Compuware takeover try asks: Where's board's IT IQ?
By Tom Henderson
Whether Elliott Management Corp. decides to make a better offer for Compuware Corp., it likely will ask for a shake-up of the company's board of directors, based on its past proxy battles with other publicly traded information technology companies. Barring, that is, Compuware's sale to another suitor. On Thursday, Reuters reported that Compuware has held preliminary talks with New York City-based Blackstone Group LP and Fort Worth, Texas-based TPG Capital LP. In a release dated Jan. 25, Compuware said it would entertain other offers. "I'm not surprised at all with this takeover bid by Elliott. The Compuware board is an ideal candidate for what not to do with your board," said Sudip Datta, interim chairman and a professor in the department of finance at the Wayne State University School of Business Administration. "There are several things that stand out for me," Datta said. "One, it's an inside board. It's too parochial. It's too Detroit-centric. These board members play in the same sandbox with the same social connections. You have to be worried that there are social connections that make true independence impossible. Two, you definitely need more board members with a background in IT or finance. And it's too big. It has 11 members. It'd be better off with eight or nine. There's academic literature on board size and effectiveness, and the larger board you have, the harder it is to be nimble and make quick, hard decisions."