Volume 8, Number 6 •  June 2011

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Directors & Boards
Robert H. Rock
Publisher

James Kristie
Editor

Lisa Cody
Chief Financial Officer

David Shaw
Publishing Director

Scott Chase
Advertising Sales Director

Barbara Wenger
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From Jim Kristie   |   Article of the Month   |   Columnist
Reader Profile   |   Research   |   News | 


Getting That First Board Seat
What we are doing to help crack the code.




A fascinating stat somewhat buried in the 2010 Board of Directors Survey jointly conducted by Heidrick & Struggles and WomenCorporateDirectors (WCD) is this: It takes women about 2.4 years to achieve their first board seat once they start actively seeking a corporate directorship; the comparable "time in search" for men is 1.4 years.

The one-year difference in male-female board seating is an interesting story in itself. My reaction to this statistic, however, is this: Count me just a touch skeptical.

I say that based on years of anecdotal reports from close readers of Directors & Boards who have written and called me for counsel on the best ways to be considered for a corporate board. My sense from these interactions is that it takes longer — sometimes a lot longer — than the 1-3 years cited in the survey.

Here is one such seeker, very much prototypical, who emailed me this note a while back:

When I turned 50, I felt like I had enough experience to add value to a public board of directors. I had served on private boards. I joined the National Association of Corporate Directors, and began soliciting smaller public companies to serve on their boards. I even solicited pink sheet companies. I solicited private equity firms to serve on the boards of portfolio companies. I signed up with headhunters, and Nasdaq Board Recruiting. In the last several years, I have sent my CV to hundreds of people, and made hundreds of telephone calls. I have been in the running, but so far no board positions.

I did not have much to offer to this fellow — and it was a man who wrote this — other than to say that it seemed to me like he was doing all the right things. I passed along a few articles on "How to Get on a Board" that Directors & Boards has published, and also planted the idea that one thing he might consider to raise his profile is to do some writing.

But after receiving notes like his, and reading and hearing many similar stories of the frustrations in trying to crack the code of getting that first corporate directorship, you can see why this particular stat jumped out at me.

To meet this voracious need for guidance on how to get on a board, regular readers of Directors & Boards see that we are boosting the Directors Roster section in each issue with a number of targeted advisories. One such helpful how-to, “Writing a Resume for a Board Candidacy,” appears in the Columnist slot in this June e-Briefing.

Before I sign off, back to the WCD for a moment. The organization held its first-ever global gathering of women directors in May. I attended a portion of the two-day summit and found it a superior initiative — in content, speakers, participants (over 200 women directors), and overall event planning. I am pleased to feature the “Call to Action” that came out of it by the WCD leadership as the Article of the Month below.
 
And as always, I welcome your comments at jkristie@directorsandboards.com.  Share with me — in complete confidence, of course — how long it took you to get your first corporate board seat, so we can affirm whether that board stat cited at the beginning is solid or a bit squishy.   

Jim Kristie is the editor and associate publisher of  Directors & Boards.

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A ‘Call to Action’ on Board Effectiveness
WomenCorporateDirectors challenges every leader to actively help bring more women onto corporate boards.

WomenCorporateDirectors (WCD) co-chairs Susan Stautberg, Alison Winter and Henrietta Holsman Fore issued a “Call to Action” to the WCD membership and those corporate leaders assembled at its first-ever Global Institute and “Visionary Awards” Dinner in New York City on May 17-18, 2011. The 10 steps of the “Call to Action” to bring more women onto boards follow.

1. Build the Pipeline Through Advocacy and Mentorship
Each board director and corporate leader should help identify senior women in their companies and help them gain the visibility and responsibility necessary to become a board director: Identify; Coach; Promote; Advocate.

2. Assure Every Director Slate Includes at Least One Woman
Board nominating committees, executive search firms, succession planners and boards themselves must commit to including at least one woman on every slate. We can learn from the NFL’s highly effective “Rooney’s Rule,” which assures an African-American coach is considered in each coach search.

