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From Jim Kristie | Article of the
Month | Columnist
Reader Profile |
Research | News |
The
Karmic Nature of Directorship
It explains a lot about why someone would agree to serve on a board.
A popular regular feature in Directors
& Boards is the “Book It: Best Bets for Board Reading”
article. In it I spotlight six to eight new business books by running
brief passages from each book. These passages are designed to give
readers a sense of the book and to be self-contained gems of leadership
insight that can be enjoyed on their own standing. Click
here for the current issue’s “Book It” feature.
Typically I receive one or two books every working day, so the cut is
fierce to make it into “Book It.” Here is a book that came in as I was
preparing this editor’s note that more than made the cut. I am giving
it a spotlight in this month’s e-Briefing
because it aptly fingers one of the enduring motivations that impel
executives to answer the call to board service.
The book is titled “Shine:
How to Survive and Thrive at Work,” by Chris Barez-Brown. More on
the author below, but let me get right to his keen observation. See for
yourself if this doesn’t resonate with you in how you approach life,
business, and your board work:
For example, in sales functions a great deal of effort goes into building relationships that are of no immediate benefit in the expectation of reaping future rewards. You throw your energy out there and you hope that at some point it comes back. When it does come back it’s surprising — it’s often in disproportionate measure and the timing is anything but predictable.
For many in business the idea of doing anything for anyone that doesn’t result in a direct payback seems alien. Those people are missing the point. As I say to my kids constantly, “Nice brings nice and bad brings bad.”
Be generous with your time and your help. Karma will usually ensure that someday, in some way, you will be repaid.
When you help somebody, you form a connection with them that is deeper than usual. The more you connect with people, the more chance there is that you’ll be noticed, create energy and therefore shine in any business situation.
I once had a real problem regarding my role in an agency and wasn’t sure if I could reconcile it, so was considering resignation. The chairman was on holiday but he got the board together for dinner with me so we could sort it out — he drove to join us and then returned to his family that night. I have never forgotten that and I have been keen to repay it ever since.
Get out from your desk and be abundant with your talents. Surprise people by helping them when you have no obvious reason to do so, and notice the impact. Karma will reward you in the most unusual and pleasing ways.
Excerpted from “Shine: How to Survive and Thrive at Work.” Published by Portfolio/Penguin, copyright Chris Barez-Brown, 2011.
Barez-Brown is founder (in 2009) of a firm that describes itself as
having a sole focus “to release the genius of organizations by helping
their people shine more brightly.” The name of the firm is Upping Your Elvis. (That is
a consultancy name you don’t come across every day — such new knowledge
being one of the pleasures of editing “Book It.”) He works with
companies like Coca-Cola, Nike and Citibank.
I submit that many who take on board service are embracing the karmic
nature of the duty at hand. They are being “abundant with your
talents,” as Barez-Brown suggests, and opening themselves up to the
opportunity for karma to reward them “in the most unusual and pleasing
ways.”
As always, I welcome your comments at jkristie@directorsandboards.com.
Jim Kristie is the editor and associate
publisher of Directors
& Boards.
Rebuilding Trust: The Corporate Governance
Opportunity for 2012 The issues requiring special attention will depend on the company, but for most companies will include these ‘hot buttons.’
By Ira M. Millstein and Holly J. Gregory
Ed. Note: The following article is excerpted from the authors’ client advisory issued by Weil, Gotshal & Manges LLP on Dec. 28, 2011. Click here to access the full advisory.
Concerns about the responsible use of corporate power remain high in the wake of the financial crisis. Although these concerns have been focused primarily on the financial sector, there is spillover to corporations in every industry. Tough economic conditions, slow job growth, political dysfunction and general uncertainties about the future continue to undermine investor confidence and fuel public distrust (with Occupy Wall Street an example). This in turn intensifies the scrutiny of corporate actions and board decisions, and may skew the regulatory environment in which companies compete.
All corporate governance participants — boards, executive officers, shareholders, proxy advisors, regulators and politicians — have both an interest and a role to play in rebuilding trust in the corporations that are the engine of our economy. In our annual reflection, we offer thoughts on how, without the need for regulatory intervention, boards and shareholders can seize the opportunity to rebuild trust and, by doing so, help resolve some of the tensions that are stalling our economic recovery. To read more, click the link below.
[Click
Here to Read the Entire Article]
What I Think I Learned!
For one, never go on a board where one has the slightest doubt about the integrity of the CEO or the other members of the board. Life is too short.
By Norman R. Augustine
Ed. Note: Norman Augustine, retired chairman and CEO of Lockheed Martin Corp., keynoted the 35th anniversary edition of Directors & Boards with an eight-page set of reflections on leadership principles and board practices. He drew upon his vast set of experiences leading Lockheed Martin (and its predecessor companies) and serving on several major corporate boards. The following is an excerpt from this article.
