 |
 |
Are you reading a pass along copy? Get
your
own FREE subscription. To unsubscribe, please click HERE
and send a blank email. You will be automatically unsubscribed.
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
Subscriptions
Jerri Smith
Reprints
1845 Walnut Street
Suite 900
Philadelphia, PA 19103
+1 (215) 567-3200
The Directors & Boards e-Briefing is produced by GRID Media LLC.
From Jim Kristie | Article of the
Month | Columnist
Reader Profile |
Research | News |
The
Rostering of New Directors
When we look at the elevated levels of recruitment of women directors,
that tells us something is going on.
I get a bit of pushback sometimes when I release the results of our
quarterly Directors Roster report on new women joining corporate boards.
What I hear from other trackers of board composition is puzzlement —
and, to some extent, alarm.
Their query to me is: What’s with the discrepancy between the Roster
numbers and their numbers?
The Roster, now in its 17th year, has been documenting for the past two
years elevated levels of women joining boards. Here are some of our
latest findings (expertly crunched by Roster editor Kelly McCarthy):
- In the first quarter of 2011, 34% of new director elections that we tracked were women.
- In the fourth quarter of 2010, 38% of new directors were women.
- For 2010 as a
whole, 34% of board appointees recorded in the Roster were women; in
2009, the recruitment rate was 39% — a dramatic leap from 25% in 2008.
Most
major surveys of board composition point to representation of women
stuck in the mid-teens range, where it has been mired for years. To my
mind, there is a simple explanation for meshing these very different
recruitment findings.
The major surveys are a snapshot of board composition at a fixed point
in time — an annual look at who is sitting on a defined universe of
boards. The Directors Roster is a snapshot of a quarterly flow of
activity at a random universe of boards — companies that happen to have
added a new board member.
This is a bit of apples and oranges. What we are looking at with the
Roster is velocity — a moving target — whereas the annual board reports
are measuring an end point. We need both sets of measurements to
properly gauge marketplace activity.
As a longtime champion of board diversity, I am sympathetic to the
concern my survey counterparts share with me — that the optimistic
picture we present in the Roster could lull people into thinking that
recruiting of women directors is going along just swimmingly, when in
fact all the annual reviews of board composition do not seem to bear
that out. That’s why I prominently cite other surveys in Directors & Boards that show how
sluggish the progress is of board diversity.
I agree that many questions are left unresolved about the enduring
impact of our measure of velocity. Perhaps it is a matter of time — and
it will be a lot of time — before we see the cumulative impact of these
elevated recruiting levels.
But something is going on, and that is where the Roster data play an
important tracking role.
I launched the Directors Roster in Directors
& Boards in 1994, initially with the backing of Spencer
Stuart and now with the sponsorship of Heidrick & Struggles. I am
enriching it this year with a number of new editorial features oriented
to executives looking to go on a board, to add to their board seats,
and to get a better appreciation of board life. Click
here for a few sample pages from the current edition.
Maybe we will rostering you in a future issue. To that end, be sure to
read the lead item about a new director recruiting tool in this
e-Briefing’s News section. And as
always, I welcome your comments at jkristie@directorsandboards.com.
Jim
Kristie is the editor and
associate publisher of Directors
& Boards.
What Boards Can Take Away from the BP
Disaster One year later, the evidence is indisputable that the only way for the board to govern so as to protect cash flow, the workers, and the shareholders is to have a heightened sensibility about safety.
By Tom Krause and John Balkcom
Ed Note: The following article was written in the wake of the oil spill disaster in the Gulf in April 2010 and originally published in the Fourth Quarter 2010 edition of Directors & Boards. The following is a slightly expanded version of the original article.
If for no other reasons, safety has seized the attention of boards because of the $8 billion in direct costs incurred by BP from the date of the Deepwater Horizon explosion through August of 2010 and because of BP’s loss of over $70 billion in market value over the same period following the resultant spill.
While these downstream outcomes put the oversight of safety squarely in the laps of the BP board, our experience suggests that the boards of directors in high hazard industries rarely if ever see the information and data they need to assure themselves that exposures to catastrophe are being continually identified and effectively managed.
