A letter to a shareholder.

• Author: Rodgers, T.J.
• Position: Political correctness in choosing a board of directors

"Choosing a Board of Directors based on race and gender is a lousy way to run a company. Cypress will never do it."

Editor's Note: The following article is the letter that was sent earlier this year by T.J. Rodgers to one of the company's institutional shareholders. It engendered some notoriety: The Wall Street Journal's coverage of the controversial exchange of correspondence was headlined, "CEO Takes On a Nun in a Crusade Against Political Correctness" (July 15, 1996). This article presents the full text of Dr. Rodgers' letter.

May 23, 1996

Doris Gormley, OSF Director, Corporate Social Responsibility The Sisters of St. Francis of Philadelphia Our Lady of Angels Convent - Glen Riddle Aston, PA 19014

Dear Sister Gormley:

Thank you for your letter criticizing the lack of racial and gender diversity of Cypress's Board of Directors. I received the same letter from you last year. I will reiterate the management arguments opposing your position. Then I will provide the philosophical basis behind our rejection of the operating principles espoused in your letter, which we believe to be not only unsound, but even immoral, by a definition of that term I will present.

The semiconductor business is a tough one with significant competition from the Japanese, Taiwanese, and Koreans. There have been more corporate casualties than survivors. For that reason, our Board of Directors is not a ceremonial watchdog, but a critical management function. The essential criteria for Cypress board membership are as follows:

* Experience as a CEO of an important technology company.

* Direct expertise in the semiconductor business based on education and management experience.

* Direct experience in the management of a company that buys from the semiconductor industry.

A search based on these criteria usually yields a male who is 50-plus years old, has a Masters degree in an engineering science, and has moved up the managerial ladder to the top spot in one or more corporations. Unfortunately, there are currently few minorities and almost no women who chose to be engineering graduate students 30 years ago. (That picture will be dramatically different in 10 years, due to the greater diversification of graduate students in the '80s.) Bluntly stated, a "woman's view" on how to run our semiconductor company does not help us, unless that woman has an advanced technical degree and experience as a CEO. I do realize there are other industries in which the last statement does not hold true. We would quickly embrace the opportunity to include any woman or minority person who could help us as a director, because we pursue talent - and we don't care in what package that talent comes.

I believe that placing arbitrary racial or gender quotas on corporate boards is fundamentally wrong. Therefore, not only does Cypress not meet your requirements for boardroom diversification, but we are unlikely to, because it is very difficult to find qualified directors, let alone directors that also meet investors' racial and gender preferences.

I infer that your concept of corporate "morality" contains in it the requirement to appoint a Board of Directors with, in your words, "equality of sexes, races, and ethnic groups." I am unaware of any Christian requirements for corporate boards; your views seem more accurately described as "politically correct," than "Christian."

My views aside, your requirements are - in effect - immoral. By "immoral," I mean "causing harm to people," a fundamental wrong. Here's why:

* I presume you believe your organization does good work and that the people who spend their careers in its service deserve to retire with the necessities of life assured. If your investment in Cypress is intended for that purpose, I can tell you that each of the retired Sisters of St. Francis would suffer if I were forced to run Cypress on anything but a profit-making...