Thanks to Twitter™, participants at NACD’s Director Professionalism® course in Laguna Beach were able to keep on top of the news from the SEC last week, even though they were 3000 miles away in sunny California.
“We had people down at the SEC of course” said NACD Managing Director and CFO, Peter Gleason, who was one of the facilitators at Director Professionalism. “Their tweets, and those of the major news outlets and the SEC itself kept us up to the minute. The expert directors who were leading our discussions on shareowner value and nomination and governance processes on Wednesday made sure the directors attending (more than 100) didn’t miss a beat.”
“Being able to discuss the SEC decision on proxy access with our attendees in real time was a terrific benefit for my morning session on nominating and governance committees,” said Michele Hooper, a member of the NACD board and of the boards of UnitedHealth Group, Astra Zeneca, PPG Industries and Warner Music Group. “I was leading the nom/gov discussion as corporate governance history was being made in DC. As you might expect, we had a lot of questions about the impact of the new rules, board composition and how best to explain your individual and collective skill sets on the proxy. The NACD’s new proxy disclosure template is a valuable resource and should prove very helpful for boards”
Rich Koppes, director at Valeant Pharmaceuticals, NACD, and a former GC at CalPERS, agrees: “I was facilitating a discussion on adding shareowner value as the news was breaking. A lot of directors are nervous about spending their time on compliance that distracts from the main strategic work of the board, and I am not sure that anyone knows how the latest promulgations around say-on-pay will work out. But there was a lot of energy around new ways of communicating value to shareowners, and that has to be a good thing.”
Participants in NACD’s Director Professionalism® program in Laguna Beach, CA, in August not only left the program better prepared to face the future—they also arrived at the program ready to move from knowing to doing: NACD is now using podcasts to keep directors at its cornerstone program up-to-date on legislative changes and emerging issues. NACD CFO Peter Gleason recorded a briefing on the Dodd-Frank Act, proxy access and proxy plumbing to bring directors up to speed before they travelled to the course, allowing them to make the most of the opportunity to talk through the implications of this sea change in corporate governance with each other. “It’s a quick and easy way to share the information and it stimulates useful discussion,” says Pete, who jokes that he has “a great face for podcasts.”
“If everyone arrives with the same baseline knowledge, we can use our time together to tap the experience in the room to work out how to lead the way in a new environment for directors. Distance learning is great for sharing information, and classroom settings are great for peer exchanges. NACD makes the most of both educational opportunities”
To join the next Director Professionalism course in Tampa, FL, on Dec. 6 and 7, register here. To check out 2011 dates for Director Professionalism and for the more advanced Master Class click here.
Following Ken Daly’s talk with Continental Airlines director and NACD board member Karen Hastie Williams at NACD’s Director Professionalism® course in Laguna Beach, CA, I have been thinking more about company culture and the board’s role in shaping it. The power of culture to make or break an organization is something recognized by many NACD members, and I have been lucky to learn from some of their reflections on this topic over this crisis-ridden summer for big business in America.
NACD member Jim Brady, who is the chair of four public company audit committees, recently shared his views on how board members can both read and contribute to a company’s culture in an NACD Boardroom Excellence webinar on “Tone at the Top.” Jim talked about the importance of respect and listening and observing body language, both when a director is considering joining a board, and when he or she seeks to influence the culture of the C-suite.
In the same webinar, Mike Pocalyko, a former U.S. Navy helicopter pilot and investment banker who now serves on the boards of Herley Industries and TheramuneX Pharmaceuticals (as chairman), joined Jim Brady to talk about transparency, board accountability, and thoughtful risk management and strategy development—important board responsibilities that, in turn, shape the culture and performance of the company.
Balancing business opportunity with risk management and a wider stewardship responsibility is something that many NACD members grapple with every day in their board work. Directors at PICO Holdings—corporate board members of NACD—govern a company that owns water rights in much of the Western U.S. Speaking to PICO board member Richard Ruppert over lunch one day when he attended our Scottsdale, AZ, Director Professionalism course, I was moved by how he spoke of the need to balance profit with concern for the land and the people making a living on it and from it. “‘Don’t be greedy,’ that’s our motto” he said. (BTW, the issue of the global water shortage, and how it may affect your company’s strategy will be examined in a session called “Enabling the Future” at this year’s conference — don’t miss it.
Also at the conference, Dr. Reatha Clark King, a former Exxon board member and a current director of NACD, will be among those examining corporate culture and its role in rebuilding public trust. Given the trials this summer for one of Exxon’s competitors, BP, her words will be well worth hearing.
Jeff Jarvis’ latest book ‘What Would Google Do’ envisions the ways in which running businesses the way Google is run would change industries. It is impossible to read this book without having a few innovative ideas of your own. It got me thinking ‘What would Google do if they regulated boards or designed corporate governance systems?’
Here are some ideas:
Give shareholders control – in theory this happens at annual general meetings (AGMs). In practice the process stultifies the content and the exercise is often an empty formality. The AGM could be webcast and votes cast remotely after hearing the arguments for and against each issue. Chat rooms could allow shareholders to communicate with each other and the board on issues.
Life is a beta test – instinctively, when we make mistakes, we feel embarrassed. We shouldn’t. A board that truly values innovation or creativity should be out pushing the boundaries of what is possible and failing a little from time to time.
Don’t be evil – Google’s founders wrote, before their IPO, “We believe strongly that in the long term, we will be better served – as shareholders and in all other ways – by a company that does good things for the world even if we forego some short term gains.” Wow!
Elegant organisation of data – When you type a search into Google you get back a simple list of relevant sources of the information sought. There is no clutter, no distracting graphic, and the sources are ranked in order of likely importance. Why aren’t board papers presented like that? Why don’t corporate boards report to their shareholders like that?
Meritocracy wins – In boardrooms, it is often the sad case that directors are selected because of what they have done in the past and with insufficient real analysis of what they will provide to the board in the future. On Google data is realtime; imagine if we could constitute boards that had access to the best expertise on any topic, instantly, as required. How would that affect quality of data, independence of thought and speed of reaction?
Better searching of previous information – With Google a board could call up such board governance data instantly and use it to support decisions. A system for tracking and reporting dividends and share purchases or sales when annual tax returns are being drawn up would remove the potential for errors and inaccurate reporting of dates, quantities and assessable imposts. Shareholders do not want impersonal reports that are delivered months after the end of the financial year; companies can close of their accounts faster and shareholders expect faster reporting with greater customisation.
The impact of the Google mentality upon regulators and judiciary is also apparent; these institutions are using sophisticated search and tracking to catch inconsistencies in reporting and recording data. The ability to cross check and match large data sets will change the corporate compliance and reporting environment.
Love it or loathe it, the ‘Googlisation’ of corporate boardrooms will have an effect on directors that may be as profound as the effect of globalisation of business.
Julie Garland McLellan is a practising company director with experience on a range of boards including public listed, non-profit and government sector organisations. She is also a boardroom consultant and the author of Dilemmas, Dilemmas, a book of practical case studies for company directors. Julie will be presenting at the NACD conference in Washington on the topic of “Digital Directorship”.