as chairman and in a new operational role. Theranos will remake its board with fewer politicians. Chipotle, too, looks likely to shake up its boardroom. Meanwhile, a new Stanford University survey of corporate boards reveals common issues today’s directors face, plus some suggestions for solving them. And this week’s newsletter is filled with good advice for your new year: How to plan a CEO transition; how to think about governance for subsidiaries of larger firms; and how to be a more effective leader. We hope you find it valuable.

Chief among a board's responsibilities, some say, is the hiring—and potential firing—of the CEO. We know there's a lot more to governance than that! But there's no doubt that having the right person in the top job is important. Harvard Business Review makes the case this week that there is a much a board can do to help a new CEO get up to speed and be effective in her role; after all, great coaching can turn a decent player into a stand out. And John Graham, a professor at Duke University's Fuqua School of Business, argues in the Wall Street Journal that even the stand-out players should be evaluated periodically; you need to know when they would benefit from more coaching or need to be cut from the team. And we've included a story from the archives about how to hire the right CEO when you need to. Our takeway? Yes, the board needs to be highly attuned not only to who is sitting in the CEO's seat, but whether and/or how it can help improve the quality of the CEO's performance. Sounds like a great topic to consider as you begin to size up the new year. Contact us if we can help: info@boardspan.com

When employees share their concerns or whistleblowers make noise, it doesn't hurt to listen. Yesterday, the Wall Street Journal published an intimate look into the experience of the man who apparently went public with his concerns that blood-testing company Theranos was fudging its research. The employee in question landed the job through his connection to Theranos director and former Secretary of State George Shultz, who happens to be the man's grandfather. (It's quite a read.) And this week several major shareholders said they are looking for changes to the Wells Fargo board in the wake of the false-accounts scandal that cost the company its CEO—a scandal that some say was first revealed to the board by whistleblowers five years ago. Meanwhile, a new study shows that the quotas some European countries have put in place to ensure gender diversity on boards has resulted not only in more female directors, but an overall positive experience for directors and more professionalism in the recruiting process. Enjoy this week's issue and ... have a Happy Thanksgiving! We won't publish next week, but will see you back here on December 1.

While the boardroom is fairly quiet this week, there are a few things that caught our attention. For starters, we look at how much directors are paying themselves—the median salary for directors of S&P 500 companies is about a quarter of a million dollars a year, with some earning into the millions, presumably for a job very well done. Next, we are back to Wells Fargo, which is hoping to avoid litigation by settling yet another accusation of wrongdoing—this time for overcharging mortgage holders for home appraisals the bank required of those who had defaulted on loans. Meanwhile, commentators offer some advice to the bank’s board about refreshing the company culture, even as a group of senators questions why KPMG, the bank’s long-time auditor, didn’t discover signs of malfeasance. We find some rich insights on how a board can help grow a sustainable business that activists will leave alone, as well as advice from one of the best-known activist investors, Nelson Peltz. And, since we can’t help but think that now is a great moment to step back and think about the board’s role in creating responsible corporate cultures, this week we highlight “Business Ethics Begin in the Boardroom” from the Boardspan Library. Read more.

Great expectations. We all have them for boards. Just count the ways critics suggest Wells Fargo’s board of directors could have done better: by acting when they first got wind of the scam; by limiting the CEO’s participation in outside boards; by fostering more turnover of board directors; by separating the role of CEO and chairman; by hiring an outsider as CEO… and so the list of failed expectations goes on. We also hoped for more from Facebook’s handling of its high-profile, Trump-supporting member—read the Wired piece below excoriating Mark Zuckerberg for suggesting that Peter Thiel’s board membership is a nod to diversity. It is hardly surprising to learn that board members themselves feel pressured by expectations—a new survey shows that 60 percent of global directors feel expectations are higher than what they can reasonably deliver. And activist investor Nelson Peltz, bemoaning the Information Age, says it’s harder to meet the expectations of being a good director when you’re inundated just before a board meeting with email and last-minute documents. So, what’s a director to do? Well, avoid complacency, get ahead of the issues affecting your board, stay informed, speak up, and use the best governance tools available to ensure that your board is as effective and efficient as possible. It may not be easy to meet today’s high expectations, but, surely, you don’t want to embrace the alternative. Read on