3. Declare Board Diversity a Necessary Component of Good Governance
Regulatory agencies, stock exchanges, and governance communities around the world should encourage nominating committees to secure diverse directors and to explain their board selection process in their proxies.To read more, click the link below.

[Click Here to Read the Entire Article]

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Writing a Resume for a Board Candidacy
Here is what differentiates a job resume from a director resume.


By Madeleine Condit and Christine Edwards


Too often, highly qualified board of director candidates assume that their most recent job resume is perfectly acceptable to submit as a board candidate resume. And why not? It’s easy to pull out a current resume and click the “send” button.

But with all the federal, regulatory and court changes taking place that will impact proxy access for board candidates, director standards will be more rigorous and candidates will be better aligned with the strategic goals of the company than in the past.

Because a candidate’s board resume is frequently the differentiating factor in determining who will be interviewed by the nominating and governance committee, it is an important component of the board recruitment process for candidates.

What differentiates a job resume from a director resume?  To read more, click the link below

[Click Here to Read the Entire Article]

K. Sue Redman
Chair, Audit Committee
Apollo Group, Inc.

Editor's note:  Each month, we ask a Directors & Boards reader to comment on critical issues facing directors today. This past month we asked for ideas on improving the effectiveness of the annual meeting of shareholders. Here is a selection of responses.  If you'd like to participate in this section in the future, please email Scott Chase. 

Do the recent and projected increases in M&A activity necessitate increased oversight by boards?

Mergers & Acquisition activity is forecast to reach $3 trillion in 2011. Many companies are focusing on mergers and acquisitions because they have cash on hand, have confidence that the economy is improving, are seeking growth,  or because acquisitions are part of their overall business strategy – and it could be all of these factors.  However, historical trends show that the failure rate of mergers may approach 70 percent, with failure being defined as a decline in shareholder value.

While there is general support in the corporate boardroom for an acquisition focus, there are good reasons why some board members are finding themselves to be ambivalent and a bit cautious. Many board members have been involved in past failed acquisitions or where the merger did not deliver the anticipated value and they found themselves on the receiving end of the question, “Where was the board?”

Given that the success of mergers depends on both how realistic the deal structure is and how well management can integrate the two organizations, boards today are finding they need to play an increasingly larger role in both of these phases of a merger or acquisition.  To read more, click the link below.

[Click Here to Read the Entire Article]

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Global Talent Wars Rage Despite Recession
Heidrick & Struggles Data Points to a Shrinking Pool of Qualified Talent, As United States Retains Top Spot Worldwide

The Heidrick & Struggles Global Talent Index shows that demand for talent across the globe is outstripping supply and that countries are not moving fast enough to prepare workers for the needs of tomorrow’s economy. In addition, the report finds one in three executives worldwide are not satisfied with the quality of hires over the last two years, raising questions about the ability of companies to provide sustained economic growth, according to the leadership advisory firm.
 
According to the Global Talent Index, the United States leads the world for talent and is projected to remain at the top spot in 2015. At the same time, other countries are closing the gap with the U.S. due to increased spending on education and more open labor laws – pointing to future concerns about competitiveness.

Key Global Talent Index Findings:
  • China will make significant jump - China is projected to have the largest score improvement in 2015, boosted by Beijing’s increasing willingness to embrace foreign workers.
  • Canada will leap due to energy boom - Canada is projected to have the greatest movement in the index from today to 2015, moving six spots to number 8, as a result of increased investment in its economy from the gas and oil industries.
  • India’s workforce is eye-catching - Despite India’s own rapid rise in employment opportunities, it is unfortunately offset by a continuing poor standard of mainstream education.
  • Nordic power play - The Nordic region is represented by four countries in the 2011 top ten. Denmark, Finland, Norway and Sweden all benefit from high government spending on education.
  • Europe needs additional manpower - European countries overall maintained their rankings from today to 2015, but they are challenged by a low birth rate.
  • Asia Pacific is on fire - Singapore and Hong Kong economies benefit from their openness to international trade, thus catapulting them upwards on our index.
  • Australia has top-notch education - Australia comes in at sixth place on the index, in large part because of its high-quality universities and labor force.
The Heidrick & Struggles Global Talent Index was completed in partnership with the Economist Intelligence Unit, which developed a proprietary methodology to rank 60 countries on their ability to attract and retain talent.

