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‘It’s Nuti’s board,’ prof says of NCR

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By Jessica Wehrman and Tom Beyerlein, Staff Writers Updated 8:59 PM Saturday, June 13, 2009

Ever since Bill Nuti took the helm of NCR Corp. in August 2005, he has been surrounding himself with familiar faces.

The first time there was a vacancy on the board, NCR appointed Gary Daichendt, who served as executive vice president of Cisco Systems Inc. when Nuti was senior vice president there. Daichendt also worked at another company on Nuti’s resume, IBM.

Nuti’s executive vice president, John Bruno, and three of seven senior vice presidents worked with Nuti at either Cisco or Symbol Technologies. And in May, NCR appointed two new vice presidents who worked at Nuti’s former employers.

Since Daichendt’s appointment, three other NCR directors have been appointed under Nuti’s chairmanship. That means Nuti and directors appointed under his leadership constitute a 5-4 majority on the board.

“It’s his board,” said Ned Hill, economic development professor at Cleveland State University. “A CEO is going to recruit people on the board whose business judgment (the CEO) respects.” At the same time, Hill noted, no CEO recruits board members who are likely to be consistent opponents.

Nuti doesn’t sit on the NCR board committee responsible for filling vacancies, but the committee is expected to consider his opinion, according to company policies.

NCR says all eight directors besides Nuti meet company and New York Stock Exchange definitions of “independent directors.” In SEC filings earlier this year, the board confirmed it had examined the eight members and found them to all be independent.

Still, some members’ resumes include ties to NCR customers and business partners. NCR makes ATMs and retail checkout scanners.

Before Nuti’s arrival, in 2002, NCR named to the board Mark Frissora, then chairman and CEO of Tenneco Inc. In July 2006, Frissora became CEO of Hertz, an NCR customer. In January, NCR, after reviewing its corporate governance policies, determined that Frissora’s Hertz doesn’t have a material relationship with the company that could cause a conflict of interest.

And on April 3, 2008, Atlanta-based Home Depot, an NCR customer, announced that Robert DeRodes, its executive vice president and chief information officer, would be leaving by year’s end. Less than a month later, NCR announced that DeRodes and Richard Clemmer would be named to the board. In October, DeRodes became chief technology officer of First Data Corp., a partner to NCR in a deal to put ATMs in banks.

First Data, “is very relevant” to NCR, said Gil Luria, an analyst with Wedbush Morgan, who said board members have been picked in large part for their business backgrounds.

DeRodes also worked for another Atlanta-based NCR customer, Delta Airlines, and in a March 31, 2009, SEC filing he listed an Atlanta address.

NCR announced on Tuesday, June 2, that it was moving its world headquarters from Dayton to Atlanta.

Clemmer is president and CEO of NXP Semiconductors and former senior adviser to Kohlberg Kravis Roberts & Co., or KKR.

Both Clemmer’s NXP and DeRodes’ First Data are owned by KKR, the leveraged buyout firm that was the namesake of “Barbarians at the Gate,” a popular book and movie about KKR’s hostile takeover of RJR Nabisco.

James McRitchie of corpgov.net, an online database of information on corporate governance, said independence on corporate boards is often difficult to define.

“You want independently minded board members who are not going to follow along with whatever the CEO says, like ants or whatever,” he said.

Luria said NCR’s directors have strong enough credentials to indicate independence from Nuti. By its board picks, “NCR’s trying to create a brand perception as a more innovative company,” he said.

The NCR board’s newest member is longtime Xerox executive Quincy Allen, who recently became CEO of Vertis, a Baltimore advertising and marketing company. He joined the board in late January.

Four members of the board predate Nuti. One, business professor C.K. Prahalad, was described by BusinessWeek magazine as a “business prophet” who is “one of the management world’s most creative thinkers.” Another, Edward “Pete” Boykin, is the retired president and chief operating officer of Computer Sciences Corporation.

Prahalad and Boykin are also directors of the Dayton-based NCR spinoff company Teradata. Daichendt and Frissora, have degrees from Ohio State University.

Other than that, the connections to Ohio appear to be few.

McRitchie said a downside of independent directors may be they may find it easier to sever long-term ties to a community, like NCR has done with Dayton.

“There’s no allegiance to any town, city or country, for that matter,” McRitchie said.

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