Tag Archive: governance survey

Stay connected with #NACDBLC

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Hard to believe, but it’s time again for the annual NACD Board Leadership Conference, held in the Washington, D.C. metro area. At this event, which is the largest of its kind in the United States, there will be a record crowd—1,000+ attendees. While attendees will see much of what they’ve come to expect from the NACD Board Leadership Conference—outstanding programming, venue, and speakers—here’s what’s new at the 2013 event:

  • The release of the new Blue Ribbon Commission report and the 2013–2014 NACD Public Company Governance Survey. Every conference attendee will receive a copy of this year’s Report of the NACD Blue Ribbon Commission Report on Talent Development: A Boardroom Imperative. Also available is this year’s public company governance survey, an analysis of more than 1,000 responses from those in public company boardrooms.
  • This year’s conference will kick off with an address from NACD Chair Reatha Clark King, and close with Eileen Claussen and Jeffrey E. Sterba on “Eye of the Storm: The New Face of Global Risk.” The two-day event will feature Raj Sisodia on “conscious capitalism,” former Olympus President and CEO Michael Woodford, and Securities and Exchange Commission Chair Mary Jo White.  
  • To enhance your experience at the conference, we will have session recaps posted on the NACD Blog. Keep this link—and follow us at @NACD and #NACDBLC—handy as we’ll continually update it throughout the conference, adding articles, videos, and other data from each session.
  • Visit the new Social Media Lab at this year’s conference for a hands-on, one-on-one, or small group experience with the latest technologies, tools, and trends guided by social media-savvy experts. The Social Media Lab has something for everyone—expert-led talks on issues that affect the boardroom, opportunities to explore some of the newest sites/applications, and an expert tech team ready to help install and use the latest tools on your own device.
  • Join Deborah Sherwood for her Story Circles session regarding the secret lives of America’s first ladies; hear Linda Alvarez discuss a revolutionary new way to approach contract negotiations; or hear crisis guru Judy Smith (the inspiration for the hit ABC show “Scandal”) dissect the anatomy of crisis management and prevention.
  • And lastly, have the NACD 2013 Board Leadership Conference available at your fingertips! In an effort to provide our attendees with instant access to all event information, we have created an easy connection: our NACD 2013 smartphone app. To download, search “NACD BLC 13” in the app store on your mobile device. 

Annual NACD Private Company Governance Survey

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While public companies often dominate the news cycle, privately held companies play a major role in the global economy. According to Forbes, the largest 212 private companies in the U.S. represent $1.33 trillion in revenues. Although they aren’t subject to the full gamut of requirements as dictated by listing exchanges and regulatory agencies, private companies are inching closer to their public counterparts in terms of governance practices, according to the 2011 NACD Private Company Governance Survey. To be released next month, this survey details the governance habits of America’s private company boardrooms. According to our data, in few cases do the practices between public and private boardrooms differ greatly.

All companies are faced with an extremely challenging economic environment. As a result, private company directors, like their public company counterparts, have maintained focus on strategic planning and oversight. In fact, boards have listed corporate strategy as their top priority for the past three years. Oversight of corporate performance is consistently ranked as second. These two concerns indicate that private company directors, despite the economic volatility, focus their attention on the long-term sustainable performance of their organizations.

While some priorities remain unchanged, private boards have also made adjustments in response to the current environment. This year, the need to build bench strength is a top issue for directors. Executive talent management and leadership development rose to the third most important issue, its highest ranking to date.

The findings from the private survey are typically a leading indicator of the “hot topics” being discussed in America’s boardrooms. At a time when corporate leadership is under heightened public scrutiny, the rising importance of executive talent management is a positive sign.

Understanding CEO Succession Planning

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In the past few weeks, NACD Directors Daily has covered numerous stories of companies left in a lurch after an abrupt CEO departure. In many well-recognized companies, the lack of formal CEO succession planning has been a frequent news item. This week, ITworld cited a recent survey by executive search firm KornFerry International, noting that while nearly all executives polled indicated CEO succession planning was “an important piece of the overall corporate governance process,” only 35% were prepared for the departure, either planned or unexpected, of their CEO.

NACD also includes questions regarding executive talent management as part of our annual Public Company Governance Survey. In 2010, 24.6% of respondents indicated CEO succession was a top priority for their board in the upcoming year. Since 2009, CEO succession has ranked in the top five of board priorities, an area that had previously languished in the bottom of rankings.

According to our research, the statistics in the aforementioned article only tell part of the story. Our data shows that companies have some form of succession planning. However, these plans may not always be formalized. When asked in 2010 about the components of their CEO succession plans, formal or not, over 90% of respondents answered the question. Most commonly, CEO succession plans include:

  • Development of internal candidates (70.6%)
  • Plans to replace the CEO in an emergency (69.1%)
  • Long-term succession planning (56.6%)
  • Engagement of an executive search firm to identify external candidates (21.1%)

There are many explanations as to why a company does not formalize a CEO succession plan. Company size is often a factor. By market cap, larger companies tend to have formal plans. These plans are also more likely to include programs to develop internal talent. Conversely, smaller companies, with fewer resources, are less likely to have development programs to create “bench strength.”

The takeaway is, in the face of increased shareholder scrutiny, boards should make an effort to strengthen and formalize their CEO succession plans. Directors should begin discussions on long-term succession planning three to five years before a CEO transition is expected, in order to develop and assess internal candidates. Plans should also provide guidance for an emergency succession situation. Having an established succession plan, a specific duty of the board of directors, can provide stability and clarity in what can be a volatile time for stakeholders.