HBR’s 10 Must Reads on Boards (with bonus article “What Makes Great Boards Great” by Jeffrey A. Sonnenfeld)

The Error at the Heart of Corporate Leadership

by Joseph L. Bower and Lynn S. Paine

IN THE FALL OF 2014, the hedge fund activist and Allergan shareholder Bill Ackman became increasingly frustrated with Allergan’s board of directors. In a letter to the board, he took the directors to task for their failure to do (in his words) “what you are paid $400,000 per year to do on behalf of the Company’s owners.” The board’s alleged failure: refusing to negotiate with Valeant Pharmaceuticals about its unsolicited bid to take over Allergan—a bid that Ackman himself had helped engineer in a novel alliance between a hedge fund and a would-be acquirer. In presentations promoting the deal, Ackman praised Valeant for its shareholder-friendly capital allocation, ...