Posts Tagged ‘NACD blog’

Award Season!

February 3rd, 2011 | By

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.

AwardWe’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.

  1. 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.
  2. Women in the boardroomTopic 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.
  3. 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.
  4. 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.
  5. 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.

Other nominees?  Other categories?  The envelope, please. 

Over to you.

Is Dodd-Frank on Life Support?

December 22nd, 2010 | By

The landmark Dodd-Frank Wall Street Reform and Consumer Protection Act arrived into the world on July 21, 2010. Hailed as the new model for our economic system, it contained many new changes for corporate boardrooms. These changes were long sought by the shareholder community. Although this new law is still in its infancy, I can’t help but think that some of its corporate governance provisions are already in critical condition.

The Act’s prognosis was good; the bill had a strong supporter in the SEC and two branches of the Federal government backing its provisions. But, as always, things change. Within weeks, the U.S. Chamber of Commerce filed a lawsuit challenging proxy access.  Then in November, the Republicans won control of the House of Representatives for the next two years. And finally, the SEC recently announced that they will not be able to fund the whistleblower office, thus hindering the rule. These three incidents amount to a broadside against the Act and could potentially halt its implementation in Corporate America.

On the other hand, the Act is not completely dead. Though the law has strong forces acting against it, all are in flux. The Chamber’s legal challenge is no guarantee and may likely fail in the courts. The House Republicans have made it clear that they plan to attack the Dodd-Frank Act but they have only promised “a significant amount of oversight.” Their attention will mostly be directed at minimizing the health care law. Additionally, amendments and any legislative changes to the bill will almost certainly face Senate rejection and/or a veto by President Obama. As for the SEC, their budget shortfall may only be temporary, and responsibilities for the whistleblower’s office will be carried out by the current SEC staff.

Will some provisions of Dodd-Frank ultimately meet their doom? Short answer: maybe. Two of the most important provisions of the Act—proxy access and whistleblower protections—are in question, but others, such as say-on-pay, will be in place for 2011. Sadly, the lack of certainty on some provisions will directly affect the governance of our public companies and the director community.

Corporate directors cannot relax as they wait and see what provisions will actually become reality. Even if some of these provisions ultimately fail, shareholders will surely not give up on them. Shareholders will still pursue proxy access and the SEC will surely concoct new disclosures for your board to prepare. The only option a board has is to prepare. Preparation means speaking with large shareholders, examining board composition, and reviewing executive compensation structures.

As we wait for the SEC to implement more key provisions of Dodd-Frank, many factors are at play. Whether the provisions thrive or their plugs get pulled, the coming year promises much drama.

NACD Insight & Analysis for December 3, 2010

December 6th, 2010 | By

In a New York Times (Nov. 30) article published in Wednesday’s NACD Directors Daily, columnist Stephen M. Davidoff commented on the SEC’s Concept Release on the U.S. Proxy System.

Davidoff highlighted how companies that are generally averse to government regulations are calling for additional rules for proxy advisory firms like Institutional Shareholder Services (ISS). These companies see a conflict of interest for proxy advisory firms that often offer both voting recommendations and advisory services.

In alignment with the NACD Key Agreed Principles of independence and transparency, NACD agrees that proxy advisory firms should be subject to enhanced disclosure regulations. On October 20, we submitted a comment letter to the SEC on the Concept Release, covering proxy advisory firm independence, as well as NOBO/OBO voting (see the Council of Institutional Investors summary of NOBO/OBO here). The comment letter includes recommendations for the separation of businesses that offer both shareholder voting and corporate governance advice.

To read the comment letter, click here.