Motorola Appointing Dave Dorman as Chair is a Positive
Yesterday, Motorola announced that Dave Dorman will take over from Ed Zander as the Board's Chair. I very much support this development.
When I first spoke out for changes at Motorola last summer, I was critical of the management and the board. There are several directors whose tenure exceeds 10 years. Simply put, they've now overseen the rise and fall of StarTAC and RAZR -- with nothing learned and no consequences.
Carl Icahn getting 2 seats at the table helps, but more work needs to be done in over-hauling this board. Some of the old guard need to move on.
Dorman is a breath of fresh air for shareholders. He has relevant experience and a solid reputation.
Here's what I said about him and the rest of the board last summer:
If you had a sense of déjà vu watching what happened with RAZR, it’s because Motorola has lived the story before of riding the wave of a hot product without sufficient heed to where the industry is moving to. Ten years ago, it was with StarTAC: the “iconic” hit phone, which was analog-based. All the signs pointed to the industry moving to digital. However, Motorola’s plans for digital phones were delayed, so that additional resources could “feed the beast” of StarTAC. The company almost drove off the precipice as a result. Fortunately, for its customers, employees, and shareholders, it pulled itself back from the brink. You would hope that an organization would institutionalize the learnings of such a heralding experience. Yet, the parallels between RAZR and StarTAC are eerie. Why didn’t Motorola learn?
Chris Galvin, the former CEO and grandson of Motorola’s founder, is no longer around. However, 4 of Motorola’s current board of 11 were around. Judy Lewent, the CFO for Merck, has served on the board since 1995. Nicolas Negroponte, a director of the MIT media lab, has been on the board since 1996. Dr. John White, the Chancellor of the University of Arkansas, has been on the board since 1995. And Samuel Scott III, the head of a corn refining business, has been on the board for almost 15 years.
In the wake of Sarbanes-Oxley, a lot of attention has rightly been paid to the issue of board “independence.” It is a good thing to have directors who are sufficiently vigilant and will ask hard questions of management. Yet, how “independent” can you be when you’ve served on a board for over a decade? Meg Whitman, CEO of eBay, famously said that no CEO should stay in the same job for 10 years or they risk becoming stale in the saddle.[6] We agree and think this same benchmark should apply to all corporate directors for the sake of fresh eyes and energetic vigilance.
One argument a defender of keeping a director on the same board for over a decade could make is that: it is critical for retaining some “institutional memory” in board discussions. Presumably, these longer-serving directors could remind their shorter-tenured brethren about organizational mistakes made in the past that shouldn’t be repeated – such as StarTAC. We thank Ms. Lewent, Mr. Negroponte, Dr. White, and Mr. Scott for their service, but respectfully and strongly suggest that the company would be better served by new independent directors with strong business and communications experience....
[T]he Motorola board has – in the past – chosen to appoint directors with an abundance of experience outside Motorola’s core communications industry. While we don’t advocate a board only consisting of industry veterans, we believe a solid majority should be experienced within the markets in which Motorola directly competes, rather than – for example – from the pharmaceutical, consumer packaged goods, agricultural, and academic worlds. Therefore, we suggest replacements for the 4 people named above reflect this.
New Motorola director David Dorman who is ex-AT&T fits the bill for what we’re asking.
