Aerojet crashes into board dysfunction

NEW YORK, July 1 (Reuters Breakingviews) - A company whose chief executive also takes the role of board chair can be criticized for poor corporate governance. But Aerojet Rocketdyne (AJRD.N), a $3 billion U.S. defense firm, shows splitting roles isn’t a cure for board dysfunction.

The rift between Chief Executive Eileen Drake and Executive Chairman Warren Lichtenstein started over a now-defunct sale to Lockheed Martin (LMT.N). He acknowledged he tried to get her to change deal terms by offering to buy her a handbag. Both put forward separate slates of board directors. Then Lichtenstein took Drake to court for her use of corporate resources to help fight him.

Lockheed dropped its bid, but the court case forced Aerojet to retract a press release that undermined Lichtenstein. Then on Thursday, shareholders sided with Drake. Board members disagreeing about the direction of a firm isn’t necessarily a bad thing. But the company’s shares are down 16% in the past year while Northrop Grumman (NOC.N) is up 30%. The Aerojet fight has so far produced only a distraction. (By Lauren Silva Laughlin)

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