The continuing search for balance in corporate governance — speed vs. checks, monitoring vs. agility, rules vs. innovation — has been superbly documented in the pages of Directors & Boards over the past 35 years. Its pages are a treasure trove of wisdom from which one can learn a great deal.
I suppose it was in this spirit that the editor asked me to add to these pages some of my own lessons learned, presumably reflecting my having participated in over 500 board meetings of Fortune 100 companies and numerous meetings of not-for-profits and small firms in my career, not to mention recognizing the independence that results from my having “aged-off” (as the event is politely termed by the cognoscenti) all my large corporate boards.
Here are a few lessons gained from the School of Hard Knocks, a school that awards no parchment diplomas but offers the opportunity to acquire an abundance of scar tissue — all while charging an extraordinarily high tuition. To read more, click the link below.
[Click Here to Read the Entire Article]
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Martin Lipton Steven A.Rosenblum Karessa L. Cain Wachtell, Lipton, Rosen & Katz |
Every year you offer some thoughts for directors for the coming year. What’s top of mind for 2012?
The current economic and political situation requires corporations and their boards to have bold visions for future growth with long-term investments, to make proactive efforts to modulate the pressures for short-term stock price increases and to take advantage of the valuable insights gained in navigating the worst recession since the 1930s. Many boards have been playing de-fense rather than offense these last few years, as tough economic conditions have prompted crisis management dilemmas, short-term survival strategies and other challenges. Boards have also been dealing with ever-increasing layers of corporate governance requirements and demands from activist shareholders that shift decision-making power from boards to shareholders. In ad-dition, pressures for short-term increases in stock prices have been constant; Wall Street continues to be intensely preoccupied with quarterly earnings targets, which in turn has fostered an investor mindset that too often measures success on the basis of myopic benchmarks. In this envi-ronment, the need for boardroom resolve and commitment to long-term growth is critical not on-ly for companies, but also for the vitality and competitiveness of American businesses in the global economy.
Have these processes and the factors you cite lead to any positive changes in board effectiveness?
Considerable attention has been devoted to searching for lessons learned from the financial crisis and ways to improve board functioning. To read more, click the link below.
[Click Here to Read the Entire Article]
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GMI released a report detailing the largest severance packages paid to CEOs in the U.S. since 2000. It identifies 21 CEOs who received “walk‐away” packages in excess of $100 million. In total, the 21 CEOs received severance of almost $4 billion.
The report identifies stock and option awards, pensions and other deferred compensation as representing the largest part of the severance packages, approximately 80 percent on average. The report reveals the full “walk‐away” packages for the CEOs – many of which have not been calculated elsewhere – by including all forms of compensation paid in the final year of employment.
The top 10 highest severance packages are listed below.
General Electric John F. Welch Jr. 1981‐2001 $417,361,902
Exxon Mobil Corp. Lee R. Raymond 1993‐2005 $320,599,861
UnitedHealth Group Inc. William D. McGuire 1991‐2006 $285,996,009
AT&T Edward E. Whitacre Jr. 1990‐2007 $230,048,463
Home Depot Inc. Robert L. Nardelli 2000‐2007 $223,290,123
North Fork Bank John A. Kanas 1977‐2006 $214,300,000
Merck & Co., Inc./Schering‐Plough Fred Hassan 2003‐2009 $189,352,324
International Business Machines Louis V. Gerstner Jr. 1993‐2002 $189,005,929
Pfizer Inc. Henry A. McKinnell Jr. 2001‐2006 $188,329,553
CVS Caremark Corporation Thomas M. Ryan 1998‐2011 $185,415,435
The full report, written by Greg Ruel and Paul Hodgson, can be downloaded here.
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February
8-9, 2012 February
9, 2012 February
15, 2012 |
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Chairmen’s
Forum Issues Model ‘Chair-on-Succession’ Policy Statement for 2012
“The Board believes that having a separate, independent director to serve as Chair of the Board assists the Board by providing clear, independent Board leadership. Therefore, it is expected that the Board will be chaired by an independent director. This principle will guide the Board’s approach to succession planning and succession decisions. If the Board determines that special circumstances require the roles of Chair and Chief Executive Officer to be combined, the independent directors of the Board shall designate a Lead Independent Director who shall serve in such capacity until such time as a new independent Chair is appointed. In this event, the Board shall provide an explanation of its decision to shareholders.”
Bill McCracken, chief executive of CA Technologies and chairman of the Chairmen’s Forum, said, “Today, a record 41% of S&P 500 companies feature separate chairs, demonstrating that the combined chairman and CEO is no longer common practice in the US, and 21% of boards have an independent chair with no current or former executive role at the company, compared with just 10% five years ago, according to search firm Spencer Stuart. Corporate directors should prepare now for next-generation leadership, which involves building companies through strong and constructive boards led by independent chairs.”
McCracken added: “The Chairmen’s Forum sees succession as the inflection point in moving to a fresh model of board leadership. This policy language offers a clear way for directors to put this fresh model into practice and reflects an emerging standard.”
