Category: Corporate Social Responsibility

Paul S. Williams On Diversity and Making the Most of Summit

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Paul S. Williams

Paul S. Williams is a partner in the Chicago office of Major, Lindsey & Africa, the nation’s leading executive legal search firm, and is a member of the board of directors for three public companies: Bob Evans Farms, Compass Minerals, and Essendant. He recently was named president of the NACD Chicago Chapter, and has served as the lead independent director of State Auto Financial Corp. The NACD team recently sat down with Williams to discuss his insights on board diversity and to ask him how to make the most of the 2017 Global Board Leaders’ Summit.

NACD: You are a fierce advocate for greater diversity in the boardroom. Could you tell us why diversity at the highest level of a company is so important?  

Williams: As a director, I feel a sense of obligation to make sure that I am helping to pave the way for diversity on boards. Unfortunately, there have not been many people of color that have served on public company boards. I think when you step back and think of the credibility of these boards—the credibility of corporate boards with the rest of the business world and the rest of society—it’s incumbent upon us to demonstrate that diversity within companies should start with the board.

When I say that I am a staunch advocate of diversity, I don’t want to limit it to ethnic diversity. I feel strongly about gender diversity, as well as diversity of ethnicity and sexual orientation. I truly believe these boards need to be diverse in all aspects.

Boards also need to be diverse experientially. Directors can’t all be people with similar backgrounds and ways of looking at critical business issues. It’s important that the discussions in our respective boardrooms include truly diverse views.

NACD: What kind of impact do you think a diverse board has on company culture?

Williams: I think it has a tremendous impact. When a management team sees a diverse board talking the talk and walking the walk, it sends a message that the board has taken to heart the importance of diversity. As a board, we don’t want to be hypocritical. Boards without diversity undermine the management team’s ability to bring about change.

A diverse board definitely impacts corporate culture in a number of ways, starting with the commitment to diversity within the company. There’s a sense of appreciation for people who bring different perspectives. It sets a tone of progressiveness and the mandate of being open to different ideas.

Diversity as a concept is somewhat intangible. Compared with financial results, it’s harder to measure. Yet I believe a company can’t have impressive financial results without an underlying culture that is productive and effective. 

How can directors learn more about the importance of diversity?  

Last year I attended NACD’s Global Board Leaders’ Summit. It was uplifting to be able to go to Summit and meet a number of other diverse directors. I knew that I would be assuming leadership of the NACD Chicago Chapter and thought it would be great to meet other chapter leaders. I had heard rave reviews about the programs and I wasn’t disappointed.

The sheer number of attendees at Summit is impressive. There is such a diversity of experience and expertise at Summit. It gave me an opportunity to meet people from around the country to network with and discuss the challenges boards are facing in terms of board diversity and other challenges.

What advice would give to someone attending Summit for the first time? 

Get out of your comfort zone and meet new people. It can be tempting for people who are more introverted to stay with the people they know. Sit at a table with folks you have never met, or who are from a different part of the country, or who sit on boards that are in different industries.

Have a game plan in advance, especially in terms of programs you plan to attend. It’s important to know which programs you want to focus on.

Most importantly, have fun! Really allow yourself to enjoy the things that come up in the spur of the moment, whether it’s talking to someone that you didn’t anticipate meeting, or going up to one of the speakers after a program and asking a follow-up question.

Click here to learn more about diversity-specific programming offered at the 2017 Global Board Leaders’ Summit.

Time Warner Diversity Chief Aims High

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Champions of business women have been honored each year since 2001 by the prominent civil rights organization Legal Momentum with its Aiming High award. Lisa Garcia Quiroz, senior vice president, president of the Time Warner Foundation, and chief diversity officer of Time Warner, is one of three honorees this year.

Lisa Garcia Quiroz

The seventeenth annual Legal Momentum Aiming High Awards will be presented at a luncheon on June 15 in New York City.

In addition to Garcia Quiroz, this year’s award recipients are:

  • Stephanie Drescher, global head, business development & investor relationship management, Apollo Global Management
  • Brad S. Karp, chair, Paul, Weiss, Rifkind, Wharton & Garrison, and winner of the Man of Distinction honor

Few people in the workforce can claim that they have worked for the greater part of their careers helping to advance women in their workplace. Garcia Quiroz counts herself among the privileged few. When asked about the role that the women in her working life played in her own career development, she said that she owed much of her success to women who reached back to pull her up along with them.

Before moving to Time Warner’s corporate offices and taking on this new position, she served as the founding publisher of People en Español, a position she earned after proving herself as the founding publisher of Time for Kids.