Boards under scrutiny: Even as former Wells Fargo CEO John Stumpf vacated his board seats at Target and Chevron in the wake of the “cross-selling” scandal that cost him his job, the California Department of Justice yesterday announced it is conducting a criminal investigation of Wells Fargo, seeking evidence of identity theft when the bank opened millions of accounts without customer’s permission. Critics suggest that 1) the board should have noticed the evidence of wrongdoing earlier; 2) it should have split the CEO and chair roles—pairing Stumpf with a strong overseer; and 3) at a minimum, it should have sent strong signals that it valued propriety above profits. Congresswoman Maxine Waters is now questioning whether the Wells Fargo board, even today, is supportive of real structural and cultural change since it appointed as its new CEO Tim Sloane, a 29-year Wells Fargo veteran. Meanwhile at Facebook, CEO and chair Mark Zuckerberg apparently received enough negative feedback that he felt obliged to defend much-maligned board member Peter Thiel after Thiel’s $1.25 million donation to the Trump campaign. Any board facing criticism might consider what it needs to do to ensure the public’s trust—one thing that no successful business can be without. Read on to learn the basics for building, or rebuilding, trust.

It’s a woolly week in the board room with Wells Fargo CEO John Stumpf stepping down amid scandal and calls for Stumpf to also step off the Target board, where he is a director. Heeding the criticism of Congress as well as shareholders, the Wells Fargo board takes this opportunity to split the chair and chief executive roles. One wonders if the Wells Fargo and Target boards would benefit from reading the article (from the Boardspan archives) on the board’s role in reputation management. It could be required reading, too, for those boards the Wall Street Journal discovers have "independent" directors who double as paid lobbyists. Meanwhile, the under-representation of women in the boardroom continues to spark fury in some corners, but a new PwC study suggests that a majority of male directors are just fine with the status quo, thank you very much. We link to the full report, which addresses not just gender, but issues like unprepared board members, the role of activist investors and more. Happy reading....

Lest you think that debates are for the politically minded only, one can only imagine what conversations are going on across many a boardroom this week. With Twitter’s board deciding its future – and it may not be entirely up to them – and Wells Fargo playing “whack-a-mole,” there’s some tough talk at the board table this week we surmise. Speaking of tough talk, see what the activist investors are voicing opinions about this week: woes at Samsung in one case and the need for more women in the boardroom in another case. You go, girl. And batting clean up this week, a broad range of views on compensation from top to bottom, from the US and the UK. With compensation season just ahead of us, we can’t resist the temptation to go deep into the archives and share an opinion that feels like it was written yesterday. Catch up on all the board news.

Shortly before this week’s newsletter arrives in your in-box, Wells Fargo CEO John Stumpf will appear before the House of Representatives Financial Services Committee, at a hearing entitled, “Holding Wall Street Accountable: Investigating Wells Fargo’s Opening of Unauthorized Customer Accounts.” It’s anyone’s guess what to expect, but already this week the Wells Fargo board, bowing to public pressure, clawed back $41 million of Stumpf’s pay and brought in outside investigators to determine who knew what when in the “massive scam” now roiling the bank, while the State of California suspended a key business relationship with Wells. We wonder what "the tone at the top" of Wells Fargo has been and include two articles about corporate culture in the Archives below, for your perusal. Meanwhile, the Twitter board seems to be shopping the company, the Lands’ End board has parted ways with its CEO, and tech giants Amazon, Facebook, Google, IBM, and Microsoft have come together to launch a non-profit Partnership on Artificial Intelligence to Benefit People and Society. The alliance's board is tasked with formulating best practices for a field potentially rife with moral and ethical issues, the resolution of which could affect us all. Read on

Culture clash. Led by the fiery prosecutorial instincts of Senator Elizabeth Warren (D-Mass), a former Harvard law professor, the Senate Banking Committee took Wells Fargo CEO John Stumpf to task this week for his accountability in the bank’s “cross-selling” strategy, which resulted in some 2 million false accounts being created in the names of Wells Fargo customers. Stumpf, in turn, leaned on his board, stating that it was not up to him as Chairman and CEO, but to the bank’s other directors to decide whether executives who oversaw the tainted division should be fired or financially rewarded for their service. (If you didn’t catch this real-life political drama as it unfolded in the Senate chambers, it’s worth watching.) Criticism of the Wells board is rolling in and it’s not hard to imagine there will be a lot more conversation about the board’s responsibility for protecting consumer and shareholder interests, as well as following through on the company’s stated mission of building a culture of accountability. For a thoughtful take on the significant role board culture plays in a corporation, be sure to read “The Anatomy of Board Culture” from our archives. And then, consider the news that GM now has as many women on its board as men—and hasn’t even tooted its own horn about this milestone. For the whole story, keep reading.

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! Read on...

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. Get up-to-date now.

