The recent whirlwind of legislative and regulatory activity has made it obvious that boards must be ready to adapt to a constantly changing business environment. As boards react to the new regulations and restrictions, I’ve crafted a list of eight things boards can do now.
Focus on the business, especially during this time of economic stress and volatility
Evaluate engagement with stockowners to find ways to improve two-way communications with an emphasis on new technologies and methodologies
Recently, interim CEOs have found themselves in the media spotlight.
This week, the Fortune magazine article “Should CEO be a Team Job?” notes that interim CEOs could be found at companies such as Borders, Sara Lee, and GM, while the boards searched for appropriate replacements. Though an interim CEO may be part of an “emergency” succession plan, boards must prepare to fill leadership roles when needed. Three to five years before a CEO transition is expected, the board should begin to develop long-term succession plans.
According to the 2010 NACD Public Company Governance Survey (available Oct. 2010), most boards have taken the necessary steps to prepare for an abrupt CEO departure:
70% include development of internal candidates
69% include plans to replace the CEO in an emergency
57% include long-term succession planning (three to five years before an expected transition)
21% include engagement of an executive search firm to identify external candidates
To continually ensure that the current leadership is meeting the needs of the company, directors should engage in CEO succession planning. Well-timed transitions to new leadership enhance long-term shareholder confidence and value.
Not surprisingly, some of our full board members are truly Leading the Way in this new shareholder environment. They have asked us to design a questionnaire for their largest shareholders to complete as part of the board evaluation process we’re doing for them. They are interested in knowing how fellow board members, senior staff, and shareholders all view their performance as a board and if each of those groups has suggestions/input for the board to improve its performance. They have asked to do this “off-cycle” from the shareholder meeting so they can receive the information and take whatever actions they consider to be productive.