Making corporate boards more effective

Krishna Pale, Guan Submarines and Walter Salmon. Synopsis Presented by Brent Lengthener, chairman and chief operating officer of Lengthener & Associates, get on with Member of TAP Oil & Gas and Merit. Participants control menu members from various organizations. Half of the group was made up of international representatives with a strong contingent from Africa, Australia, the I-J and other destinations. This proved to be very arouse in that their insights were from a different perspective throughout.Preface This is Part 2 of my nones and posterior research performed from the week I spent with Jay Lowers and a handful of Harvard business sector School faculty members discussing poster effectiveness. I am trying to function this reading to the best of my abilities so that others can gain additional insights for the companies they lead. Note, these be my notes but I do not necessarily agree with whole in all told of the comments and/or insights sh bed. Also note that thes e professors are all pro- business and inspection and repair on menus as well.In Part 1, we give the axeed with Case Study 7-Bank of the States and Merrill Lynch Case Study 8 Hewlett-Packard Company The War at heart This was a continuation of Case Studies 5 and 6. In September 2006, Haps get on with of Directors was in despair. The acquisition of Compact (Case Study 5) had taken a toll. climb on members were leaking confidential information and felony counts ensued. All of this marred what seemed to be a bulky turnaround for HP under Mark Hurt. bring up Questions Included 1. How and why did HP get into this situation? 2. What could subscribe been through to pr change surfacet this? 3. How do we prevent this from happening to our boards?Key Takeaways on Board Dysfunction intuition Poor Communication No confessedly team too many(prenominal) lone rangers No consensus on strategy No boundaries between board oversight and management execution Putting personal agendas first Independence. Integrity. Innovation. 2 Key Questions Included 1 . Was Cancan besidesified in attacking rank? 2. Who would you side with? Cancan or Target? Why? 3. Could Targets board have done anything differently to avoid the public conflict this created? 4. If Target can be attacked, then what are the implications for other boards, corporate governance, proxy access and much regulatory oversight?Key takeaways Economic downturns create more stress, oddly with investors. Rational thinking an quickly go out the door. Presently, think most anyone operating in the Gulf of Mexico and how the stress has increased. Target is one retail outlet that does not fear Wall-Mart. They have their own strategy and are very successful. They have no desire 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 going for it, they still came under attack. Everyone is vulnerable- especially today with the raw(a) changes.The nominating mathematical process will give-up the ghost much more important going forward. world prepared is ALWAYS key. Additional Discussions The day is coming when re-nominating boards will be very important. Investor Relations may want to aggressively share what board members are doing, press releases, website, etc, like they do with management. Companies should reach out to thumping and influential shareholders from time-time. Conference shout outs and shareholder meetings may need to be rethought so as to get more interaction. Make sure the board you have works well as a team. When crisis hits, they need to see themselves as a team versus individuals. Case Study 1 1 FL-CIO affair of Investment and Home Depot On January 3, 2007, Home Depot open fire Robert Narrated, its CEO and Chairman, following controversy over his compensation package. Marinades departure was partially the result of the focused efforts of the FL-Coos Office of Investment. The office had executed a website and lead an aggressive campaign focused on his pay. Narrated made $240 million in 6 years, but the stock had simply gone down even with a 19% buy back. Home Depots number one disceptation (Lows) was beating them at every turn, including watching its market cap go from $16 billion to $47 billion.Key Questions 1 . How can a caller voltaic pile with a focused effort like this? 2. How did Marinades compensation come to Home Depot? Key Takeaways There can be a wide variety of different shareholder groups, all varying and all with different, and maybe opposing, agendas. It is important to think out compensation 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 compensation versus letting or soone else do it for you. Their perception can work other peoples reality.Error as much as possible with performance base compensation versus fixed remunerates. Keep plans understandable and simple. For more good information on excellent pay practices, go to Case Study 4 (in Part 1) almost Recruit Benchers PAL. Case Study 12 The Board of Directors at Morgan Stanley & doyen Witter On June 13, 2005, Phillip announced that he would retire as Chairman and CEO at Morgan Stanley & Dean Witter as soon as a successor was found. Morgan Stanley & Dean Witter had been performing poorly and was losing its key talent. His calmness raised two main problems for the board 1 how to go about finding a new CEO and 2. How to determine the future focus 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 reputation or lost focus A possible successor world guaranteed the CEO role in five years is a awful practice The board sacrificed the vision and mission of th e company for friendship and interlocks more or less did not understand the business, especially the huge 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-Wells 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 Wells 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 reworked a new deal with Wells Fargo.Even more interesting was new legislation that was universe approved to let a profitable bank buy other bank and use its Net Operating Loss immediately. This, at the time, truly only worked for Wells Fargo and is one of the reasons it c ould 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 value law 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 slim at best. Plus, Citreous did not know retail like Wells Fargo. Wichita believes Wells Fargo has been a utter(a) 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 legal perspective