The information and data they do receive most often address the safety incident rates of the company’s operations, and board members often take comfort that low incident rates predict longer periods of safe operations, while their data tell them nothing about the leading indicators that underlie the potential for disaster.
That an organization has not experienced a catastrophic event should not be reassuring. To read more, click the link below.
[Click
Here to Read
the Entire Article]
Wisdom Is an Invaluable Asset on a Board
The overwhelming number of complex issues dealt with by directors requires a great deal of experience.
By Randy Thurman
Ed Note: The following article originally appeared in the Second Quarter 2011 edition of Directors & Boards as a key feature in the cover story, “Are Boards Too Old?”
We are living in a new world in corporate America. Globalization is a reality. Companies are now communicating and marketing through Facebook and Twitter and other means known as "social media." In my industry we are now dealing with new technologies such as wireless healthcare, non-invasive surgery, and personalized medicine. My own daughter is head of social media marketing for an international retail company — a job that certainly did not exist 10 years ago. Traditional sources of news are all but gone and we now get our information on such devices as iPads and Kindles. No one can doubt that this pace of change will continue if not accelerate.
These new world technologies provoke the questions: "Are today's directors too old to deal effectively with this pace of change and new technology? Should boards become more youthful?"
In a word, my answer is "no." Nevertheless, the question is very relevant and deserves greater discourse and debate. To read more, click the link below
[Click Here to Read the Entire Article]
Doug Friske &Todd Lippincott
Towers Watson
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.
Why is the issue of how companies select executive compensation consultants so timely?
Doug Friske: Many companies are taking a fresh look at how they select and use executive compensation consultants. The SEC proposed new rules governing how compensation committees assess the independence of their advisors and how companies disclose their executive compensation consulting relationships. The rules make it clear that companies are expected to take a holistic view in selecting “independent” compensation consultants. In short, companies need not exclude multi-service consulting firms merely because they provide consulting services in addition to advising the compensation committee and board. The rules offer compensation committees significant flexibility in how they approach the important fiduciary decision of compensation consultant selection. These rules may, once again, change the landscape of compensation consulting relationships and reaffirm the role of multi-service firms. This is good news for committees, as it should increase the consulting choices available to them.
How should compensation committees approach the consultant selection process?
Todd Lippincott: As a starting point, it’s essential for the company to have a clear understanding of its needs and the kinds of advisory services that will best address these needs. Depending on the organization’s governance structure, the executive compensation consultant may work for management, the board or both. To read more, click the link below.
[Click Here to Read the Entire Article]
Back to the Top
In its 2011 Women on Boards Report, GovernanceMetrics International, the leading independent global corporate governance and ESG research firm, shows that 40 percent of the world’s largest publicly listed companies have not appointed even one woman to their boards. Even in major markets like Japan, Italy, the United Kingdom, and the United States women continue to be grossly under-represented on corporate boards. Not surprisingly, the issue of board diversity is generating a healthy level of public debate.
GovernanceMetrics has found that 2/3 of the publicly listed companies in Italy do not have a single female director. Overall, 1/3 of the companies in Europe do not have any women on their boards. Further, across the more than 4,200 companies that GovernanceMetrics covers from countries across the globe, women hold less than 10 percent of the total number of board seats and a paltry 2 percent of companies are chaired by female directors.
GovernanceMetrics finds that despite recent laws enacted in a number of countries, female board participation rates remain low. Between 2009 and 2011 GovernanceMetrics found that the share of board seats at the 4,200 companies we cover increased from 9.2 percent to 9.8 percent - a glacial pace.
The US, where there has only been limited regulatory or legislative action, is also making only slow progress. In the United States, the share of board seats held by women barely budged from 12.1 percent in 2009 to 12.3 percent in 2011. Most analysts think that it is unlikely that the U.S. will follow Europe’s lead and legislate some form of quota for the inclusion of women on public boards.
