Archive for the ‘Board Information’ Category

Board Confidence Index Q3 2011 – Director Confidence at an All Time Low

October 28th, 2011 | By

Director confidence in the health of the economy significantly dropped in the third quarter of 2011. New results from the NACD’s Q3 2011 Board Confidence Index (BCI) reflect this current economic malaise. While directors had remained mostly optimistic since late 2010, this recent round of BCI data suggests that they now seriously question the economy’s progress.  

 This report, prepared by NACD in collaboration with executive compensation consulting firm Pearl Meyer & Partners, found that directors’ confidence in the economy has decreased significantly. Overall, on a scale of 0 to 100, the Q3 2011 BCI registered at 47.5 – “moderately worse” than Q3 of last year. When asked, “How would you characterize general economic conditions compared to a year ago,” directors in Q3 2011 responded with an average score of 46, showing a negative view of the economy’s trajectory and a 22-point decrease from Q2 2011.

However, on a somewhat more positive note, 49 percent predict that conditions will be “moderately better” a year from now. In forecasting general economic conditions next quarter compared to this quarter, directors predicted conditions to remain unchanged. 

Despite the lack of confidence, NACD’s BCI found that 39.4 percent of participating companies’ employment activities last quarter resulted in a net gain. While the job numbers are positive, this is a decline from the Q2 2011 BCI figures which indicated that 48.1 percent of companies expanded their workforce.

The NACD BCI is a leading indicator of economic health as viewed through the lens of the boardroom and reflects the views of 185 corporate directors. Q4 2011 results can be expected in January 2012.

 

NACD Survey Reveals Most Up-To-Date Trends on Corporate Governance

September 21st, 2011 | By

Exemplary boardroom leadership means advancing a company’s best interests while also maintaining a responsible and accountable corporate culture. Whether shareholders are seeking to remove directors or third parties are questioning corporate responsibilities, obtaining a consensus on best governance practices is a key asset for corporate leaders. Knowing what their peers are doing can help boards assess their decisions instead of working in a vacuum.

As companies prepare for and react to the unique external events that will shape their corporate climate in the months and years to come, they can benefit from external benchmarks for their corporate governance practices.  However, in a year marked by a troubled economy and sweeping legislative reforms, standards for best practices in governance often become increasingly murky.

NACD helps boards tap into the latest trends and issues for boards with our 2011 Public Company Governance Survey. The survey offers a comprehensive review of the most up-to-date governance trends, incorporating input from almost 1,300 individuals from public company boardrooms. In addition, the information gleaned from respondents is enhanced by the inclusion of data from 2,400 proxy statements compiled by Institutional Shareholder Services.

The survey provides insights on a wide range of issues, including shareholder communications, CEO succession planning, director competence, and directors’ response to new proxy disclosure requirements. In addition, it features a special section on executive compensation, which is broken down into 24 industry sectors. Among the key survey findings this year:

  • The board’s role in overseeing strategic planning, corporate performance and valuation are top priorities for the majority of respondents.
  • Nearly 70 percent of respondents characterize their company’s long-term strategy as “balanced,” with moderate risk and moderate expected reward.
  • Directors believe that their current governance structures and practices enhance their ability to effectively and efficiently fulfill their duties.
  • Most boards have not formalized their CEO succession plans.
  • Nearly one-third of respondents feel the current disclosure requirements for corporate governance are “excessive and should be reduced.”

Data gleaned from this latest survey is also used to create the comprehensive NACD Custom Board Benchmarking Report, which provides boards with the opportunity to conduct an in-depth analysis of their current structures, practices, strategies and policies in comparison to their industry and peer group companies.

To purchase a copy of the latest Public Company Governance Survey, visit http://www.nacdonline.org/Store/ProductDetail.cfm?ItemNumber=3854.

Problem-Finding: A Vital Board Skill

June 2nd, 2011 | By

Solange Charas is the president of Charas Consulting, Inc. and a senior-level human capital professional with 20-plus years of experience as corporate CHRO and consulting firm practice director. She is currently pursuing her doctor of management at Case Western Reserve. She has served as the chair of the remuneration committee for a NASDAQ-traded company.

Michael Roberto, author of Know What You Don’t Know: How Great Leaders Prevent Problems Before They Happen, shared his insights with the 200 directors who attended last week’s NACD Directorship Forum in NYC. He explained why it makes more sense to concentrate on “problem- finding” than “problem-solving.” Practicing problem-finding helps leaders spot and address emerging concerns while they are still manageable and before they turn into disasters. It is a vital board skill.

Roberto opened his talk with examples from the Cuban Missile Crisis and recounted his conversations with Robert McNamara about that perilous time. He also gave examples from the 2003 NASA shuttle failure from his interviews with then Space Shuttle program manager, Linda Ham. Using these two examples he illustrated the fundamental value of actively seeking out problems before they find you.

I think his presentation had the attention of the audience—there was something seductively compelling about the idea of using proactive techniques to anticipate and avoid dangerous problems. Yet, despite our intellectual agreement that being proactive is always more effective than being inactive or reactive, what’s the trick? How do we set about successful problem-finding?

Roberto offered these seven steps to becoming a proactive problem-finder instead of a reactive problem-solver:

  1. Circumvent the gatekeepers – get unfiltered information.
  2. Become an ethnographer – watch what your constituents are doing and stay alert to what’s happening in the periphery. Watch for “Hirschman’s exit” or “voice” phenomena;
  3. Hunt for patterns – try to draw on past experiences but don’t get caught in the trap of misusing analogies.
  4. Use intuition to “connect the dots;” lessons learned from small problems can contribute to understanding the path of large problems.
  5. Encourage innovative thinking and risk-taking on a small scale – piloting programs and experimenting may be the key to learning. “Fail often, succeed sooner.”
  6. “Watch the film” – what is your team and the competition doing? “Adopt the military’s “After Action Review” (AAR) process to learn and improve;
  7. Create a climate of information-sharing – encourage people to speak up and have a mindset of “openness.”

In my opinion, our shareholders and stakeholders expect us board members to do our best to steward the organization. To do that, we need to listen to our inner dialogue to understand what can inhibit our participation in important activities. What can cause us to abdicate our leadership role? Is it fear that we may be viewed as pariahs and shunned if we voice a dissenting opinion?  Do we feel safer if we ignore an issue? Like the Ravenous Bugblatter Beast of Traal in Douglas Adams’s Hitchhiker’s Guide to the Galaxy, do we believe that if we can’t see the problem, then it can’t see us? Or do we assume that someone else will tell us about the problem when it get big enough? All perilous pitfalls—which might be avoided by practicing problem-finding.

Read more about the NACD Directorship Forum here and here.

To reserve your seat for the NACD D100 Forum, November 8-9 at the Waldorf Astoria, NYC. Sign up to learn from Jet Blue director General (rtd) Stanley McChrystal, Polymer Group CEO Ronee Hagen and HealthSouth CEO Jay Grinney among others, and be our guest at the gala dinner celebrating the NACD D100 and Director of the Year honorees.