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Proxy Season Prompts Big Changes on High-Profile Boards
March 23, 2016
Board succession and refreshment
have become
consistent topics of conversation in corporate governance, with shareholders directly
sending a message to companies that they expect regular evaluation of a board’s composition and performance.
Constituents have competing interests in terms of what they’d like to see change, and most discussions about
an urgent need for board assessment has centered on
greater diversity
and skills in a
changing corporate environment.
In the past several weeks, high-profile public companies have been in the news as months of back and forth
with shareholders culminated in turnover on their boards of directors. Each of the scenarios highlighted
below spotlights a different hot-button issue at the forefront of today’s corporate governance discourse.
According to Equilar Atlas, an executive data platform, 32 new board members were added at NYSE and
Nasdaq-listed companies in the week ending March 11. Of those, seven (or 22%) were females. Seventeen board
members left their positions as directors during that timeframe, and even more turnover has occurred since
then, as reflected below.
Proxy Fights
In the second week of March, both United Continental Holdings and Yahoo added two new members to their boards.
In the case of United, the company
immediately came under fire from activists who threatened a proxy fight with the presumption that the company’s
directors as a whole do not have enough industry experience. Yahoo, who has been under widely publicized scrutiny
from investors Starboard Value, added two new board members recently as well, which
The Wall Street Journal said “may indicate that Yahoo intends to fend off any
outside attempt to seize the board.” In the coming weeks when these companies file their proxy statements and
get ready for their shareholder meetings, more news is sure to come.
Boards Reflecting Company Performance
Valeant Pharmaceuticals has added several new
board members in 2016, most recently in the opening weeks of March. These appointments
occurred in concert with Valeant’s consistent position in the spotlight for a variety of reasons, from CEO J.
Michael Pearson’s medical leave, scrutiny of its acquisitions strategies, an SEC investigation and a stock
price that has fallen well over $200 from its peak last year. After announcing its earnings on Tuesday, March
15, Valeant’s stock fell another 50%, prompting activist investor Bill Ackman, who leads
Pershing Square Capital Management and just secured a spot on the company’s board, to move
into defensive mode. Indeed, with the company’s stock now a shell of its high last summer, its new directors have
their work cut out for them to assuage the concerns of its stockholders.
Over the weekend,
Pearson was let go at the request of the board, prompting more changes at the company as the
company’s CFO refused to step down as a director to make room for Ackman himself.
Board Independence
Viacom has had no shortage of attention on its
board composition this year, and the plot thickened
after its annual shareholder meeting on March 14 when the company added a new
lead independent director. This
is in line with greater trends among S&P 500 companies, which have seen an increase in boards adding a lead independent
director to serve alongside a combined CEO and Chairman of the Board—which Viacom now has in Philippe Dauman.
According to Equilar, the percentage of S&P 500 companies that have a lead independent director alongside a combined
CEO/Chair role has increased from 55.5% in 2012 to 61.2% in 2014. The movement toward board independence is typically a
popular move among investors and proxy advisors. And though Viacom’s shareholders technically overwhelmingly
supported the company’s decisions, some have raised questions about the move in light of
considerable controversy over the way its
voting shares are distributed.
The data in this post is powered by Equilar BoardEdge, which not only includes information on
150,000 directors and executives qualified for board service, but also more than a dozen categories
about each board member’s background and leadership experience. The platform’s defining feature is a
networking tool that clearly displays how board members are connected to each other.
For more information on BoardEdge, or to request a demo, click here.
For more information on Equilar’s research and data analysis, please contact Dan Marcec, Director of Content &
Marketing Communications at dmarcec@equilar.com.