How boards think and “feel” about issues makes a difference: The board of Mylan, critics say, should have demanded that the company curb its price increases to keep the EpiPen affordable—and to spare the firm the media bloodbath of recent days. Others are wondering if the board of the Tronc media company is wise to continue rebuffing the acquisitive advances of Gannett. And new research suggests that boards packed with industry experts may actually have a harder time making the best future-looking strategic decisions. This and the latest news on women in the boardroom, “undesirable” CEOs, and the Uber-Alphabet boardroom breakup in this week’s Director’s Domain.

The end of summer. And the end of a gripping season of board drama at Viacom, as CEO Philippe Dauman is forced out (with a widely criticized $72 million settlement package), while the Redstone family wins the privilege of a board makeover. Never fear… a new and fascinating board drama begins airing in its stead, as an activist investor (and Carl Icahn protégé) looks to replace the entire board of the Williams gas pipeline company, months after half the board resigned following a failure to oust the CEO. Follow these storylines, plus news on employee pay raises, the board’s role in managing cyber risks, and the preponderance of Republicans on boards in this week’s newsletter.

The latest news to get diversity advocates riled up? A study showing that companies with women in the CEO seat are more likely to be targeted by activist investors. The latest news to, perhaps, energize them? A report from the Wall Street Journal suggesting that some companies are aggressively recruiting female directors, sometimes narrowing the field to just women candidates. For a pragmatic discussion about diversity—why it matters and how your board might reasonably achieve it—take a look at the Conference Board article, “How Much Difference Does ‘Difference’ Make.” Get it all in this week's Director's Domain.

Establishing appropriate executive pay is a pain point for a lot of boards: What’s the right package? What’s the right process for determining it? Some of the biggest names in tech are now “disrupting” the common practice of linking pay to performance, potentially opening the door to a new era of compensation practices. Meanwhile, a Texas A&M study questions whether boards can be effective monitors of executive performance. And, speaking of effectiveness, you might improve yours by better understanding your leadership style. Read all about it in this week’s issue.

Disappointed. How else to feel when reading that the latest research reveals that women and minority corporate directors make less than their fellow directors serving on the same boards? Rather than letting discouragement set in, though, why not focus on what you can do to make a difference? You might start by reading MIT Sloan Management Review’s ideas for promoting greater diversity in the boardroom. Meanwhile, critics of the “Commonsense Principles of Corporate Governance,” (issued last week by a group of prominent corporate leaders), say the guidelines need to go farther to ensure that non-executive directors have a larger role in engaging shareholders, that boards take seriously their responsibility for enterprise risk management, and that director tenure and age limits become commonplace. Catch up on the details.

How common is common sense? This week, the governance narrative turns to a discussion that should not be very contentious; however when the definitions of “common” and “sense” are in the eye of the beholder, controversy abounds. Are VC’s paying enough attention, are government leaders paying too much attention, are corporate board members paying the right level of attention? All that, and a board paying its CEO to create the right “tone at the top” while another board fires its CEO for missing the numbers. Lots of opinions this week: from Sacramento to Washington, New York to London, Philadelphia to Stockholm. So we ask, where is the common in common sense? Read more here.

Board politics. While power moves within the board room are hardly novel, the phrase is taking on new meaning as politicians, including Hillary Clinton, Donald Trump, and Britain's Theresa May weigh in on governance issues like board composition and executive compensation. Meanwhile, Facebook finds itself, again, defending the rights of its provocative director Peter Thiel to take actions that don't represent the views of the board, this time as he takes the stage at the Republican National Convention in support of Trump... If this campaign season is giving you—and your CEO—a little agita, you may want to read on to understand how anxiety impacts a CEO's decision making and learn how the board might work with an anxious executive to ensure the best outcomes. Read more here.

Tumultuous times: Nearly half the directors at pipeline giant Williams Co. resign when a move to oust the CEO is blocked. The entire board of digital privacy nonprofit The Tor Project is refreshed by its new executive director, whose predecessor resigned amid accusations of sexual abuse. The $12 billion Hersey Trust sees its third trustee resign as the Trust confronts demands for governance reform from Pennsylvania’s Attorney General. The all-volunteer board of the defunct nonprofit Architecture for Humanity faces a $3 million lawsuit for financial mismanagement. And not surprisingly, the implosion of blood-testing company Theranos inspires new levels of scrutiny of the sometimes lax governance practices of Silicon Valley’s venture capital-fueled startups. It sounds like time to focus on doing what's right—see below for "Integrity is Free"—and to take note of the bright spots, including the increasing diversity on prominent boards such as Intel, Accenture, GoPro, and …Boardspan! Read all about it.

