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NACD Insights & Analysis for November 12, 2010

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According to a Bloomberg report featured in Wednesday’s NACD Directors Daily, a daily e-news briefing for members of the National Association of Corporate Directors (NACD), a Young Presidents’ Organization survey indicates that chief executives in the U.S. were more positive about the economic climate at the start of the fourth quarter. According to the survey, CEOs expect stronger sales, increased spending on equipment, and generally better economic conditions in the coming months.

NACD president & CEO Ken Daly talks with CNBC about the NACD Board Confidence Index

NACD president & CEO Ken Daly talks with CNBC about the NACD Board Confidence Index

NACD conducts a similar quarterly survey—the Board Confidence Index (BCI)—presenting the corporate director’s perspective. While directors felt that the economic conditions in the third quarter were much improved from one year ago, they were much less confident in forecasting the fourth quarter. When asked about their expectations for the fourth quarter in their own industry, the index score was 48—reflecting more negative than positive responses.

To see NACD CEO and President Ken Daly talk to CNBC about the BCI, click here or on the video image.

Note: This column regularly appears in NACD Directors Daily, a daily e-news briefing for members of the National Association of Corporate Directors (NACD).

Hu, Valukas, and Markopolos on Corporate Governance

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As the country emerges from the worst financial downturn since the Great Depression, directors, executives and other corporate governance experts gathered to honor the 100 most influential players in the boardroom and analyze recent mistakes and how they can be avoided at the NACD Directorship 100 Forum held Monday and Tuesday in New York City. The 100 honorees were commended at a dinner Monday night in a keynote address by Henry Hu, director of the SEC’s Division of Risk, Strategy and Financial Innovation.

Hu presented his “decoupling” concept, and explained how it relates to boards’ current challenges, especially as directors face the new Dodd-Frank Act. He pointed to the Act as the “most comprehensive change in generations… representing a new era for corporations and boards that introduces new challenges and new opportunities. It is important to get the balance between corporate governance and financial innovation right.”

The Forum’s second day featured Anton Valukas, court-appointed examiner in the Lehman Brothers’ bankruptcy, explaining the actions that the Lehman board could have taken to better prepare for the company’s failure. While Valukas does not believe that failure was preventable, he did explain that, had the board asked more important questions, the fall would have had less severe of an impact on the U.S. economy.
“In this case,” said Valukas, “one word would have made the difference: transparency.” (read Valukas’ full report here)

Also featured was Harry Markopolos, author of No One Would Listen, which details his ten-year-long investigation of Bernie Madoff’s Ponzi scheme, the largest in history.  Markopolos took a firm tone with the directors of the room, imploring them to “use your experts and don’t take numbers from management, for the sake of your shareholders and stakeholders. That’s your job.”

Wanted: A New Board Chair for the BBC – My Country Needs You

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The British Broadcasting Corporation is looking for a new chair of the BBC Trust, the governing body of the organization. If you are reading this in the United States (and most of NACD’s 10,000 members will be) there is no reason for you to care about this as much as I do, but nontheless I hope you will look carefully at the job description because the UK’s public service broadcaster needs great governance as never before. Brush up on your British English and get your application in.

Here’s a primer to get you started: in the UK every household with a TV pays a fee to the government and the entire population can access BBC television, radio and online content for free and on demand. The license fee, as it is known, is supplemented by sales of programs and formats ( including Dancing with the Stars, The Office, Dr Who, Life and all of David Attenborough’s output) overseas.

In recent years the BBC has been under threat from Rupert Murdoch’s satellite and cable service which of course carries all the BBC channels. Rupert owns a lot of rights to major sporting events and he also owns the technology which beams those events into people’s homes. He charges a lot for this. People who choose to watch sport rather than comedy, drama, nature, children’s programming (yes, the BBC brought you the Teletubbies) and who pay their bill to Sky, don’t see why they should pay up if they don’t choose to watch the Beeb. This said,more than 95 per cent of the British population avail themselves of some BBC service every week – the broadcaster remains resolutely at the center of everyday life.

With the election of a new coalition government, the UK is facing public service cuts that not even Maggie Thatcher would have dreamed of. The BBC will suffer a 16 per cent cut in its income and the Chairman’s salary has taken a similar hit.

Less income means staff cuts, more repeats in primetime, and limits on the kind of technological innovation that has led to the BBC becoming one of the world’s most trusted digital guides.

This matters to me because the BBC practically brought me up. I was one of those children with square eyes, a pasty complexion and the ability to make great halloween costumes, sex a tortoise and identify the cuisine, terrain and music of all world capitals because I had seen it on TV. I learned to expect the Spanish Inquisition, and had my own silly walk. Like all Monty Python fans I knew when a parrot was an ex parrot.  All my crushes were BBC presenters and my female role models were too. They still are. 

My first job was with the BBC and I was the envy of everyone I knew for there could be no more exciting and interesting place to work. Here, I could learn faster than I could anywhere else, and each morning as I walked through the Television Center scene dock past the Tardis and the sets of my favorite sit coms (Mrs Bucket’s table for candlelit suppers, Mrs Slocombe’s shopfloor bust from Are You Being Served? and, later, Edina and Patsy’s office from Ab Fab) I felt lucky to be there and proud to be part of the BBC. I worked in the newsroom then. I didn’t last long. The BBC demands a rigor in its news services that to which I was totally unequal. Sidelined from the serious stuff, I went on to run the BBC’s daytime services and later came to the US to be part of the early years of BBC America.

I'm Proud of the BBC

I'm Proud of the BBC (video)

I still love the BBC and I am glad to say others do too. Check out this video, now something of a hit in Britain. For a slightly more upscale appreciation of the BBC services check out this promotion for the range and diversity of music featured by the public service broadcaster.

I expect the job of chair of the BBC Trust will go to a Brit, and someone well-known to the current UK government, but I urge you to think about it carefully. The BBC is worth having, and so, therefore, is this job.