Tag Archive: Anne Sheehan

Chief Engagement Officer and the Engagement Oversight Committee

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Don't forget to sparkle

 A recent blog by British twitter maven Lucy Marcus got me thinking about where new thinking and fresh strategy comes from. Lucy rightly points out that new beginnings take time and that, in this cost-conscious era, there is a risk that no company has the patience to sew seeds and give them time to grow. We’ll call this impatience, and certainly it is a failing that often besets the super-bright who are restless company executives, and their peripatetic counterparts who become board members.

There are other stumbling blocks in the way of innovation too, and chief amongst them is information overload. At NACD’s recent Investor Insights Roundtable , Denny Beresford revealed that he had seen proxy statements that were longer than the 10-K. Anne Sheehan, director of corporate governance for CalSTRs, concurred. “Don’t send me the charter; I can read that for myself,” she pleaded, making a request for only critical information, presented in a concise and accessible form.  As all of us know, too much information can be as bad as too little. Swamp your readers and they’ll find it all too easy to miss your point.

But there is one shortfall that always stands in the way of progress for fresh thinking, and that is lack of imagination. Too few C-suites, committees and other information providers really think about the message they wish to convey, and ways to engage the audience they seek. The best teachers understand that without engagement, there is no education. Information is passed and knowledge is gained through story-telling, entertaining experiences that stick in the mind, and the thoughtful paring down of data and equally thoughtful pumping up of passion, color and context. These are skills and approaches that have value in every area of life, business and governance. They should not be confined to the classroom.

 At NACD’s Director Professionalism® course in Deer Valley, UT last week,

Deer Valley, UT

 our engagement quotient was high: Richard Levick discussed crisis planning at the board level, using the miserable face of an oil-soaked shag and the equally miserable face of former BP CEO Tony Hayward to make his key points; Rob Galford, compensation chair at Forrester Research, used his physical presence and party tricks (“point your finger in the air. Now, on the count of three, point it at the spokesperson in your group”) to drive home some interesting thoughts on performance metrics; and Charles Elson, a director on the board of HealthSouth corporation, used catch phrases (“Don’t be sleazy; Don’t be sloppy”) to help more than 60 directors grasp the essence of the Duty of Loyalty and the Duty of Care.

All of this leads me to an interesting opportunity for washed-up television producers such as myself: We should position ourselves as Chief Engagement Officers for corporations prone to boring their boards to death. We could be creative conduits, taking the dry, dense and dusty and turning it into presentations worthy of prime-time. Similarly, all boards should look for comedians down on their luck, children’s book illustrators with a gift for detail that captivates, and song and dance acts capable of rhyming “audit” with either “plaudit” or “sod it.” Once identified, this rag-tag group should form an Engagement Oversight Committee with advisory status to the board. This EOC would work alongside the GC and reshape anything terminally turgid into a director’s delight. It would solve an unemployment problem in the entertainment sector, and would greatly enhance not only board meetings, but also board, company and stock performance. It might also offer an interesting second career opportunity for burned out teachers…

 If you sleep at night surrounded by spreadsheets and with PowerPoint as your pillow, urge your company to consider this engagement initiative, and soon you’ll look forward to board meetings: We put the “Glee” in governance.

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Proxy Access: The Ultimate Weapon

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On a recent conference call with our Board Advisory Services faculty, we invited Anne Sheehan, director of corporate governance for the California State Teachers’ Retirement System (CalSTRS), to provide her perspective on how CalSTRS plans to use the recent proxy access regulations.

For background, CalSTRS is the second largest public pension fund with over $134B under management. CalSTRS is a long-term shareowner and is considered a passive investor. Their mission is to act as the steward for California state teachers’ retirement funds—ensuring that California’s K-14 professors and teachers (kindergarten through community college) have sufficient funds available when they retire. Approximately half of CalSTRS’ portfolio is invested in equities across roughly 7,000 companies. Typically CalSTRS’ investment is around 0.5 percent of outstanding stock per company.

Anne’s comments were extremely important for directors of publicly traded companies, as CalSTRS leverages corporate governance practices to add value and minimize risk to their portfolio. CalSTRS looks to directors to oversee delivery of long-term growth and value for shareholders. It does not have a political agenda; it’s all about long-term value creation.

Aside from shareholder value creation, the goals of Anne’s team are focused on creating a dialogue with companies and boards. Importantly, the majority of CalSTRS requests are resolved through dialogue.

During our meeting last week, Anne provided a brief summary of recent proxy access rules—SEC Rule 14a-11 and amended SEC Rule 14a-8(i)(8)—and what they mean for directors. While many organizations have provided detailed descriptions of these rules, Anne emphasized the following four key points:

  1. Boards need to proactively engage in shareholder communications and dialogue. While boards need to be aware of shareholders concerns and desires, boards do not have to do as all shareholders request. Frequently shareholders perceptions are simply based on not knowing why.
  2. The new proxy access rules level the playing field.
  3. If a board and/or senior management disregards and/or avoids a shareholder’s request for information, proxy access is the tool of last resort.
  4. Proxy access is seen by large investors as the “ultimate weapon” to influence a board.

Net: If your board is looking for an independent, third party to help conduct a confidential and customized in-boardroom program on strategy, the current environment, or succession planning; or for assistance conducting CEO and/or director succession planning, or exchange-mandated board evaluations, NACD’s Board Advisory Services faculty of 100 percent current directors and leading governance experts is ready to help your board advance exemplary board leadership. NACD’s Board Advisory Services (BAS) team is poised to help boards perform as strategic assets for their shareholders and senior management.

Don’t wait until it’s too late; contact us at inboardroom@NACDonline.org or call 202-572-2101.