Silicon Valley dominates this week’s board news: With the retirement last week of Nike founder and chairman Phil Knight, Apple CEO Tim Cook steps up as lead independent director of the Nike board—and critics immediately begin asking if Apple can afford for its leader to have any competing priorities. Yahoo CEO Marissa Mayer also hears from nay-sayers, with more than 100 million shareholder votes against her re-election to the company’s board last week. And Twitter announces its latest addition to the board is former Facebook CTO Bret Taylor. Meanwhile, the story of how Google board member Diane Greene became an executive at the company makes for a good read. Check it out here.

Sensational times in the boardroom. Volkwagen's board is accused of knowing more than previously believed about "Dieselgate." The Viacom board has been pretty well deconstructed and remade in just one week's time, with continuing repercussions. And Lululemon's board has been rumored to have a "ghost" in its midst. Meanwhile, Tom Monahan, the CEO of CEB, argues in Harvard Business Review that boards, in their necessary effort to mitigate risk, might miss out on some opportunities to add strategic value—and he has some suggestions for doing better, including being a bit more daring. Read all about it here—then guarantee yourself a bump in popularity by sharing Director's Domain with a friend or colleague.

Long-standing issues dominate the thoughtful discussion taking place in the boardroom this week: Despite much-publicized goals and efforts to increase the percentage of women directors, the numbers aren’t moving, according to the latest Catalyst report (via Bloomberg). The debate continues on board tenure—is familiarity with the business more valuable than fresh insight and lack of cronyism? A new study from NYU’s Stern School of Business suggests long terms are not likely to be better. And Boardspan CEO Abby Adlerman suggests a simple model for Boards to best collaborate with Management. Read on

An activist board?! The business press is brimming with tales of activist investors reshaping companies to be more profitable, and also with advice columns pushing boards to be more strategic. But it’s rare to find stories that shed light on just how a strategy-focused board can reshape a company. This week’s Bloomberg Business article about the Microsoft board offers a rare glimpse of an experienced group of directors pushing a company to make strategic and life-assuring changes. Facebook’s board, meanwhile, shows it is serious about succession planning. And a new study shows that a "nice CEO" may not be the one you want. Read on

Interesting behavior abounds. There are calls for Paypal founder and Facebook director Peter Thiel to resign from the board of the social media giant; Facebook is becoming a powerful media player and is a business partner of Gawker Media, the gossip site Thiel is purportedly trying to sue out of existence. The Viacom board is fighting against the presumed wishes of its largest shareholder and former chief, Sumner Redstone, in an intensifying battle for control of the media empire. The former chief of Valeant Pharmaceuticals, who stepped down amid a massive scandal that cost the company billions, gets a $9 million severance package, while the Theranos founder whose company is under federal investigation for various alleged infractions sees her presumed wealth in the company plummet to zero. And Uber offers up a board seat to its newest investor: a Saudi fund that has made the largest-ever investment by a single investor in a private company: $3.5 billion! For all the news and some fascinating stories on corruption-promoting cultures, CEO pay, and women directors, read on!

Power plays. Exxon Mobil shareholders demand greater influence over the company’s climate change policies and win a vote to allow minority shareholders to nominate board candidates—eco-director to come?… Viacom is roiled, as 92-year-old chairman emeritus Sumner Redstone strips his long-time protégé and CEO Philippe Dauman of his seat on the family trust that will ultimately control the company… The Google/Alphabet board is accused of supporting the company’s alleged use of Android as a “Trojan Horse” to advance anti-competitive practices for other services the company offers... With so many throwing their weight around the boardroom, you would be forgiven for missing the news of a host of interesting board appointments in our Seat at the Table department. It's a packed list this week. Read on

Stepping up to the challenge. The remaking of the Twitter board, which has been on CEO Jack Dorsey’s to-do list since he rejoined the company last year, is happening. This week, saw the introduction of a fourth new director: BET CEO and chair Debra Lee, now Twitter’s first African-American board member, not to mention a media-savvy CEO and former general counsel — a welcome addition to a board that has been faulted for leaning too male and too white. Still, there is much more that can be done to increase boardroom diversity, as this week’s news, once again, points out. Read on

