Read through this year’s most downloaded resources to see what directors found useful in 2012.
Governance Challenges—2012 and Beyond: Featuring the guidance and thought leadership from six of NACD’s strategic content partners, this publication offers a forward-looking perspective on the issues dominating boardroom discussion. Topics covered range from ten to-do’s for audit committees and the basics of compensation to board preparations for crisis situations.
Bridging Effectiveness Gaps: A Candid Look at Board Practices: To combat the risk of asymmetric information, NACD partnered with McGladrey to host four small gatherings—at NACD chapter locations across the nation—of executives and directors in an effort to find ways of improving the communication and relationships between the board and C-suite. From these candid conversations, this white paper was created.
2012 Risk Oversight Advisory Council Summary of Proceedings: The inaugural meeting of the NACD Advisory Council on Risk Oversight met telephonically during one of the worst hurricanes to hit the eastern seaboard in a century. During the abbreviated meeting, discussion focused on two areas: allocating the work of risk oversight and the new paradigm of reputational risk for corporations today.
2012 Nominating/Governance Committee Chair Advisory Council Summary of Proceedings: The third annual meeting of the NACD Nominating/Governance Committee Chair Advisory Council reinforced the sentiment that nominating and governance committees are navigating an increasingly challenging environment. The Council focused on how nominating and governance committees are revisiting their director evaluation and succession processes in the context of both new regulations and the rapidly changing global markets.
At any NACD education program, the discussion of directorship as a part-time profession with full-time risks is bound to arise. Yet following any corporate crisis, the question is always asked: “Where was the board?” Outside of the C-suite and boardroom, many perceive that directors should be able to foresee and avoid a crisis before it strikes.
This perception is misguided for several reasons. As a result of legislative and regulatory activity, since the 1960s corporate boards have become increasingly independent of management. Although legislation such as Sarbanes-Oxley and Dodd-Frank mandated independence at specific committees, this has extended to the entire board. Today, most publicly held company boards comprise a majority of independent directors, and often the CEO is the only executive director.
The development of independent boards is not negative. In fact, it ensures that the board can effectively carry out its mission and responsibilities, and fairly hold management accountable to shareholders. However, there are a few consequences when directors are selected entirely for independence. Directorship, as noted above, is a part-time role. Inherently, directors rely on senior management for information necessary to carry out their oversight responsibilities. When outside directors are chosen for lack of ties to the corporation, they do not necessarily bring knowledge of the business or industry. Therefore, the benefit created by adding an independent director is largely tempered, as this outsider is reliant on the CEO for the information necessary to his or her oversight role.
To combat this risk of asymmetric information, NACD partnered with McGladrey to host four small gatherings of executives and directors in an effort to find ways of improving the communication and relationships between the board and C-suite. From these gatherings, the Bridging Effectiveness Gaps: A Candid Look at Board Practices white paper was created. As Bridging the Effectiveness Gaps notes, broadly, these gaps were found in the areas of strategy and risk, executive compensation, CEO succession planning, and board evaluations. By convening management and directors from different companies, the meetings fostered candid and open conversation regarding areas where communication tends to break down. However, where communication was generally the root of the problem, it was also the solution.