 |
|
|
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 |
An Idea for Hank Paulson
How about this mark-to-market
variant to help get the system rebooted?
It’s a bit of an eye-opener to hear when the radio clicks on at 6 a.m.
that the futures markets are imploding — down over 600 points on the
DJIA and 80 points on the Nasdaq. Who needs an alarm clock!
With the advance deadlines we have for these editor’s notes, I’m
writing this on Friday, Oct. 24. It will seem like long ago when you
read this e-Briefing, but those numbers were the pre-market wake-up
call on this day.
Everyone wants to put forth a good idea for solving what ails the
financial markets. Goodness knows, our government leaders have been
flaying about all year with idea after idea for restoring credit
availability and liquidity to the system.
Well, let it not be said that the editor of Directors & Boards is not doing
his share for love of country and free market capitalism and looking
out for the well being of his fellow e-Briefing readers’ personal
balance sheets.
Here is my contribution to the cause. I haven’t seen this idea floated
yet.
Let’s raise the capital loss deduction on personal income tax filings
for 2008 — to $10,000 from the longstanding allowed write-off of $3,000.
Market mavens know that many investors are reluctant to sell a losing
stock, hoping that “it will come back.” Let’s encourage individual
investors — who may be frozen in place from the market crash — to
jettison a cratered position or two that may never come back for years,
if ever.
Such an allowance will liquefy personal balance sheets, both by adding
new cash that can be reinvested or used to pay off debts and by
lessening the tax bite coming up next year. Maybe Treasury’s coffers
will be somewhat replenished by spring 2009 to take the hit from this
proposal.
There are obvious complications with this proposal. But the idea is in
sync with the thrust for mark-to-market clarity as one of the
fundamental realities of a sounder financial system that we need going
forward. You can’t get more mark-to-market realism than when you sell
off a decisively revalued asset.
What’s being pushed on the boards of financial institutions can be
tweaked for the individual investor too to help reboot the system.
Think how galvanizing just the announcement of this step would be. What
do you say, Hank?
I welcome your comments at jkristie@directorsandboards.com.
And I welcome you to visit my new blog, Boards at Their Best http://jameskristie.blogspot.com.
Jim
Kristie is the editor and
associate publisher of Directors
& Boards.
Ramping Up the Compliance
Effectiveness of Board CommunicationsEvery company has a ‘learning management system’ for delivering vital information to the board. With shareholders raising the ante for board accountability, is your LMS up to the job?
By Martha Braunstein
Corporate boards are caught in a crossfire that isn’t likely to quiet down soon. Stakeholders demand accountability for corporate performance while regulators and enforcement agencies, both domestic and foreign, are getting fat on successful prosecutions for ethics and governance violations.
There’s more. The 2007 Ethics Resource Center’s National Business Ethics Survey concludes that ethical misconduct in general has shot back to pre-Enron levels and that only one in 10 companies surveyed has a strong ethical culture.
There’s no question that an ethical culture produces business benefits, whether through compliance or customer loyalty. There’s also no question that an ethical culture starts from the top of the organization and relies on consistent communication for reinforcement. There’s no question that companies have cut down, cut back, and cut out all but the most critical costs.
The question that does need an answer is this: How can a board of directors avoid the quicksand of noncompliance and non-ethical behavior throughout the organization — but do so without adding huge costs or massive new systems? To read more, click the link below.
[Click
Here to Read
the Entire Article]
‘MVP’
On every team there is usually someone who stands out as the most valuable player. Who is a board’s MVP?
By Robert H. Rock
With the 2008 baseball season wrapped up, sports writers will later this month select “the most valuable player” in each league. In the National League, the past two MVPs have come from my home team, the Philadelphia Phillies. This year the Phils may have a third straight winner, as suggested by chants of “MVP, MVP, MVP” echoing through Citizens Bank Park for our highly talented infielders.
On every team there is usually someone who stands out as the most valuable player. He or she leads by example, not only on the field but also in the clubhouse.
A board of directors is a team of players with different skills and experiences that must work together to assure good corporate governance. On the public and private boards on which I serve, I have worked with several directors whom I have come to admire as truly exceptional in the value they add to board deliberations and decision making. They are the MVPs of these boards.