Executives behaving badly. Unfortunately, it’s nothing new, but it can have a devastating effect on a company and put a board under unenviable scrutiny. A new Stanford Business School report, “Scoundrels in the C-suite,” notes that “media coverage of CEO misconduct is significant,” with some incidents garnering hundreds of mentions in the press—and lots of pressure on boards to make things right and to explain how “this” could have happened on their watch. For a timely example, look no further than this week’s news that the high-profile board of the LendingClub fired its CEO after an internal review showed that the firm had sold $22 million in loans to an investor without the loans meeting that investor’s requirements. The media coverage has been fast and furious, with some commentators suggesting that the board acted appropriately by taking immediate action and others suggesting that if the board had done a proper job of monitoring the company, this never would have happened. Right on cue, a Harvard Business Review article argues that we put too much stock in boards’ abilities to oversee complex companies and that “monitoring” is actually an unrealistic expectation. Lots of big ideas to chew on this week! Read on

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. Read on

Shape shifting. It’s nothing new to find hedge funds using their investment muscle to reshape boards and thereby companies, but Starboard Value is really showing us how it’s done: just yesterday the fund picked up four seats on the Yahoo board and more at chipmaker Marvell Technologies. Meanwhile, the $300 billion pension fund CalPERS is using its substantial might to ensure that corporations are taking climate change seriously by requiring companies it invests in to appoint directors with expertise in climate change risk management strategies. Though public scrutiny has already shifted the board structure of beleaguered blood-testing company Theranos, onlookers are now trying to dissect just how the $9 billion company, and its board, got into such hot water. And in an effort to up its EQ, ride-sharing unicorn Uber welcomes the first woman to its board: online media powerhouse Arianna Huffington. All this and much more in this week’s Director’s Domain. Read on

Once upon a time, boardrooms had a reputation for being cloaked in secrecy. No more. These days a lot of interested parties are paying a good deal of attention to boards and placing high expectations on them to maximize shareholder value, diversify their ranks and more. This week federal agencies are putting pressure on the boards of eight of the country’s biggest banks to get their “playbooks” in order and show their preparedness for responding to potential crises. Investors are turning up the heat on Berkshire Hathway, Coca-Cola and other companies with long-tenured board members to turn over some seats and refresh their boards. Another batch of investors has pushed United to reshape its board and is pressing Yahoo to speed its movement toward a sale. Meanwhile, the insistence on change that is being felt in the boardroom is not sweeping the C-suite in the same manner: the percentage of new women CEOs named in 2015 was the lowest in years. Read on

Clearly spring, the season of renewal, is upon us. This week, Twitter and McDonald’s took it upon themselves to drive major changes in their boardrooms, while Chipotle, United Continental and Depomed got an earful from activist investors demanding large-scale director turnover. But the big news is at Theranos, which earlier in the week announced an illustrious new medical advisory board, but is now smack in the middle of a crisis that no advisory or governing board can help with: The possible closure of its labs and banning of its founder to work in the field. The Wall Street Journal reports that federal health regulators are threatening to revoke the company’s licenses and ban CEO Elizabeth Holmes from the blood-testing business for two years, after that the company allegedly failed to address major problems in its testing facilities. Read on

Best laid plans… Disney’s once-celebrated succession planning comes unraveled this week, as the presumed heir to the executive suite prepares to high-tail it out of the Magic Kingdom. As the board rethinks its approach to CEO Robert Iger's retirement (scheduled for 2018), onlookers are engaging in wild speculation about who might fill the top spot and in some serious reflection on the cost companies pay for failing to adequately plan for succession. Across the pond, British firms find the mandate to put women on boards is creating a new wrinkle: fewer women in operating roles. And Valeant Pharmaceuticals offers an unfortunate lesson in what really happens when you reward CEOs for high share prices. —It's a great week for observing the very real impact boards of directors can have on the organizations they serve. Read on

The pressure is on. Of course, if you're an executive or director at Yahoo, you've been feeling it for some time. Still, the call late last week to replace the entire board seems to have upped the intensity and prompted directors to move more quickly toward a possible sale of the company. For an educated guess about how Yahoo’s high-stakes battle with activist investor Starboard Value might turn out, check out the Quartz piece detailing Starboard’s previous campaigns and their results. Avon and American Apparel are also going through big board changes, and new questions arise about whether the presence of women directors has a measurable impact on performance. On a softer note, a nonprofit serving the homeless rewards the efforts of a very young man to make a difference in the lives of the poor ... with a board seat. Read on

