For the 1,200-plus directors convened at this year’s NACD Global Board Leaders’ Summit, Delaware Supreme Court Chief Justice Leo E. Strine Jr. had words of advice that ranged from improving time management to establishing a Tobin-like tax on financial transactions. The nation’s leading jurist on corporate matters also cautioned against using electronic devices during board meetings for unrelated matters because that information may one day be discoverable in court.
Interviewed on Tuesday, Sept. 29, by NACD President Peter Gleason, Strine was at his provocative best. The proliferation of technology in the boardroom, Strine observed, may lead to an unintended consequence: the ability to discern just how engaged directors are and by what in board meetings. Strine warned of the possibility, and even the probability, of a shareholder suit that alleges inattention and seeks to support that allegation with a review of the director’s online activity when in board meetings—measuring just how much time was spent looking at material on the board portal versus sending e-mails, text-messaging family or friends, or playing fantasy football.
Boards also need to assess whether they are using their time to best effect. “There are no disciplined studies about how boards should be scheduled and what you do in certain committees,” Strine said. “The pattern is that if something is required legally or by statute, then that tends to get done first. A real challenge is to think like business people about your function as a director and how you use your time, and [recognize] that it reflects the priorities that you (as a board) set.” Strine challenged directors to set “a board budget of hours.”
Strine repeated a suggestion he has made previously that U.S. tax policy be adjusted to include a so-called Robin Hood or Tobin tax. Such a tax is named for the late Nobel Prize-winning Yale economist James Tobin, who in 1973 recommended a levy on short-term currency swaps in order to thwart speculation. A similar tax on stock trades, Strine maintains, would discourage short-term fund-hopping and generate new revenue.
Strine took issue with the voting practices of some large asset managers, noting that the sheer volume of votes created by shareholder proposals and the numbers of companies in each fund make informed voting impossible. Even the most “rational” investors, such as Fidelity Investments and the Vanguard Group, tend to vote their funds in one direction for the sake of expedience, he said. (See related content:Taking the Long View with Bill McNabb.) “It would be good for index funds to have their own voting policies. Why is the index fund voting the same way as the dividend fund?” Strine asked. “Why?”
One of the CEO’s most important jobs is to develop the next generation of leadership, Strine reminded the assembled directors, and boards should have opportunities for regular contact with up-and-comers.
Strine also recommended that boards consider the benefits of adopting a forum-selection bylaw. The inclusion of such a bylaw would allow corporations to determine where court cases are adjudicated when suits cover more than one jurisdiction. The state of Delaware in May enacted an arbitration law that is intended to provide speedier, more cost-effective dispute resolution as long as one of the companies in the dispute is domiciled in Delaware.
“You’ll have to get on your dancing shoes” said Donna as we watched the Dancing with the Stars finale the other night, and I must admit a shudder ran through me.
“What do you mean?” I asked, worried that she was going to suggest a Latin salsa class or sign me up for the square dance squad at church. My toes refuse to twinkle and I am to ballroom dance what hippos are to hip hop.
Hines Ward. He's no Ken Daly
“Well, I see the NACD conference site is open for business” said my wife “and you know how quickly your dance card fills up every October in DC.”
She’s right. Our conference has sold out for the last two years and we’re expecting more than 800 directors at the JW Marriott in Washington, DC from October 2-4 this fall. It’s great to see chapter leaders, members I first met at roundtables or education events, Board Leadership Fellows and our own NACD board, but it sure is hard to find time to take a turn around the floor with everyone—and to break in on all the interesting networking conversations going on left, right and center.
Conference is like a cotillion, and at all hours of the day and night board members from companies big and small, public and private, from all over America and, increasingly, all over the world, are in constant, swirling motion. You’ll definitely need your comfy shoes.
Like everyone else who makes certain to attend, I like to catch as many break outs as possible. There are 24 this year and it takes the speed and stamina of Maksim Chmerkovskiy to run between them. One definitely not to miss: Bonnie Hill from the board of Yum Brands, Jim Brady from the board of Constellation Energy, former Governor Bill Owens from Colorado at the time of Columbine, and communications guru Richard Levick talking about the board’s role in crisis planning and management in the year of the beef taco, Fukushima and political volatility all over the world.
We have a full day of programming on Sunday this year: plan to attend one of five board committee forums or get to know fellow directors by joining our special private tours of the Capitol or the National Archives.
Sir Peter Bonfield
As I write, Sir Peter Bonfield, who has contributed a lifetime to driving international technology innovation and who now sits on the board of Sony Corporation (among others) has agreed to join the opening plenary on Global Governance with Ambassador Roz Ridgway and our board member Michele Hooper (who Sir Peter knows from the board of AstraZeneca) . It’s a small world—although The Honorable Barbara Hackman Franklin and The Honorable Charlene Barshefsky may beg to differ. They’ll be sharing their view from 30,000 feet on one of the rare occasions when they are not in the air flying to China or other far flung hot spots.
Members of our latest Blue Ribbon Commission on Effective Lead Directors will take the stage as will The Honorable Leo Strine from the Delaware Court of Chancery. As usual, you won’t be able to turn around without bumping into a big name from the business world or someone from the Administration or the Hill. As always, thanks to our fantastic line-up of sponsors who make it possible for us to offer you an event of this size and scale.
I am looking forward to meeting Medco director Myrtle Potter who is based on the West Coast and catching up with Chris Kubasik, President and COO of Lockheed Martin and a board member at USO—an organization that I am sure is close to all our hearts. I know you will have your own “dance card” of movers and shakers in the world of governance. Just remember, you can’t be part of the fun if you don’t make it to the ballroom floor. Register now and I look forward to seeing you twirl by in the middle of all the excitement this October in Washington DC.