Who are these board MVPs? To read more, click the link below.
[Click Here to Read the Entire Article]
Chairman & Chief Executive
Cornerstone International Group
Editor's note: Each month, we ask a
Directors & Boards reader to comment on critical issues facing
directors today. If you'd like to participate in this section in
the future, please email Scott
Chase.
Does the President of the United States have an Advisory Board?
Yes, the President’s Cabinet Members can and should serve as an Advisory Board. The President is the CEO of his organization (the Executive Branch of the United States of America) and as with any CEO, the composition, personalities, styles, and competence of his Advisory Board, the Cabinet Secretaries, can and should help the CEO to be better informed, more accurate, with far more objectivity in making vital decisions that affect the lives of millions and millions domestically and internationally.
What are the primary functions of Presidential Cabinet Members?
Besides the important responsibilities associated with running specific departments of government, Presidential Cabinet Members are supposed to be official advisors to the President. In defining the term “advisor,” the Merriam Webster dictionary refers to such descriptive terms as “counsel,” “inform,” and “recommend;” but it also associates “advisor” with such words as “warn” and “caution.”
Does the Cabinet adequately “warn” the President, and does the President usually listen?
Most CEOs have relatively large egos, and Presidents of the United States are certainly no exception. When harnessed, a large ego can be an asset for a top leader, but quite often an excessive ego will prevent a leader from genuinely listening to the advice of others—in this case, U.S. Presidents have relied less and less on the advice of their Cabinet advisors. Albeit the Cabinet is still a key element of Executive Branch leadership, this advisory body has typically declined in its influence upon Presidential decision making. Beginning with Franklin Roosevelt, Presidents have tended to rely on the National Security Council or the Executive Office of the President, rather than on the Cabinet. Non-Cabinet officials such as the Director of the Office of Management and Budget, the National Security Advisor, and the White House Chief of Staff, appear to have a greater role than Cabinet Members in advising the U.S. President. One might ask, does the President genuinely listen to these individuals either, or does the President tend to use them as conduits for expressing his own opinions and/or discourage them from challenging him or warning him of the negative consequences of his actions and decisions? To read more, click the link below.
[Click Here to Read the Entire Article]
The rates of increase in CEO pay at the largest S&P index firms were three to four times higher than at the smallest S&P index companies. This is according to the latest CEO pay survey from The Corporate Library, the leading independent provider of corporate governance and executive compensation data and risk analysis. The median increase in total actual compensation between 2006 and 2007 was 22 percent for S&P 500 CEOs and 15 percent for Midcap CEOs. On the other hand, Smallcap CEOs received a median pay increase of 5.5 percent. The Corporate Library’s calculation for total actual compensation includes profits realized on the exercise of stock options and value realized from vesting restricted stock awards.
Total actual compensation increases are well ahead of rises in annual compensation, which includes base salary and annual cash bonuses. “While 2007 was a relatively unsuccessful year for many companies, and this can be seen in the single digit increases in total annual compensation, this had yet to affect equity compensation,” said Senior Research Associate Paul Hodgson, co-author of the report. “On the other hand, total annual compensation did not go down.”
The survey, also co-authored by Research Associate Greg Ruel, examined compensation data in 3,242 U.S. and Canadian companies, making it one of the most comprehensive CEO pay surveys on the market. Median total actual compensation for all CEOs in the survey was just over $2,000,000, but levels varied widely. For example, Lawrence Ellison, CEO of Oracle, earned almost $193 million, while some CEOs earned nothing. Median total actual compensation for S&P 500 CEOs was just over $9.2 million.