Entering Bizarro World: Valeant Pharmaceuticals, reeling for months amid accusations of financial misconduct, this week loses its CEO, gains a new director in activist investor Bill Ackman, and finds that its former CFO, who has been implicated in its troubles, refuses to leave the board. Meanwhile a board-approved comp plan requiring officers to maintain large stock holdings has cost current Valeant CFO more than $4 million. At United Airlines, activists continue to wage a proxy battle for six board seats, even as the stock price soars. And, in news that seems a good deal saner, Salesforce carries on building a powerful board with the addition of a prominent former European tech regulator. Read on

Great judgment. It's a requirement for any decent board member, but all the more so for directors of companies engaged in battles with activist investors—especially as the battles seem to be growing in ferocity. Yahoo’s board appointed two new members in a gesture that was widely interpreted as an affront to vocal investors allegedly hoping to oust chief executive Marissa Mayer, while Viacom re-elected its entire slate of directors, despite investors’ calls for a leadership change. Meanwhile, Harvard Business Review suggests that CEO resistance to activists may have more to do with self-preservation than company performance. In other news, Germany and Japan are both struggling to fulfill their aims of bringing more women into the boardroom. Read on

What makes a great board? It depends who you ask. Studies show that companies with women directors tend to perform better, nonetheless Carl Icahn and fellow activists apparently prefer loyalty to diversity in the boardroom. Harvard Business Review suggests that the ability to openly address conflicts is essential, while Knowledge@Wharton highlights the importance of ethics. Closer to home, Boardspan's CEO Abby Adlerman shares that strategic thinking, governance know how and cultural compatibility are among the attributes of an outstanding board. All of this and more is surely under consideration at United Continental Holdings, the latest large company board to find itself under siege. Read on

Powerful people are in demand. Alphabet executive chair and former Google CEO Eric Schmidt will surely seek them to fill the new advisory board on tech innovation that he heads for the Pentagon. Blythe Masters’ new financial services startup, Digital Asset Holdings, is bringing them on board with appointments like former Bank of America exec Sallie Krawcheck. Activist investors are increasingly filling boards like Angie’s List with them, too. Harvard Business Review, however, strikes a cautionary note about bringing too many leaders together to serve a common cause: Powerful people, who are extremely successful when reigning solo, don’t always work so well together -- perhaps something to consider when you are aiming to compose a truly effective board. Read on

It’s all about the almighty dollar. Or at least much of this week’s board news is: Director pay at large public companies has risen 10% over the past three years, with a number of board members receiving well over half a million dollars for what the Wall Street Journal calls a part-time job. Executive pay has risen faster still and researchers suggest one reason could be board member ignorance about the mechanics of stock grants. (Really?) Other researchers provide evidence that “pay for performance” doesn’t actually provide the desired results and argue that a fixed CEO salary is the way to go. And weighing in from the Boardspan archives, Kellogg Insight offers the voice of yet another researcher, who makes the case that a hefty load of options can alter a CEO’s performance —and not always in good ways. Our conclusion? It’s never a bad idea to review your director and exec comp structure. Read on

They are active all right. Activist investors are seemingly everywhere: reshaping the board of insurer AIG, demanding changes in the corner office and boardroom of media giant Viacom, even looking for some action in the UK at luxury automaker Rolls-Royce. A writer for Harvard Business Review makes the case that the presence of activist investors often leads to better company performance. If, however, you would prefer to avoid such interference, you’ll find some expert advice here as well. Hint: It’s not just lagging stock prices that catch the attention of activists--a board that fails to adopt best practices, like diversity among its directors, is more vulnerable to outsiders wanting to have their say. Read on

Oh, Silicon Valley and its penchant for pushing limits. Jack Dorsey, already managing dual CEO roles at Twitter and Square, is looking to be re-elected to the Disney board—begging the question: Will stakeholders at all three companies be well served by such a plan? Marc Andreesen, the venture capitalist and Facebook director, shares his personal opinions about the Indian government's decision to block Facebook’s latest business move, then finds himself redacting an inflammatory Tweet. And Zenefits jumps into crisis management after its CEO departs amid allegations that an excessive focus on new business caused it to lose site of regulatory requirements for insurance sales. The company's response to right the wrongs include promoting its COO into the chief executive role and adding three high-profile board members: PayPal cofounder Peter Thiel, Valor Equity Partners founder Antonio Gracias, and TPG Growth founder Bill McGlashan. What a week! Read on

In through the out door? While this week saw the departure of several high-profile board members from unsettling situations—including Charles Schwab from the Yahoo board as the company grapples with an uncertain future, and executive chairman Sumner Redstone from the CBS board after a lawsuit alleged that the nonagenarian was mentally incompetent—it also brought at least one unlikely appointment: Famed attorney David Boies, (the man who represented Al Gore in the disputed 2008 presidential election), has taken on the dual role of litigator and director at the beleaguered blood-testing startup Theranos. The New York Times ponders the wisdom here, asking if it is possible to simultaneously protect shareholder interests as a director and management interests as a lawyer. Read on