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June 1-22, 2011
KPMG's Spring 2011 Audit Committee Roundtable Series - "Changes and Challenges Driving the Audit Committee Agenda" - is being hosted in several cities during June. Each program brings together seasoned audit committee members, directors, and business executives and covers a number of timely topics, including top concerns of audit committees in 2011, the new disruptive global economy, information technology risk, and challenges presented by legal/regulatory compliance. To view the schedule and register, visit here.

June 8, 2011
The Yale CEO Leadership Summit will be held at the New York Stock Exchange. Under the direction of Prof. Jeffrey Sonnenfeld, senior associate dean of executive programs at Yale School of Management and founder, president and CEO of The Yale Chief Executive Leadership Institute, the program brings together prominent CEOs and other business and market leaders for highly interactive peer-driven educational discussions. This session's theme is "Settling Old Debts, While Taking On New Risks." For more information, visit http://celi.som.yale.edu

June 8-9, 2011
The Conference Board Governance Center is holding a "Corporate Governance and Compliance Crash Course." The program will cover recent developments in executive compensation, FCPA, corporate political accountability, and other matters. To register, visit https://www.conference-board.org/governance/index.cfm?id=2147

June 10-11, 2011
Westminster Theological Seminary and the Center for Christian Business Ethics Today LLC have joined to host the 2011 Conference on the application of the 8th Commandment to business. Themed, "Business Ethics Today: Business and the 8th Commandment - You Shall Not Steal," it will be held at the Union League of Philadelphia. For more information, visit http://www.cfcbe.com/conference

June 12-15, 2011
The National Investor Relations Institute holds its annual conference in Orlando, Fla. The conference, always the largest gathering of IR professionals in one location, tackles the toughest IR challenges facing organizations today and is an opportunity to learn about the latest changes in financial disclosure regulations, corporate governance, capital markets and cutting edge communications methods and tools. Key speakers include George Barrett, chairman and CEO of Cardinal Health Inc.; Sam Levenson, senior vice president, investor relations, Sony Corp. of America; and Adam Bryant, "Corner Office" columnist for the New York Times. For more information, visit http://www.niri.org/Main-Menu-Category/learn/annualconference/AC2011/a.aspx

June 16-17, 2011
The Millstein Center for Corporate Governance and Performance at the Yale School of Management is hosting the Yale Governance Forum 2011. The event brings together on the Yale campus in New Haven leading institutional investors, corporate directors, executives, regulators, academics, governance advisors, and other experts from around the world. This year's theme is "Governance Fit for the Long Term." Forum topics include: "Can Investors Behave Long Term?"; "Making Independent Board Leadership Work for the Long Term"; "Corporate Governance Challenges Worldwide"; and "Governance in the Cloud: Short-Term Social Media for Long-Term Gains." The conference will also include the fourth annual awarding of the Millstein Center's Rising Stars of Corporate Governance. For more information, visit http://millstein.som.yale.edu/Forum2011

June 19-21, 2011
Stanford Law School and Stanford University's Rock Center for Corporate Governance present the 17th Annual Directors' College, an intensive program for directors and senior executives of publicly traded corporations. This year's program will include four new plenaries that will address modern, up-to-date issues and a pre-conference Sunday session at the Ritz-Carlton, Half Moon Bay. Among the sessions will be "Board-Level Lessons from HP, BP and AIG," "Dodd-Frank: Whistleblowers, Bounties and the New Realities of Governance," and "Board Diversity and Compostion: Hiring, Firing and Evaluating Directors." Keynote speakers include Intuit Chairman Bill Campbell, SEC Chairman Mary Schapiro, and George Roberts, founding partner of KKR. Register at http://www.directorscollege.com

