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Kick-Starting the Conversation

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According to preliminary data from the 2012-2013 NACD Public Company Governance Survey, top board priorities continue to be strategic planning and oversight, corporate performance and valuation, and risk oversight.

In addition to the foundational areas of oversight, directors have even more responsibilities on their shoulders. Boardroom composition, the constantly evolving risks presented by information technology, and heightened scrutiny on executive compensation packages are just the tip of the iceberg. Regulatory activity has also heated up in recent years as agencies such as the SEC and the PCAOB continually issue new rules affecting corporate governance.

Every year, the NACD Board Leadership Conference convenes directors, business leaders, corporate governance experts, shareholders, and regulators to discuss the issues the boardroom is currently facing and what is just around the corner. This year’s sessions are pulled from today’s headlines, including panels on social media and reputational risk, doing business inChina, and risk and white-collar crime.

To kick-start the conversation ahead of the conference, starting next week, the NACD blog will spotlight key sessions and the speakers scheduled to join us in October. Also pay attention to our Twitter feed and let us know your thoughts—in 140 characters or less—with the hashtag #NACDBLC.

We look forward to hearing from you before the Board Leadership Conference and seeing you at the National Harbor in October.  

 

Five Focal Points of the 2011 NACD Board Leadership Conference

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  1. Instant technology. Throughout the conference, speakers discussed the importance of instant technologies, such as social media (Facebook, Twitter, etc.) and cloud computing—particularly the need for directors to be aware of these products in order to provide effective oversight. In fact, during the “Reshaping the Risk Agenda” session, Chuck Noski’s (vice chairman of Bank of America and director of Microsoft) three areas that will transform risk oversight at the board level all related to the increasing pervasiveness of technology: the “consumerization” of technology, cloud computing, and the increasing sophistication of hackers.
  2. China. Multiple sessions referenced China and the increasingly global marketplace. From futurist Edie Weiner to Honeywell chairman and CEO David Cote, speakers urged attendees to adopt a new perspective regarding fast-growing emerging markets. Specifically, Cote encouraged directors to view China as a “partner, competitor, and supplier.” During NACD chairman Barbara Hackman Franklin’s panel on “Doing Business in China,” the discussion extended to intellectual property rights.
  3. The new consumer base. Political pollster John Zogby fascinated conference attendees with his lunchtime session on “The Way We’ll Be.” Having examined the American consumer for the past two decades, Zogby recommended that directors be aware of the new generation of consumers—the “global citizens.” Born roughly between 1979 and 1993, he said that this generation communicates and identifies themselves in a far different manner than the baby boomers.
  4. Flexibility in business strategy.  KPMG’s Mary Pat McCarthy noted that directors should know that the “unimaginable does happen.” To ensure long-term success, business strategies should be flexible enough to quickly adapt to the constantly evolving business environment. Edie Weiner advised directors to take note of the “carrots and sticks” in their businesses—observing whether short- or long-term gain is rewarded.
  5. Recruit for the future. With these rapidly changing technologies, emerging global markets, and new consumer bases in mind, boardroom composition should reflect a set of directors that can meet future needs. During a panel on “The Next Generation of Board Leaders,” Ralph Whitworth (founder of Relational Investors LLC) suggested that boards recruit for both current gaps in necessary skill sets, as well as the gaps they expect three to five years down the road.

 

Leadership Lessons in the Global Arena and Stewardship of the U.S. Economy

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The 2011 NACD Board Leadership Conference ended with an intellectually stimulating power session on the global economy. David Cote, chairman and CEO of Honeywell International and director at JP Morgan, began the final session with a keynote on leadership lessons in the global arena. As one of President Obama’s appointees to the bipartisan National Commission on Fiscal Responsibility and Reform, Cote called for an “American competitiveness agenda,” and the need for the U.S. government to enable business, as well as regulate it.

Cote issued a hard lesson to the audience: We are in a different global economy than twenty years ago. This economy will move forward with or without us. To move forward, our politicians need to work together. He offered six areas of focus:

  1. Debt reduction. According to Cote, if the average family acted like the U.S. government, it would be making $21,000 a year, but spending $35,000.
  2. Energy policy. Policy efforts in this area should include both energy efficiency and generation.
  3. Free trade. The U.S. should foster a more thoughtful relationship with China. Furthermore, China should be viewed as a partner, competitor, and supplier.
  4. Math and science education. Cote observed, “We need more engineers, and fewer lawyers.”
  5. Infrastructure development. The nation should be spending a higher percentage of GDP on improving roads, bridges and ports.
  6. Tort reform. Cote noted that as a nation, “We have let the pendulum swing too far in an attempt to root out society’s inequities.”

Cote finished his speech urging the audience to express their opinions to their government representatives. The session then moved to a panel discussion titled “Stewardship of the U.S. Economy,” moderated by Robert Hotz, senior managing director of Houlihan Lokey Howard & Zukin, Inc. Hotz and Cote were joined by Kathi Seifert, director at Supervalu, Eli Lilly and Company, Revlon, Appleton Papers and Lexmark, Inc.

Hotz opened the session with a question to the panelists: What can corporate directors do to restore confidence in the U.S. economy? Based on her experience at New North, Inc., an initiative to restore economic vitality in the Wisconsin area, Seifert offered five key learnings for directors:

  1. Collaboration is critical
  2. Build on your strengths
  3. Be flexible in your business in order to achieve growth
  4. Have the work force to drive growth
  5. Retain the companies you have in the area.

Cote also offered two recommendations to the audience, echoing Seifert’s need for flexibility in the business, and encouraging voters to urge policymakers to solve the new issue of “uncertainty of government debt.” He also stressed the need for directors to make sure that whatever companies they are associated with have the flexibility to respond to changes. He warned that unless the U.S. and European governments address debt and the uncertainty of demand and regulations, we will be met with a recession.

Seifert emphasized the need for companies to build on strengths and have a strategic priority for growth. She said it’s also necessary to drive collaboration, partner with others and be open to ideas from the outside. In today’s environment, companies must look to drive growth in any way possible.