“The Corporate Library’s CEO Pay Survey: CEO Pay 2008” is available for $75.00 in The Corporate Library’s online store at http://www.thecorporatelibrary.com.
|
November
10, 2008 November
11, 2008 November
13-14 |
|
December
2, 2008
Twin Cities Women on Boards holds a session at the Metropolitan
Ballroom in Golden Valley, Minn. The program is designed to educate and
prepare women for board service. Panelists include Lois Martin, SVP and
CFO of Capella Education Co., and Robin Engelson, managing director of
Lazard Middle Market. For more information, visit
December
2, 2008
The Directorship 100 one-day conference will be held at the
Metropolitan Club in New York City. The D100 Recognition Dinner will be
part of this event. Major topics included will be compensation
strategies, management dynamics, risk management and D&O, and a
capital markets symposium. To register,
December
2, 2008
The Directorhip 100 one-day conference will be held at the Metropolitan
Club in New York City. The D100 Recognition Dinner will be part of this
event. Major topics included will be compensation strategies,
management dynamics, risk management and D&O, and a capital markets
symposium. To register, visit
December
2, 2008
The Directorship 100 one-day conference will be held at the
Metropolitan Club in New York City. The D100 Recognition Dinner will be
part of this event. Major topics included will be compensation
strategies, management dynamics, risk management and D&O, and a
capital markets symposium. To register, visit
December
9-10, 2008
The ICGN Mid-Year Conference will be held in Wilmington, Del. Hosted by
the International Corporate Governance Network, sessions will include
"A View From the Bench" in which members of the Delaware judiciary will
participate in discussions of key governance matters. Other topics to
be discussed include regulatory and market issues such as shareholder
access, say on pay, proxy system reform, director dialogue with
shareholders, transparency of stock ownership by institutions, proxy
contest reimbursement, and more. For more information, go to
Directors Forum 2009 will be held at the University of San Diego. Bringing together institutional investors, directors, officers, and regulators, the event will feature such speakers as former SEC Chairman Christopher Cox, Invesco Ltd. Chairman Rex Adams, famed short seller James Chanos, and Bill George, director of Exxon Mobil, Goldman Sachs Group, and Novartis. To register, visit
The Forum of Executive Women, the Philadelphia region’s premier organization of influential women leaders, released in October the research results from its 8th annual Women on Boards survey, a look at how the boards at the 100 largest publicly held companies in the region reflect gender diversity. These results are always an insightful data point on the progress of women attaining seats on corporate boards.
Although the 2007 data in this year’s report shows a decrease in the total number of board seats held by women — 89 of the total 884 current seats — it is virtually the same 10 percent as the 2006 data, where 93 women held a total of 893 board seats. As an historical comparison, the female percentages in 2004 and 2005 were 9.6 percent and 9.7 percent, respectively. The Philadelphia area lags the national trend: based on a survey by Catalyst, 14.7 percent of the board seats on the Fortune 500 are held by women.
“Now, more than ever in this challenging economy, companies must embrace strategies to recruit, retain, and promote women, creating a pipeline of talent extending all the way to the top,” said Elva L. Bankins, president of the Forum.
The research, conducted by the Forum in concert with professional services firm Deloitte LLP, also shows an increase in companies lacking any female board members, but that there is a positive increase in the number of female top earners. The report, entitled “Not Business As Usual,” is available online at http://www.foew.com.
For more on this topic of gender diversity on the board, see the cover story in the Fourth Quarter 2008 issue of Directors & Boards.
Director Resources
Litigation Trends: Following two straight years of reporting declines in the number of new lawsuits and regulatory proceedings – including a drop in large-dollar cases – U.S. companies now anticipate an uptick in new actions and government probes, as well as the need to hire more in-house litigation staff to help manage the expected rise in disputes. Such is the outlook from the 2008 Litigation Trends Survey just published by law firm Fulbright & Jaworski LLP. A copy of the extensive and detailed survey results can be found at http://www.fulbright.com/litigationtrends28.
Director Elections: A recent study by corporate governance advisory firm PROXY Governance Inc. shows an increasing desire on the part of shareholders to make director elections a genuine referendum on the qualifications and judgment of directors, rather than a simple rubber-stamp of the board. “The study demonstrates that shareholders are increasingly using their proxies to register discontent with the performance of directors – and the current state of the financial markets will likely only serve to increase that trend,” said author and analyst Quinton Huckeby. Click here for a copy of the study, Elections that Matter: A Review of Director Votes in 2008.