June 22, 2011
The 15th Annual Wharton Leadership Conference presents "Leading in a Reset Economy and Uncertain World." In this intensive one-day program held at the Wharton School of the University of Pennsylvania, presenters draw upon their own and their organizations' experiences in looking ahead to the different kinds of leadership that will now be required as the U.S. economy begins the recovery from the Great Recession - e.g., many observers are wondering what the take-aways will be. Is there something different about leadership in this new era? As the economies of China, India, and elsewhere accelerate, other observers are asking what will be required to compete with their firms or in their economies. Will a distinctive leadership skill set be required for global operations? The conference explores the personal, organization, and cultural models required for leading in the "new normal" and increasingly global world. For more information, contact Kay Dowgun at dowgun@wharton.upenn.edu or visit http://leadershipconference.wharton.upenn.edu/2011/registration.shtml

June 22, 2011
Boston College Law School, in collaboration with the Boston College Carroll School of Management's Center for Corporate Citizenship, is presenting a new, full-day program for corporate directors, senior executives, and corporate counsel: the Directors' Intensive Program on Corporate Governance. The program will provide expert instruction on the most useful and current information that board directors need to fulfill their oversight duties and lead with integrity. The day will culminate in a capstone application of the day's issues through "board dilemma" small-group breakouts and full-group discussion. Keynote speakers include Robert Pozen, chairman emeritus of MFS Investment and senior lecturer at Harvard Business School, and George Canellos, regional director of the SEC's New York Regional Office. In addition to law and business faculty from Boston College, other presenters include Jami Miscik, president and vice chairman of Kissinger Associates; David Devonshire, retired CFO/EVP of Motorola and director of Arbitron, ArvinMeritor, and Roper Industries; and C. Kim Goodwin, director for Akamai Technologies and Allianz Global Investors. Space is limited to 100 registrants. For more information or to register, visit http://www.bc.edu/directorsprogram

June 23, 2011
KPMG's Audit Committee Institute (ACI) and the National Association of Corporate Directors host a webcast, "Audit Committee Interaction with the CFO - A Dialogue with Home Depot's Carol Tome." Tome is chief financial officer and executive vice president-Corporate Services of Home Depot Inc. The discussion will focus on the audit committee's interaction with the CFO, how the role of the CFO and finance function is changing, and how the audit committee and CFO can best support each other and foster a healthy, effective relationship. The webcast also will provide updates on key financial reporting/accounting developments, including FASB projects and "hot button" issues; legislative/regulatory activities in Washington, featuring the status of SEC's Dodd-Frank rulemakings and other developments; and an overview of current ACI programs, resources, and insights for audit committees and directors. To register, visit here.




Director Resources

CEO Pay: After two years of declines, total direct compensation for CEOs jumped 11% in 2010 to $9.3 million, according to results from The Wall Street Journal/Hay Group 2010 CEO Compensation Study released last month. Base salaries remained flat at $1.1 million, while annual incentive payments increased by 19.7% to $2.2 million. For the first time in two years, long-term incentives grew by 7.3% to $6.2 million. For other survey findings, click here.

Dodd-Frank: Law firm Morrison & Foerster has developed a new service called FrankNDodd that serves as an online resource that tracks rulemaking related to the Dodd-Frank Wall Street Reform and Consumer Protection Act. One can sign up to keep track of various rules and have email alerts sent to them when there's a deadline or change to the section of the law that's most relevant to them or other aspect that they're interested in. To sign up, email subscribe@frankndodd.com.

Executive Search: Executive and board recruiter Spencer Stuart has launched @SpencerStuView on Twitter. The firm is regularly posting new research and thought leadership pieces, general news from the firm, thoughts on relevant news topics and trends, and various other news items as they happen.

Lead Directors: The National Association of Corporate Directors (NACD) has convened an influential group of over 20 corporate directors and governance thought leaders to begin the “2011 Report of the NACD Blue Ribbon Commission on the Lead Director.” The commissioners will develop recommendations focused on defining and clarifying the role of the lead director in the boardroom. Lead directors serve on 66% of boards, a significant rise from only 39% just five years ago. According to NACD’s most recent “Public Company Governance Survey,” 92% of boards with lead directors find that the position enhances board effectiveness. The commission is chaired by Barbara Hackman Franklin, former Secretary of Commerce and director of Aetna and Dow Chemical Co., and Irv Hockaday, director for Ford Motor Co., Estee Lauder, and Crown Media Holdings. The report is scheduled for release at the NACD Annual Board Leadership Conference on Oct. 2-4, 2011, in Washington, D.C.

