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Power Sheet – June 20, 2016

Two items of significant leadership news in the week ahead and one overlooked lesson from last week:

-The big event is of course Thursday’s Brexit vote. The outcome is anyone’s guess: Polling showed the Leave side gaining steadily until the murder of Labor MP Jo Cox last Thursday; now two new polls show Remain in the lead, but by slim margins. And remember that the pollsters mis-called last year’s U.K. elections so badly that the British Polling Council conducted a year-long inquiry into what went wrong (short answer: unrepresentative samples).

Predictions of what a Leave victory would mean are similarly uncertain. Financial institutions and the Bank of England are braced for chaos, but players with much at stake have presumably hedged their exposure and otherwise prepared for that outcome. The most immediate effect would likely be on the stature of Prime Minister David Cameron and of former London mayor Boris Johnson, with Remain proponent Cameron facing pressure to step down as Tory leader and Leave proponent Johnson his obvious (but far from certain) successor.

In short, far more than usual just three days before a vote, we have no idea what will happen. At least we Americans won’t have to stay up quite all night for the result; we should know by 2 a.m. EDT unless it’s extremely close.

-Facebook today holds its annual meeting, at which shareholders will vote on the company’s proposal to issue a new class of stock. The reason is that founder and CEO Mark Zuckerberg wants to give away 99% of his stock over time, but he doesn’t want to give up control of the company. He now owns or holds voting power over 60% of the votes. The new shares would be non-voting, and those shares would be given away.

It’s obvious how this is a good deal for Zuckerberg but far from obvious how it’s good for other shareholders. An institutional owner, Northstar Asset Management of Boston, has placed an opposing proposal on the agenda of today’s meeting, calling for Facebook to have just one class of stock. Northstar CEO Julie Goodridge argues that “Non-insider shareholders already suffer with only one-tenth the voting power of insiders. Facebook’s new non-voting share of stock will completely eliminate any semblance of opportunity for meaningful engagement with the company.”

Since Zuckerberg casts 60% of the votes, the outcome is not in doubt. And to be clear, Zuckerberg is a brilliant founder and leader who deserves to be the billionaire he has become. But brilliant leaders obsessed with control work out great until they don’t, at which point they are a world of trouble. Just ask Sumner Redstone’s family and Viacom’s directors, executives, and shareholders.

-Last Monday, Utah Lieutenant Governor Spencer Cox spoke at a vigil for victims of the Orlando shooting, at which he apologized for behavior that the public knew nothing about. He introduced himself by saying, “I recognize fully that I am a balding, youngish, middle-aged, straight, white, male, Republican politician, with all of the expectations and privileges that come with those labels. I am probably not who you expected to hear from today.” He then said that his small rural high school included students who were gay, he now realizes, and “I regret not treating them with the kindness, dignity, and respect — the love — that they deserved. For that, I sincerely and humbly apologize.”

He didn’t have to say any of that, and he may even have damaged his political prospects. But he also created a lot of fans across the political spectrum, and think of the trust with which voters and others will hear him in the future. That’s the behavior of a good leader.

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What We’re Reading Today

Paul Ryan opens door to turn back on Trump
In an interview on Meet the Press on Sunday, the House Speaker said that he must support Donald Trump as the nominee, but he would not force others – including delegates – to do the same. Ryan also indicated that he wouldn’t criticize House and Senate Republicans who have tried to sway delegates to vote against the presumed GOP presidential nominee.  The Guardian

Emails highlight bitter fight between Meg Whitman…
…and Silicon Valley investment banker Frank Quattrone. The emails relate to Hewlett Packard Enterprise’s purchase of Aruba Networks last year. Quattrone’s firm Qatalyst Partners advised Aruba until HP Enterprise CEO Whitman refused to negotiate with them, demanding that Aruba select another bank. The emails have become public after an investor sued, claiming HP Enterprise’s efforts to select the advisors in the deal led to conflicts of interest.  WSJ

Regulators eyeing block of Anthem-Cigna merger
Joseph Swedish‘s Anthem and David Cordani‘s Cigna will meet with regulators this week to discuss the proposed merger between the two health insurers. Regulators have expressed concern that Anthem won’t be able to provide enough concessions in order to purchase Cigna for $48 billion. Meanwhile, Aetna awaits a merger with Humana, which has raised similar concerns.  Fortune

Cleveland Cavaliers and Dan Gilbert win the NBA Championship
Last night proved to be an historic victory for the city of Cleveland and LeBron James. But Quicken Loans founder and owner of the Cavs Dan Gilbert also played a big role. It’s a bookend to a relationship between Gilbert and James that grew bitter in 2010, when James joined the Miami Heat. But both were able to put their issues behind them for James to return and eventually win the NBA Championship.  Cleveland Tribune

Building a Better Leader

The ‘fake it till you make it approach’ has some weight
How much you strive for authenticity can dictate how you should “fake it.” Inc.

When considering a career decision…
…make sure you’re not blinded by fear, but also use wisdom to come to the right decision. Fortune

When a company faces an unethical option…
…it sometimes takes a single strong-minded leader to end the conversation and protect the firm. SmartBrief

Fighting Fronts

Philippe Dauman’s last stand

While the Viacom CEO awaits his fate as a Delaware judge reviews Sumner Redstone‘s request to replace him and four other directors on the company’s board, Dauman says he deserves to stay. Despite the company’s performance – revenues have fallen for two years – Dauman says that he’s positioning the company for the future. He also defended Viacom’s digital efforts, his company’s programming, and his pay. Fortune

Goldman’s stroll down Main Street
Lloyd Blankfein‘s company started to take deposits into its main street play GS Bank. It’s a drastic strategy shift for one of Wall Street’s stalwarts. Goldman is also developing 401(k) accounts, loans for those with credit card debts, and cheap investment funds. But investors are confused how it will compete due to its lack of experience in the highly competitive retail banking sector. NYT

Venezuela faces food shortage, looting
Looting has become a part of daily life in the country, where a food shortage has left millions hungry. President Nicolas Maduro has blamed his enemies for using the economy to wage a coup against him. In response, he has militarized and placed cities under emergency control as the country struggles to produce and import enough food. Al Jazeera

Up or Out

UniCredit is set to name Corrado Passera its next CEO, according to reports.  Reuters

Paul Eremenko has been hired as CTO of Airbus Group.  WSJ

Fortune Reads and Videos

Hackers have attacked Citrix GoToMyPC
The company is calling it a “very sophisticated password attack,” and is advising customers to change their logins. Fortune

Apple won’t participate in the Republican National Convention
In the past, it had provided MacBooks and other tools to the RNC for the event, but it will sit out due to Donald Trump‘s comments on women, foreign refugees, and immigrants. Fortune

Algeria blocks Facebook due to high school exams
It’s to protect the integrity of the tests and will last until June 23.  Fortune

Finding Dory breaks records
With $136 million at the box office, it beat the record for highest grossing animated film during its opening weekend. Fortune

Quote of the Day

“The issue at hand there was about his health care. And as I said, he was attentive and engaged. But this context is totally different. We weren’t addressing significant business decisions.” —Viacom CEO Philippe Dauman, explaining why he testified in November that Sumner Redstone was mentally competent and why it’s different now that Redstone’s trying to oust him from the company’s board Fortune

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Produced by Ryan Derousseau
@ryanderous
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