corporate directors « NACD Blog

Posts Tagged ‘corporate directors’

Keep a Steady Focus on Strategy, but Incorporate Flexibility

January 17th, 2013 | By Kate Iannelli

For nearly three years, the boardroom maintained a consistent response to a tumultuous marketplace. Whether it was following the 2008-2009 financial crisis, navigating an economic recovery unlike any other, or facing a debt crisis with global implications, reaction from directors seemed to stay the same. Year over year, NACD’s Annual Governance Surveys did not register significant upheavals in methods or structures used. Areas of high priority continue to be strategic planning and oversight, corporate performance and valuation, and risk oversight.

NACD’s Board Confidence Index (BCI), a measure of the boardroom’s attitude toward the state of the economy, told a similar story. Although the index would fluctuate by a few points from quarter to quarter, confidence remained in the slightly optimistic side of uncertain.

This changed last fall when the nation was forced to address the pending fiscal cliff. At November’s NACD Directorship 100 event, DuPont Chairman and CEO Ellen Kullman remarked that uncertainty over future regulatory activity and the general economy had led her company to reevaluate major investments for 2013. Uncertainty in the future of the economy and consumer demand also significantly impacted Coca-Cola’s decisions to make capital investments, according to presiding director James D. Robinson III.

Just a few weeks later, results from the fourth quarter BCI further demonstrated how the economy affected the boardroom. Although the overall index score remained on the positive side of uncertain (51.8), for the first time responding directors indicated outright pessimism in the state of the economy in the next three months. Directors also echoed the statements made at NACD Directorship 100: In preparation for 2013 nearly half (47%) had reassessed corporate strategy.

The need to focus on strategy was also confirmed at NACD’s recently held Master Class in Naples, Florida. Although sessions were designed to address the new and emerging risks entering the boardroom, discussions often returned to the importance of strategic planning in uncertain times. Both panelists and attendees agreed that directors need to keep a steady eye on the established strategic plans at hand.

This recommendation is not without caveat. With a maintained focus, directors should not relegate a discussion on strategy to an annual event. Instead, the established strategic plans should be woven into every board meeting and discussion. Furthermore, plans should be adjusted to incorporate flexibility from the boardroom. This includes shorter response times that are now necessary to address situations that could be presented by emerging methods of communication and rapidly changing technologies.

Tags: Coca-Cola, corporate directors, debt crisis, director confidence, DuPont, Economic recovery, Ellen Kullman, financial crisis, James D. Robinson III, Master Class, NACD Annual Governance Surveys, NACD Board Confidence Index, NACD Directorship 100 Forum, strategic planning
Posted in Corporate Governance | No Comments »

Directors are Optimistic about the Economy

February 10th, 2011 | By Henry Stoever

If anyone is in a strong position to assess the state of the economy, it is the men and women who serve in the nation’s boardrooms. And they are offering some encouraging words.

The National Association of Corporate Directors (NACD) just released the most recent finding of its Board Confidence Index (BCI), a snapshot of the health of the economy as seen through the prism of corporate directors. The findings, covering the 4th quarter of 2010, show that U.S. corporate directors are confident about the strength of the economy as 2011 unfolds. The 64.4 confidence rating recorded in the latest BCI represents nearly a 14-point increase over the previous quarter in 2010. The findings come as other positive indicators emerge in the economy, including rising corporate profits and a rebounding stock market.

As the only economic measure of its kind, NACD’s BCI is a strong barometer of economic recovery because it is based on the opinions of 370 leading corporate directors, as well as the plans they say their organizations have for the future. Conducted in conjunction with leadership advisory and search firm Heidrick & Struggles and executive compensation consulting firm Pearl Meyer & Partners, the latest survey predicts economic growth over the long term, suggesting that the fear of a double-dip recession has lifted among corporate directors. For example, nearly three-fourths of the directors surveyed expect economic improvement a year from now.

The confidence levels were not same for every industry. In the information technology and utilities industries, directors say that their companies will do better than the overall economy over the next year. Comparatively, more directors in the healthcare sector expect their industry to do “moderately worse” in that same period. On the other hand, directors from the materials and telecommunications industries largely felt their industries would mirror the overall markets.

The survey also offered a somewhat promising outlook for the labor market: 42.3% of companies with revenue under $1 billion said they expect to do more hiring, and 34.4% of companies with revenue above $10 billion expect to add workers. Companies with revenue greater than $1B and less than $10B were less optimistic about the future state of their industries.

But in the short term, there is uncertainty. That may account for the muddled picture of the job market that emerged when the Labor Department recently reported that the economy added a mere 36,000 jobs in January, even as the unemployment rate dropped to 9 percent, the lowest rate since April 2009.

We’ll have to look for the next quarterly BCI—results expected in early May 2011— to see if that uncertainty still exists.

Tags: BCI, confidence, corporate directors, Heidrick & Struggles, Pearl Meyer & Partners
Posted in Corporate Governance | 1 Comment »

Award Season!

February 3rd, 2011 | By Robert Galford

OK, director-colleagues (and those who are similarly aligned), I am sure you are all following the current season of best-film and best-acting nominations and awards with great interest. Or, maybe not. In either case, it’s time to step away, and to take a brief detour from your desktop, or your laptop, or your iPad, or whatever device on which this appears.

We’re going to have our own little group of highly unofficial award nominations. Not “Best Director,” not “Best Committee,” not “Best Board.” Those—or their facsimiles—have already been created. Our job here is to identify the awards that we hope our own boards would win for their own work. And my job is just to start the ball rolling, or rather, to get you thinking.

Here are my categories and a few comments on potential nominees. I hope you’ll read them, and then add to the list. After all, if we’re going to turn this into a three-hour event worthy of a network telecast, we’re going to need awards across a whole barrelful of categories. I’ll start, but then you’ll need to chip in.

Most Over-Worked Topic on Board Blogs: And the nominees are: Social Networking, Social Networking, and Social Networking! Oh, yes—and Social Network—259,000 entries on Google. Current Favorite: Hmm…let’s think.
Topic That Most Boards Aren’t Sure How to Deal With: Nominees: Social Networking, Political Contributions, Number of Women on the Board. Current Favorite: All of the above. One that won’t go away for a while: Number of women on the board. Our colleagues around the world have begun mandating membership ratios.
Least-Favorite Current Topic among Board Members: Nominees: Social Networking, Proxy Access, Say on Pay, CEO Compensation, Director Compensation. Current Favorite: All of the above.
Most Fruitful “New” Board Practice: Nominees: Instituting and participating in a regularly scheduled, board-management offsite on corporate strategy; reallocating more board time to committee meetings, as opposed to full-board sessions; changing the location of meetings from isolated boardrooms or offsite rooms to onsite, “middle-of-the-action” company locations; changing where people sit at meetings; and putting in a speaking-time limitation or edict to reduce the effect of “air-hogs.” Current favorite: Unclear, but we sure know the LEAST favorite. People HATE changing where they sit. Alas.
Wildest Idea to Improve Board-Member Focus: Nominees: Measurably increase mandatory director shareownership and retention requirements; Take the Undercover Boss reality show concept and apply it to directors by making them go “undercover” as employees; Administer a “How Much Do You Know about Your Company?” quiz to members at the board meeting and openly grade it immediately thereafter; Conduct a “Zero-PowerPoint” board meeting; Have board members randomly selected to present on the topic: “What I Learned in the Past Month about Our Company.” Current Favorite: None. In fact, just the mention of any of these could easily induce a lively—if not awkward— conversation about social networking.