Why does gender diversity matter? GovernanceMetrics did some analysis of S&P 500 companies and found that companies with no women on their boards had a below average GMI Home Market Corporate Governance rating of 5.8 (on a scale of 1.0 to 10) while companies that included 30 percent or more female directors have an above average rating of 8.1. In the same vein, the top 10 S&P 500 GovernanceMetrics rated companies have an average of 22 percent women on their boards and bottom 10 S&P 500 companies have an average of 13 percent women on their boards.
The report, titled 2011 Women on Boards Report, is available as a free download from the GovernanceMetrics International website.
|
May
17-18, 2011 June
8, 2011 June
10-11, 2011 June
12-15, 2011 June
16-17, 2011 June
19-21, 2011 June
22, 2011 June
22, 2011 |
|
| |
CalSTRS,
CalPERS Are Developing a New Tool to Identify Corporate Director
Candidates
The Diverse Director DataSource, known as “3D,” will offer shareowners, companies, and other organizations a facility from which to recruit individuals whose experience, skills and knowledge qualify them to be a candidate for a director’s seat.
CalPERS and CalSTRS, along with the advisory panel of institutional investors, diversity groups, companies, academics, search firms, and labor organizations, have been working on the Diverse Director DataSource for more than a year.
“The Diverse Director DataSource is an important tool for finding untapped, experienced individuals who can help corporate boards make the tough decisions necessary to promote long-term growth to help achieve sustainable risk-adjusted returns,” said Anne Stausboll, CalPERS chief executive officer.
CalPERS and CalSTRS have commissioned The Corporate Library, an independent corporate governance researcher with an existing database of 130,000 public company directors, to develop the Diverse Director DataSource. The Corporate Library will own, operate and maintain the DataSource. The Corporate Library will work with CalPERS, CalSTRS and the 18-member advisory panel to create it.
The Diverse Director DataSource will be open to all highly qualified leaders, but only subscribers will be able to access its information. The subscribers will vet potential candidates for nomination through a rigorous process.
The CalSTRS and CalPERS corporate governance websites will feature links to the DataSource, which is expected to be operating by mid-2011.
CalPERS and CalSTRS have created separate Web pages explaining the 3D project and its history. For CalSTRS, click here and for
CalPERS, click here. More “3D” information can be found on the Governance Metrics International website, click here.
Director Resources
Audit Committees: According to numerous internal audit practitioners and audit committee members interviewed for a white paper published by The Institute of Internal Auditors (IIA) Audit Executive Center and Korn/Ferry International, establishing and maintaining strong relationships with key stakeholders is a critical component of success for chief audit executives (CAEs) to lead their organization’s internal audit function. Click here for a copy of the report, titled “The Relationship Advantage: Maximizing Chief Audit Executive Success.”
Compensation Committees: Pearl Meyer & Partners released its advisory on “Top 10 Compensation Committee Agenda Items for 2011.” Click here for a copy.
Say on Pay: Compensation Advisory Partners updated its analysis of the say on pay votes among the S&P 500. Two findings from its latest tracking: as of April 22, 381 of the S&P 500 companies have now included a say on pay frequency proposal in either a pre-proxy or a definitive proxy statement, with approx 70% of companies recommending an annual frequency/vote; and 50 S&P 500 companies have reported vote results — at 94% of those companies a majority of shareholders voted in favor of an annual say on pay vote frequency. Click here for more information.
Risk Management: RIMS (the Risk and Insurance Management Society) and insurer Chartis have formed the Risk Management Hall of Fame (RMHF). The RMHF has been established to maintain the history and tradition of the field of risk management, and will serve as a means to recognize and honor those professionals who have made significant contributions to advancing the discipline. New members to the RMHF will be announced each year at the RIMS Annual Conference & Exhibition, with the first round of inductees to be unveiled Monday, May 2, at the 2011 conference in Vancouver.