Risk Oversight I: EisnerAmper has released its Second Annual Board of Directors Survey. The report examines the issues confronting boards today, including reputational risk, financial risk, privacy and data security, succession planning, regulatory changes, and fraud. The results make it clear that a company’s reputation is paramount and all risks threaten this fragile asset. To access a copy of the survey click here.

Risk Oversight II: "An Evolving Model for Board Risk Governance" is the title of a new publication by the Risk and Insurance Management Society (RIMS). It is written by risk experts from RIMS and ERM Strategies LLC. Click here for a copy.

CEO Leadership: RHR International’s new issue of Executive Insight outlines the five core dimensions that chief executives must perform well to stand above the rest. Click here for a printable version of the issue, titled “Grooming a World-Class Chief Executive: Part I.”

Author Notes

The deadline to apply for the 2012 Catalyst Award  — June 10, 2011 — is fast approaching. The Catalyst Award annually honors innovative approaches with proven results taken by organizations to address the recruitment, development, and advancement of all managerial women. By celebrating successful initiatives, Catalyst provides organizations with replicable models to help them create initiatives that are good for women and good for business. Click here to download the 2012 application or contact Julie S. Nugent, chair of the Catalyst Award Evaluation Committee at jnugent@catalyst.org.

Catalyst President and Chief Executive Officer Ilene H. Lang was honored with the John C. Whitehead Social Enterprise Award at the Metropolitan Museum of Art in New York City on May 19. At the Harvard Business School Club of New York’s 44th Annual Leadership Dinner, Lang was recognized for applying innovative business practices and managerial disciplines to drive sustained social change.

Former Baxter International Inc. Chairman and CEO Harry M. Jansen Kraemer Jr. is the author of a new book, “From Values To Action: The Four Principles of Values-Based Leadership,” published by Jossey-Bass, an imprint of John Wiley & Sons. In conjunction with the new book, Kraemer filmed a YouTube segment in which he talks about leadership principles. Click here to view. An excerpt from his new book appeared in the Second Quarter 2011 edition of Directors & Boards and can be accessed here.

Two members of Aon Hewitt’s senior leadership, Kristi Savacool, chief executive officer of Benefits Administration, and Baljit Dail, chief executive officer of Consulting, have become co-chief executive officers of Aon Hewitt. They replace Russ Fradin, who had served as chairman and CEO of Aon Hewitt since Hewitt Associates’s merger with Aon Corp. in 2010 and as chairman and CEO of Hewitt since 2006. “The strategic rationale for the merger of Aon Consulting and Hewitt Associates is stronger today than it was a year ago,” says Greg Case, president and chief executive officer of Aon Corp.

Crowe Horwath International, ranked among the top 10 global accounting networks, has launched Crowe Horwath Global Risk Consulting (CHGRC) as a newly formed global professional services firm assisting multinational companies with their governance, risk and compliance needs. The firm’s chief executive officer is U.S.-based Larry Rieger, who has more than 35 years of multinational client service experience and is an expert on corporate governance, risk and compliance. Rieger is responsible for implementing a singular global client service delivery model. In addition to its presence in the U.S., CHGRC will initially have offices in the United Kingdom, China and Japan.

Ernst & Young LLP has enhanced its corporate governance advisory capabilities with the addition of a corporate governance team, a research application, and a comprehensive database of corporate governance information from Proxy Governance Inc. (PGI). The firm’s newly established Corporate Governance Group (CGG), which includes members of the former PGI team, has already helped clients address questions raised by boards, audit committees and senior management. "We can help answer very specific questions raised by a client," says Tom McGrath, partner and senior vice chair of Markets, "or we can enter into a more general discussion of corporate governance issues with the client and our engagement team."


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