A letter to a shareholder on board diversity.

• Author: Rodgers, T.J.
• Position: ROAD TO XL - Excerpt

Ed. Note: In 1996 T.J. Rodgers, founder and CEO of Cypress Semiconductor Corp., sent a letter to one of the company's institutional shareholders, a member of a religious order, who questioned him on the company's commitment to board diversity. His response engendered some notoriety. The Wall Street Journal headlined its coverage of the controversy, "CEO Takes On a Nun in a Crusade Against Political Correctness." Our article, "A Letter to a Shareholder" [Summer 1996], presented the full text of Dr. Rodgers' response. Following is an excerpt from that letter. (In April 2016 Dr. Rodgers announced his intention to step down as CEO of Cypress after nearly 34 years of running the company.)

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 of 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 Master's degree in an engineering science, and has moved up the managerial ladder to the top spot in one or more corporations. Unfortunately, there are...