Global Fraud: Kroll Inc. has published a special edition of its Global Fraud Report in response to the continuing economic crisis. The report includes specific advice for CEOs, CFOs, and chief counsel that addresses some of the unique challenges facing companies today. Topics were selected based on inquiries received over the past month as well as Kroll’s own analysis of the market developments.
Executive Pay Trends: DolmatConnell Partners Inc. has released two studies: the 2008 Alternative Energy and Clean Technology Study, the firm’s first annual look into executive compensation and long-term incentive practices at publicly traded alternative energy companies in the U.S.; and its 2008 NYSE v. Nasdaq Study, a comprehensive view of executive pay trends among the top companies in the NYSE and the Nasdaq. Email dcinfo@dolmatconnell.com for more information on the studies.
HR Risk Areas: Global executives are not monitoring areas of human resources (HR) risk with the same scrutiny as other traditional risk issues, leaving them open to severe financial and reputational consequences according to a new report by Ernst & Young LLP. Risks in the HR arena extend beyond what many would consider the responsibilities of the HR department. Examples include insufficient training and development programs for employees, pay and performance alignment issues, as well as weaknesses in managing vendor relations (such as relationships with recruiting agencies or healthcare assistance hotlines), among others. The report is titled "2008 Global HR Risk: From the Danger Zone to the Value Zone."
Capital Markets Insights: With the stock market collapsing, wondering what the capitalists of our society are up to? Well, Carl Icahn and Steve Schwarzman have been teaching at Yale. Yale recently launched a free online education initiative – making its classes accessible to anyone with an Internet connection. These are high quality videos of the most popular classes at Yale, allowing an experience that was previously exclusive to Yale students. Bob Shiller’s course on “Financial Markets” features guest lectures by Icahn and Schwarzman as well as former U.S. Treasury Secretary Lawrence Summers and Yale’s chief investment officer, David Swensen. Click here to check them out.
Crisis Communications: Levick Strategic Communications, a leader in high-stakes crisis and litigation communications, has released The Crisis Communications Desktop Reference, an online crisis management resource that provides executives, board members, and legal counsel with immediate guidance in the earliest moments of a crisis. It is rich in best practices and tips for two-dozen diverse crisis and litigation challenges, from bet-the-company lawsuits to wholesale blog assaults on corporate reputations. The Desktop Reference is available for download on the Levick website.
Author Notes
Willis Group Holdings Ltd., the global insurance broker, completed its $2.1 billion acquisition of Hilb Rogal & Hobbs Co., one of the world's largest insurance and risk management intermediaries, on Oct. 1. The move doubles Willis’ revenues and geographic presence in North America, and strengthens key practice areas. Willis announced a definitive agreement to acquire HRH – the largest such transaction in the insurance broking industry over the last decade – on June 8, 2008.
The law firm Simpson Thacher & Bartlett has been selected to be the Treasury Department’s lead adviser in the banking bailout. The firm’s chairman, Richard Beattie, was the subject of a Q&A article in the Fourth Quarter 2007 issue of Directors & Boards.
Global communication consultancy APCO Worldwide continues to expand its investment in China. Kenneth Jarrett and Alastair Campbell both join the company as vice chairmen of the greater China region, and Sharon Ruwart joins as managing director of APCO’s Beijing office. Jarrett, who is based in Shanghai, has more than 20 years of experience in U.S.-Chinese affairs and previously served as the U.S. consul general in Shanghai. Based in Beijing, Campbell is former executive director and head of corporate finance at the Bank of China International. Ruwart is a former managing director for Elsevier Science & Technology, China.
Crisis manager Davia Temin lead a panel presentation last month on “How Women Survive and Thrive in Turbulent Times” for the Corporate Council of The White House Project. The panel featured presentations by Ms. Temin and three of the world’s top executive coaches – Gail Blanke, Marilyn Puder-York, and Wanda Wallace – on lessons to be learned from those who conquer crisis and win in difficult situations. The White House Project is a nonpartisan not-for-profit that aims to advance women’s leadership in all communities and sectors, up to the U.S. presidency.
Back to the Top
Directors & Boards e-Briefing is a monthly service of Directors & Boards. All contents copyright 2008, MLR Holdings LLC.