Making corporate boards more effective

Krishna Pale, Guan Submarines and Walter Salmon. Synopsis Presented by Brent Lengthener, death chair and chief operating officer of Lengthener & Associates, panel Member of TAP oil & Gas and Merit. Participants Board members from various organizations. Half of the chemical group was made up of international representatives with a sanitary contingent from Africa, Australia, the I-J and other destinations. This proved to be genuinely interesting in that their insights were from a different spot through come forward.Preface This is Part 2 of my notes and subsequent research performed from the hebdomad I spent with Jay Lowers and a handful of Harvard crease School faculty members discussing add-in effectiveness. I am trying to sh atomic number 18 this selective information to the best of my abilities so that others throne gain additional insights for the companies they lead. Note, these are my notes precisely I do not necessarily hold with wholly of the comments and/or insi ghts shared. Also note that these professors are on the whole pro- business and serve on dialog boxs as well.In Part 1, we ended with drive determine 7-Bank of the States and Merrill Lynch show window field 8 Hewlett-Packard union The War Within This was a continuation of Case Studies 5 and 6. In September 2006, Haps Board of Directors was in despair. The acquisition of Compact (Case Study 5) had taken a toll. Board members were leaking confidential information and felony counts ensued. All of this marred what incurmed to be a great turnaround for HP under Mark Hurt. detect Questions Included 1. How and wherefore did HP get into this stead? 2. What could have been do to prevent this? 3. How do we prevent this from happening to our boards?Key Takeaways on Board Dysfunction Mistrust vile Communication No true team too many lone rangers No consensus on dodge No boundaries between board backsliding and trouble exe repulseion Putting personal agendas first Independence. Integrity. Innovation. 2 Key Questions Included 1 . Was Can potbelly Justified in attacking aspire? 2. Who would you side with? Cancan or Target? Why? 3. Could Targets board have done anything otherwise to avoid the public conflict this created? 4. If Target can be attacked, then what are the implications for other boards, corporeal governance, proxy access and more than than regulatory oversight?Key takeaways Economic downturns create more stress, oddly with investors. Rational thinking an quickly go come in the door. Presently, think about anyone operating in the disconnectedness of Mexico and how the stress has increased. Target is one retail issuing that does not fear Wall-Mart. They have their own scheme and are very successful. They have no proneness to be a copycat. They are proud of who they are. The board is constantly revamping itself and is considered excellent in governance. Even with all it had breathing out for it, they still came under attack. Everyone is vulnerable- especially at once with the in the raw changes.The nominating process result become a great fate more important going forward. Being alert is ALWAYS key. Additional Discussions The day is coming when re-nominating boards will be very important. Investor Relations may extremity to offensively share what board members are doing, inspire releases, website, etc, get hold of they do with management. Companies should reach out to prominent and influential shareholders from time-time. Conference calls and shareholder meetings may emergency to be rethought so as to get more interaction. Make sure the board you have deeds well as a team. When crisis hits, they need to see themselves as a team versus individuals. Case Study 1 1 FL-CIO fleck of Investment and kinfolk Depot On January 3, 2007, Home Depot laid-off Robert Narrated, its CEO and Chairman, following controversy over his wages package. Marinades departure was partly the result of the focused efforts of th e FL-Coos Office of Investment. The office had exe landed a website and led an aggressive campaign focused on his pay. Narrated made $240 zillion in 6 years, just now the stock had just now gone down even with a 19% acquire back. Home Depots number one challenger (Lows) was beating them at every turn, including watching its commercialise cap go from $16 billion to $47 billion.Key Questions 1 . How can a company remove with a focused effort like this? 2. How did Marinades allowance impact Home Depot? Key Takeaways there can be a wide transmutation of different shareholder groups, all varying and all with different, and maybe opposing, agendas. It is important to think out hire plans from beginning to end not only the costs, but the reasoning, the optics, and the story. Make sure you proactively tell the true story regarding allowance versus letting someone else do it for you. Their perception can become other peoples reality.Error as much as possible with performance bas ed compensation versus determined remunerates. Keep plans understandable and simple. For more good information on excellent pay expends, go to Case Study 4 (in Part 1) about go into Benchers PAL. Case Study 12 The Board of Directors at Morgan Stanley & doyen Witter On June 13, 2005, Phillip announced that he would love as Chairman and CEO at Morgan Stanley & Dean Witter as soon as a substitute was found. Morgan Stanley & Dean Witter had been performing poorly and was losing its key talent. His giving up raised ii main problems for the board 1 how to go about finding a new CEO and 2. How to determine the future direction of the firm. 6 Key Questions 1 . What is your assessment of how the board handled the situation? 2. How do you explain their decision? Terrible practices were in place and the company had become institutionalized Board became infatuated with a strong CEO constitution or lost focus A possible successor being guaranteed the CEO role in five years is a terrible practice The board sacrificed the vision and mission of the company for companionship and interlocks Most did not understand the business, especially the big difference between Morgan Stanley and Dean WitterTo remove the CEO, 75% of the board had to agree, which was virtually impossible The way they allowed the CEO to dictate any would-be successor cut them off from some great candidates Case Study 13 Citreous-Wichita- rise Fargo On October 3, 2008, the CEO of Citreous, who had Just worked out an exclusive agreement to buy Wichita, received a call from Washouts CEO saying they had Just cut a new deal with swell Fargo. Wells Farads offer was $7/share versus the $1 Citreous had offered. The matcher was the IBID. They first worked the deal with Citreous but later on reworked a new deal with Wells Fargo.Even more interesting was new legislation that was being canonical to let a profitable bank buy another bank and use its Net run Loss immediately. This, at the time, really only w orked for Wells Fargo and is one of the reasons it could offer more. 1 . If you were on Agitprops board and heard there was a new deal with Wells Fargo, what would you do? 2. If you were on Washouts board, how would you handle the two opportunities? 3. If you were Wells Fargo, after the favorable tax integrity change, what would you do? 4. Evaluate what the IBID did by, in essence, brokering to both. Www. Lengthener. M 7 5. Key takeaways Interestingly, we had one of Washouts negotiators in the room so he gave us some great insights Citreous was going to cherry-pick Washouts assets and Wells Fargo was going to buy all. Citreous was not a cultural fit so chances that this would have worked were abbreviate at best. Plus, Citreous did not know retail like Wells Fargo. Wichita believes Wells Fargo has been a perfect fit. The IBID Chair, Sheila Pair, brokered the deal first with Citreous and then, during the due diligence period, was working on a better deal with Wells Fargo. From a le gal perspective