All eyes are on the boardroom. From activist investors wanting access, as United Airlines is hearing about this week, to the SEC wanting to know the diversity profile of public company boards, the board is under more pressure than ever to open its clubby doors to greater visibility as well as to a whole new breed of director. Right on cue, this week’s newsletter comes with helpful advice for dealing with all this attention, including pointers for cultivating independence and trust, for creating a “mindful board,” and for boosting performance by increasing gender diversity and improving recruiting practices. And here’s a little layman’s advice: Apply that mindfulness to compensation guidelines and avoid the fate of Facebook, which this week settled a suit against it alleging that it substantially overpaid its directors, by some 43% above industry peers. Read on

People power. Nothing could be more important to a company’s success than those who lead and advise them, and this week’s news is all about finding the right mix of players. From a critique of Valeant’s CFO-heavy board to an Apple shareholder’s proposal to recruit more people of color into senior executive and director roles, board composition is a hot topic. And shareholders are quickly gaining more say in that composition: Some 21 percent of S&P 500 companies now embrace proxy access—up from just 1 percent in 2014. Meanwhile, a tough retail season is playing out in the boardroom, where both Kohl’s and Macy’s face potential activist-investor action. Read on

Vrooom. The new year is off to a quick start with General Motors CEO Mary Barra becoming the first woman to chair the board of a major automaker and critics bemoaning any CEO’s unfettered access to the driver’s seat. Others see the move as a victory for women in the boardroom, at a time when the U.S. government estimates it will be,—wait for it—four more decades before the male-dominated boardroom gives way to a 50-50 gender split. Meanwhile, the next appointment on many a board may be a cybersecurity expert if a bill proposed by two US senators passes, requiring corporate boards to disclose whether or not their ranks include a cybersecurity expert (to mitigate the risks of being hacked), and if not why not. Read on

Boards are flexing their muscles this week as they push back on activist investors whose “good ideas” don’t look all that great to insiders. Directors at Dow Chemical made a public show of their unanimous support for CEO Andrew Liveris and an announced Dow-DuPont merger, thwarting efforts by Daniel Loeb’s Third Point LLC to derail the deal and dethrone the executive. The Qualcomm board followed suit, announcing that—after appointing a special committee to review the company’s structure—it opposed the proposal of an activist hedge fund investor to split the company into two business units. One imagines that these CEO-supporting victories are music to the ears of Irene Rosenfeld, chief executive of Mondelez International, who estimates she spends 25% of her time addressing activists. Read on

What did Jack Dorsey, Robert Iger, Sheryl Sandberg and other Disney board members know about alleged wage-fixing in the animation industry? The board now faces a lawsuit claiming it unjustly enriched itself by signing off on SEC documents that did not spell out these concerns. (No wonder the D&O insurance market is $7 billion.) Meanwhile, the Yahoo board confirms it is unraveling its plan to spin off its stake in Alibaba and is instead splitting off the Internet pioneer’s core business interests into a separate company. And news of a potential Dow-DuPont merger has board critics talking. Read on

Fresh off the holiday weekend, Viacom’s board members appear to be wrestling with more allegations that 92-year-old executive chairman Sumner Redstone has become unfit to govern the global media company. It’s a directors' dilemma: Does a chairman’s right to privacy trump a shareholder’s right to know about health issues? Notably worth asking: Would this question burn so hot if Viacom made public its succession plan? …. Meanwhile, there are rumors that the Yahoo board is wrestling with issues of its own, namely whether to sell off key parts of the business and/or give Marissa Mayer the boot. Former Twitter CEO Dick Costolo is picking up new board seats. And, yes, activist investors and even billionaires lose some of the time. Read on

CalPERS, one of the world's largest public pension funds with $293 billion in assets, is throwing its weight behind change. Calling for a major boardroom makeover, the behemoth investor is asking the most common face in the boardroom—the older white man—to step aside and make way for people of color and women. Meanwhile, the biotech industry, one of Wall Street's liveliest darlings, is learning the hard way that better corporate governance is essential to good performance. In the Hot Seat this week is that old buzzword "Sustainability", as investors join environmentalists in asking: What did the Exxon board know about climate change research and could a greater emphasis on sustainability in the boardroom have reduced risk for the company (and the planet)? Read on