While the Chairmen’s Forum has long supported independent chairmanship, the group at its December meeting adopted the model policy recommendation under which the chair and CEO roles would be split by default upon a leadership succession. The Chairmen’s Forum will promote the measure as a priority for 2012.
For further information, visit http://millstein.som.yale.edu/networks/chairmansforum.
Director Resources
Global Risk: The world’s vulnerability to further economic shocks and social upheaval risk undermining the progress that globalization has brought, warns the World Economic Forum in its Global Risks 2012 report, the seventh edition, released in mid-January. Published in cooperation with Marsh & McLennan Companies, Swiss Re, the Wharton Center for Risk Management, and Zurich, Global Risks 2012 is the flagship initiative of the World Economic Forum’s Risk Response Network. The complete Global Risks 2012 report can be accessed here.
Talent Management: The World Economic Forum and Mercer have collaborated on extensive global research on how effective talent mobility can spur economic growth. The just-issued report, Talent Mobility Good Practices — Collaboration at the Core of Driving Economic Growth, was presented at the Forum’s Annual Meeting in Davos, Switzerland, by Patricia A. Milligan, president of Mercer’s Talent, Rewards and Communication business. In conjunction, Mercer launched a new resources site — http://www.mercer.com/globaltalent — that offers advice and innovative ways to manage global talent and mobility challenges.
Executive Retirement: Millions of baby boomers are starting to retire and people are living longer, so an understanding of Social Security and Medicare is essential when planning for retirement. Changes to both programs took effect on January 1, and updated, easy-to-understand information is now available in Mercer’s 2012 Guide to Social Security and 2012 Medicare booklet. Mercer’s new booklets give simple explanations of the programs, recent changes, and cost and benefit amounts for 2012 — including lots of real-life examples. For more information or to purchase the Mercer guides, visit http://www.imercer.com/content/social-security.aspx or call 800-333-3070. The minimum order for the Guide is 25 copies at $7.10 each, with quantity discounts available. The minimum order for the Medicare booklet is 100 copies at $3.40 each, also with quantity discounts available.
Key Legal Issues: Law firm Skadden Arps has published its 2012 "Insights" Compendium, a collection of Skadden partners' commentary on the critical legal issues clients face in the coming year. One section of the report is devoted to “Corporate Governance Challenges.” Other topics addressed include Capital Markets, Corporate Restructuring, Financial Regulation, Global Litigation, and Global M&A. Click here for more information on the report.
Board Risk Committee: Deloitte has released “Risk Committee Resource Guide for Boards.” The guide was developed to assist boards that are considering, establishing, or maintaining a board risk committee. Click here to access a copy of the guide. On this same topic, the Conference Board has issued an advisory, “Risk Oversight: Should Your Board Have a Separate Risk Committee?” Click here
for further information on this report.
Golden Parachutes: The Alvarez & Marsal Taxand report released last month discusses trends in change in control benefits for CEOs. Of note, golden parachute payments increased by 32% over the past two years despite the decline in economic activity. The study analyzes current change in control arrangements among the top 200 publicly traded U.S. companies, revealing that shareholder pressure is driving more equity-based compensation. While double trigger vesting has increased, companies are reducing gross-up payments. For more information on the report, click here.
Governance Ratings: GMI released in early January new ratings and rating reports for its entire universe of 4322 companies. With this latest release, GMI coverage now includes 1906 companies from North America; 1001 from Industrialized Europe; 727 from Industrialized Asia-Pacific; and 688 from Emerging Markets. The number of individual countries covered totals 45. For more information, visit http://www.gmiratings.com.
Author Notes
Strategic communications consultancy The Dilenschneider Group released its January 2012 Trend/Forecasting Report. Based on the firm’s continuing discussions over the past 12 months with hundreds of experts in diverse fields, including business, finance, journalism, the arts, academia, and the nonprofit sector, the report “focuses on critical thinking and on how you might apply it in your life, your business, or in whatever pursuits you follow,” notes Chairman Robert Dilenschneider. The 48-page report is the 44th in a series of trend reports the firm has issued over the past 20 years. For a copy, email Joan Avagliano at javagliano@dgi-nyc.com.
Executive compensation consulting firm Semler Brossy celebrated its 10th anniversary in January with a new website http://semlerbrossy.com.
L.J. Rittenhouse, president of Rittenhouse Rankings, has been selected as one of North America's Top 100 Thought Leaders in Trustworthy Business Behavior by Trust Across America. This award recognizes the research conducted by her firm to show that companies striving to promote candor will typically gain competitive advantage and superior market performance over time. The Top 100 Thought Leaders include individuals from the public and private sectors as well as authors, consultants, researchers, and academics who are making an extensive and positive contribution to building trust in business. Click here for the full list of recipients.
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Directors & Boards e-Briefing is a monthly service of Directors & Boards. All contents copyright 2012, MLR Holdings LLC.