Through her work at Time Warner, she has always placed a priority on amplifying diverse story tellers’ voices. NACD is honored to amplify her voice and to celebrate her leadership along with Legal Momentum. In a recent interview, Garcia Quiroz reflected on her role within a company of storytellers.

What is your approach to setting diversity, inclusion, and social responsibility strategies at Time Warner?

I will tell you that all of the initiatives that I work on at Time Warner have a definitive thread going through them—this idea of diversity and inclusion (D&I)—but for me, I felt it was really important to root it in the business of the company.

I don’t take that commitment lightly. I don’t mean what’s the business case for diversity and share that with my colleagues. No. I first ask, what does diversity mean for a media company? What are the most important outcomes that can come out of a robust diversity effort at a media company? Then, how can we be sure to integrate those principles into the core of this company? Our company is a company of storytellers. We create content. Bearing that in mind, what I did was develop a diversity portfolio that set goals that were very much in line with a company that had its success inextricably linked to talent.

How has being a woman shaped your opportunities to lead through your career? How have mentors helped you along the way? 

I would say that most of my significant opportunities were as a result of a woman reaching back and pulling me up with her. For example, Ann Moore was the legendary head of People magazine and went on to become the CEO of Time Inc. Ann was an incredible mentor of mine. She’s still a terrific friend and was the person that gave me the opportunity to be publisher of People en Español. What’s significant about that is that, honestly, I got that job probably five to seven years earlier than I should have, but she believed in me and gave me the type of support and mentoring that I needed to ensure that I was successful in that role. For that, I’ll be forever grateful.

Everybody has big moments in his or her career. I think choosing to do Time for Kids and getting the funding for it was a way of getting noticed in a place where perhaps you wouldn’t be noticed as quickly being a young woman of color.

When I came here to corporate, I worked for another terrific woman named Pat Fili-Krushel, who was also a fantastic boss. It’s unusual—in 27 years I’ve worked mostly for women. When I was growing up at the company, that typically wouldn’t have been the case.

You were on the board of the Corporation for National and Community Service (CNCS), which funds national service programs such as AmeriCorps*VISTA and SeniorCorps, from 2010–2015. You also served as chair for nearly three years. What motivated you to serve on this particular board?

I was struck by the chance to give people—young and old—the opportunity to serve in communities that they had never known about before. Consider sending someone from New York to the rural south for a year of service at a nonprofit, or sending a young woman from Alexandria, Virginia, to East Los Angeles, or to southern Texas. This is an important opportunity for Americans to really develop a sense of empathy, community, and understanding for what it means to be American. When we live in our little enclaves, it’s very hard to get a sense of that, even in a place like New York City.

A lot of young men and women have a similar experience in the military because they’re serving alongside people that come from all sorts of different locations. [Ret. U.S.] Army General Stanley A. McChrystal talks a lot about the fact that in the military you bring people together from all walks of life to experience and grow with others you may have never encountered otherwise. He points out that now, as our military shrinks, we should be doubling down on other forms of public service as a way to create a sense of greater understanding and appreciation for this country. He has asked whether there is a way of making national service almost mandatory. While this program has enjoyed bi-partisan support in the past, the programs funded by the CNCS are now under threat. Perhaps we should be thinking about how to create more opportunities for young people instead of diminishing them.

Culture and Compliance: Board Lessons From Volkswagen

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This blog post is one installment in a series related to board oversight of corporate culture. The National Association of Corporate Directors announced in March that its 2017 Blue Ribbon Commission—a roster of distinguished corporate leaders and governance experts—would explore the role of the board in overseeing corporate culture. The commission will produce a report that will be released at NACD’s Global Board Leaders’ Summit , Oct. 1–4.

A panel discussed how the iconic company became embroiled in scandal.

Wells Fargo & Co., Volkswagen AG (VW), Mylan NV, and Valeant Pharmaceuticals International are just a few of the companies that have recently experienced high-profile corporate crises stemming from ethics and compliance breakdowns. As corporate directors look to learn from these scandals, the John L. Weinberg Center for Corporate Governance, Association of Corporate Council, and Bloomberg Law® this April co-hosted the event Volkswagen Emissions Scandal—Lessons for Investors, Boards, Chief Legal Officers and Compliance & Governance Professionals.* The panel discussed the VW emissions scandal and lessons for boards of directors and general counsel (GCs) on instituting a corporate culture that promotes ethics and compliance.