If you’ve been following the fate of Valeant Pharmaceuticals, you’ll know that the stock continues to plummet (from $263 in August to $86 now) as the company fights allegations of inflating its revenues. With yesterday’s news that the company now faces insider trading charges from the failed Allergan deal, last week’s $100 million margin call on the CEO, and last month’s resignations of two independent directors from one of the company’s long-term investors, we imagine that the board will be in the Hot Seat soon. Also on our watch screen: expected Twitter board changes and a potentially smoother path forward for DuPont. And for all of you directors who worry about corporate hacking, you’ve got reason to do so – and reason to read below. All this and much more in this week’s Directors Domain. Read on

We all know the buck stops with the board. When corporate scandals erupt, people expect the board to take action—sometimes within the board itself. That's what happened at blood-testing company Theranos, which had been vilified by the press not only for failing to disclose that many of its tests allegedly don’t actually use its breakthrough technology but also for the relevance of its board. No big surprise then that the company announced a major reorg of its governance structure, complete with a new medical advisory board. What is surprising is that Volkswagen, weeks into its growing emissions scandal, has so far failed to respond to the cries for board reform, which many say are necessary if the automaker has any hope of rewiring its corporate culture and rebuilding its credibility. One thing that seems certain: VW is among the very few boards with a falling stock price that isn’t worrying about activist investors, whose influence seems to be on the rise. Not only are we seeing more shareholder-led take-overs, but in a strange new twist, activists are being hired as consultants to companies who want to know how they think. Read on

While a great board member is priceless, director pay is raising eyebrows this week: Mark Zuckerberg faces a lawsuit for allegedly overcompensating the Facebook board and USC Athletic Director Pat Haden comes under scrutiny for taking home nearly a half million dollars in annual compensation from the dozen boards he sits on. Meanwhile activist investor Carl Icahn places AIG in his crosshairs and demands the company be split in three. And women cybersecurity experts are making big gains in the boardroom, snapping up 10 of 16 seats at large corporations that have recently added directors to bolster their boards’ security expertise. Read on

“Crisis management” sounds like a business textbook chapter—until your board finds itself dealing with the unthinkable: a second CEO search in two months, even as you comply with a federal corruption investigation into the prior CEO’s business dealings. Or you discover that the $9 billion company your very visible board serves is very publicly accused of failing to deliver on its core promise. As these real-world dramas play out at United Continental Holdings and Theranos, respectively, you may want to heed the advice of the HBR writer who suggests that the key to great leadership is dedication to learning. In fact, you may want to reread that chapter on crisis management, just in case. Read on

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. Read on

CEO Ellen Kullman’s surprise departure from DuPont was the talk of the boardroom this week, with pundits wondering why the chemical giant didn’t appear better prepared for a CEO transition. Many are speculating that DuPont may now bow to activist-investor pressure to split its business into multiple units—pressure Kullman had seemed to successfully deflect earlier this year. Another CEO transition, the appointment of Jack Dorsey to the power seat at Twitter, emboldened billionaire investor Chris Sacca to push for a shake-up of the ailing social media company’s board. Meanwhile, the drumbeat grows louder for increased diversity, better succession planning, and a greater focus on cybersecurity in the boardroom. Read on

This week, “engagement metrics” come to the boardroom: Twitter’s directors, under fire for their slow-motion approach to filling the CEO role, are outed for lackluster participation on the social media network. Large companies across the globe are shown to be forfeiting hundreds of billions of dollars by not engaging women directors. And directors contend that more debate in boardrooms would lead to better decision-making. Meanwhile, there’s no time like the present to ensure you have at least one tech-savvy director and a strategic CFO on your side. Read on

It’s a busy week in the boardroom. All eyes are on Volkswagen, whose board accepted CEO Martin Winterkorn’s resignation on Wednesday amid the $7 billion+ emissions scandal; more heads will likely roll and a new chief executive may be named as early as Friday, following a full meeting of the 20-person supervisory board. Meanwhile, BofA shareholders rally behind CEO Brian Moynihan, who will remain chairman of the bank, and billionaire Ron Perelman outs the Carnegie Hall board for its alleged lack of transparency and oversight. Read on

Welcome to the first issue of Director’s Notes, Boardspan’s weekly news digest. What a great moment to launch—with an activist investor attack on Bank of America’s board and a hostile takeover bid in the pharmaceutical industry sparking heated debates and creating real-time case studies on governance, the CEO-Chairman role, activist threats, and more. Find it all here, plus "must reads" on delegating risk management, when boards should ignore shareholders, and the causes of board failure. Read on