Talent Management: CTPartners Executive Search Inc. released last month its 16th annual list of hot executive jobs. The 2011 report shows business reaching an inflection point on the slow, grinding road to global economic recovery: after two years of cutting costs to the bone, boards have shifted to hiring mode. “Boards have come to grips with the fact that not creating new jobs carries a punishing price,” said Brian Sullivan, CEO of CTPartners. “Despite continuing economic uncertainty, companies tell us that they can no longer delay hiring if they expect to innovate and compete. Post-recession business models need new thinking, and companies all over the world are searching in record numbers for the right leaders to change the ways they do business.” Click here to access a copy of the report.
Global Governance: A newly established nonprofit association in Japan is dedicated to the improvement of corporate governance in that country, principally through training of all board members. Click here for information on the Board Director Training Institute of Japan.
M&A: U.S. companies want to get deals done sooner than later: 36% plan to make acquisitions in the next six months vs. 22% six months ago; and U.S. companies planning to do deals abroad are on the upswing — up 32% from 20% a year ago for acquisitions over the next six months. These are two findings from Ernst & Young’s bi-annual survey released last month of over 1,000 C-suite executives' plans for M&A and capital deployment. Click here for more survey information.
Sustainability: Nearly 55% of U.S. executives say their organization has a formal sustainability strategy in place, according to a KPMG International study, “Corporate Sustainability: A Progress Report.” Another 12% say they are working on a strategy and an additional 19% expect to eventually develop a formal plan. The findings also confirm that U.S. companies are closing the gap with their counterparts elsewhere. More than 62% of executives globally say they have implemented a formal sustainability program, according to the study, which was released in mid-April in connection with the launch of the new KPMG Global Center of Excellence in Climate Change & Sustainability, based in the Netherlands. Click here to access a copy of the study.
Author Notes
FTI Consulting Inc., the global business advisory firm dedicated to helping organizations protect and enhance their enterprise value, has appointed William M. Isaac as senior managing director and head of the Financial Institutions Group within FTI Consulting. Isaac and his team join FTI Consulting as part of the recently announced acquisition of certain key practices of LECG Corp. The Financial Institutions Group assists financial institutions in a variety of areas, including enterprise risk management, corporate governance, loan review, due diligence, liquidity management, stress testing, capital and loss reserve modeling, strategic planning and regulatory compliance and relations.
The new book by Howard M. Guttman, “Coach Yourself to Win: 7 Steps to Breakthrough Performance on the Job and in Your Life,” has been included on the first weekly list of "Top 5 Business Books" issued by The Washington Post and getAbstract.com. On April 18, the newspaper's online edition, which reaches an average of more than 10 million readers, featured the first list compiled for it by getAbstract, the world's largest library of business book summaries. (To view the list, click here.) Guttman is principal of Guttman Development Strategies Inc., a consulting firm specializing in executive coaching and management development training. His article, “A High-Performance Team: Identify Please” appeared in the Second Quarter 2009 edition of Directors & Boards.
Warren Neel, director of the Corporate Governance Center at the University of Tennessee-Knoxville, has published “The Accidental Dean,” a book that traces his 25 years as dean of the University of Tennessee College of Business Administration. Neel has served on a number of corporate boards and written several pieces for Directors & Boards.
Crisis Expert Davia Temin delivered the keynote address at Carole Hyatt’s “Getting to Next” conference on April 15. Temin, who founded Temin and Company 14 years ago after serving as head of corporate marketing for GE Capital, works with CEOs and boards on reputation and crisis management, marketing and media strategy, thought leadership, and communications coaching. The “Getting to Next” seminar led by author, serial entrepreneur, and international speaker Carole Hyatt, is in its 17th season. So far over 2,400 executive and professional women worldwide have attended this workshop. It is for successful women looking to reach out for assistance from their peers in order to transition and move on to the next phase of their professional lives.
Prominent Chinese publisher China Industry & Commerce Associated Press Co. has published George Cloutier’s New York Times bestselling book, “Profits Aren’t Everything, They’re the Only Thing”. Cloutier is chairman of American Management Services, a firm he founded in 1986 that specializes in corporate turnarounds. Directors & Boards published a chapter from his book in the Third Quarter 2009 edition.
Back to the Top
Directors & Boards e-Briefing is a monthly service of Directors & Boards. All contents copyright 2011, MLR Holdings LLC.