Corporate Governance Causes of the VW Scandal

Charles M. Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance, notes in an article that three main governance practices at VW created a perfect environment for noncompliant behavior stemming from a lack of independent shareholder representation on the board:

  1. A complicated web of interests with dual-class stock, pyramidal ownership, and family control. The Porsche and Piëch families own just over 50 percent of VW’s voting rights through their preferred class stock in Porsche Automobil Holding SE, which in turn owns shares of VW (known as pyramidal ownership). Ferdinand Piëch, the grandson of Porsche company founder Ferdinand Porsche, was chair of VW’s supervisory board at the time of the scandal and served as CEO from 1993 to 2002. Piëch’s primary goal is said to have been to create the largest automaker in the world, with less regard for creating profit and shareholder value. This directive from the company leader, in an environment where shareholders outside of the family had little influence over the board, created a corporate culture where employees chose noncompliant behavior over failure when designing the “defeat devices” used to cheat U.S. emissions tests.
  2. The government as a major shareholder. VW was a state-owned enterprise until 1960 when it became privatized and left Germany’s Lower Saxony region with a 20 percent stake in the company. Elson opines that the interest of government officials is to be re-elected, often achieved through high employment rates. Therefore, government representatives on the board of VW were driven to create jobs at VW, the largest employer in Lower Saxony, even if adding those jobs was detrimental to profits.
  3. Labor representation on the board (codetermination). German law requires all companies with more than 2,000 employees to fill half of the board with employee representatives. Elson argues that the board’s ability to provide effective compliance oversight was diluted by labor representatives on the board who were essentially monitoring themselves, and hence more focused on obtaining higher compensation and decent working hours for employees.

In light of these conditions at VW, panelists shared a number of leading practices for GCs and directors in creating a compliant corporate culture:

Lessons for GCs

  • “You can’t legislate ethics, but you can promote them,” said one panelist. Be the devil’s advocate and stress the importance of risk management and cultural tones at different levels of the organization, i.e., the so-called tone at the top, mood at the middle, and buzz at the bottom.
  • Ensure your board spends adequate time on compliance issues. Directors are often bogged down by compliance and want to spend more time on strategy, but prioritizing compliance at the board level will create a culture that allows strategy to be carried out successfully.
  • Get the right information to the board at the right time. According to one panelist, “The GC—as well as risk managers and in-house lawyers—need to be tough enough to speak up and report to the board. At Lehman Brothers, the CEO was known as the ‘gorilla on Wall Street.’ He doubled down on real estate, which the risk officer beneath him knew was risky, but their concerns were never known to the board.”
  • Remember that your duty is to the company—not the CEO—even if you’re reporting to him or her. “If [you as] the GC [are] aware of a violation, you need to do the right thing and not be swayed,” said one speaker.

Lessons for Directors

  • Increase your exposure to more employees, including mid-level employees, to get a better sense of the corporation’s culture in practice below the C-suite.
  • Create straight reporting lines from the compliance officer, chief risk officer, and internal auditor to committee chairs. This empowers these officers to speak openly with board members about their concerns without management present. (See NACD’s brief on Audit Committee Oversight of Compliance, which is open to the public for download.)
  • Incentivize compliance through compensation metrics. See NACD’s briefs on Incentives and Risk-Taking and Board-Management Dialogue on Risk Appetite for guidance on designing incentive programs that promote high performance while limiting unhealthy risk-taking.
  • Should your company have one in place, reevaluate multiclass stock structures in light of investor perspectives. Research from the Investor Responsibility Research Center Institute shows that “controlled companies generally underperform on metrics that affect unaffiliated shareholders,” while the “Commonsense Corporate Governance Principles,” released by major institutional investors and others, says that “dual class voting is not best practice.”

 

* The distinguished panel of speakers included: Robert E. Bostrom, senior vice president, general counsel, and corporate secretary at Abercrombie & Fitch Co.; Charles M. Elson, Edgar J. Woolard, Jr. chair in corporate governance, director of the John. L. Weinberg Center for Corporate Governance, and professor of finance at the University of Delaware; Meredith Miller, chief corporate governance officer at UAW Retiree Medical Benefits Trust; Gloria Santona, retired executive vice president, general counsel, and secretary at McDonald’s Corp.; Professor Christian Strenger, academic director, Center for Corporate Governance at the HHL Leipzig Graduate School of Management; Anton R. Valukas, chairman at Jenner & Block LLP; and The Honorable James T. Vaughn, Jr., justice of the Delaware Supreme Court. Italicized comments above are from panelists that participated in this event. However, this discussion was conducted under the Chatham House Rule, so quotes are not attributed to individuals or organizations.