Nominations to the 2017 NACD Directorship 100 are open until March 31. And while we tally this year’s annual list of the most influential people in boardrooms and corporate governance, we’re sharing responses to questions from 2016 honorees about their perspectives on directorship.
Honorees underscored the importance of creating a strategic-asset board, reflected on the joy of their life’s work, and shared why board leadership can be fun. Selected responses from the 2016 D100 class follow, complemented by photos from the D100 gala held at New York City’s Gotham Hall on Nov. 30, 2016.
What do directors need to keep top of mind in the next five years?
Deborah DeHaas Vice chair, chief inclusion officer, and national managing partner, Center for Corporate Governance, Deloitte LLP
“Often the most effective boards draw on a diverse set of individual strengths, skills, and experiences from their directors. When brought together with the right leadership, diverse talent in the boardroom can help the company address almost any governance challenge. Such capability doesn’t just happen. It takes rigorous commitment to the principles of board composition, refreshment, and accountability to reach the level of top-performing boards. It also requires a deep understanding of current issues and challenges, anticipating those in the future, and determining what critical skill gaps need to be addressed among directors.”
Stephen R. Howe, Jr. U.S. chair and managing partner, Americas Leading Partner, Ernst & Young LLP
“Complacency with a company’s current strategy may open companies to long-term vulnerabilities. Boards must constantly assess and anticipate competitive forces and threats and drive enterprise-wide cultures of innovation and agility. They must recognize that digitalization and sector convergence will continue to disrupt business models and markets. They must oversee organizations grappling with increasingly complex and global forces resulting from ever-shifting political and regulatory agendas such as those getting underway in the United States following this year’s elections.”
Daniel Laddin Founding partner, Compensation Advisory Partners
“Do not be afraid to stick out and use a less typical design if you believe it is in the best interests of shareholders. I believe we are going to see that many of the best performing companies have unique compensation designs linked to their strategies that do not necessarily fit neatly into the paradigm into we see today.”
Paula Loop Leader, PwC Governance Insights Center
“Boards will need to stay current, and that alone will be hard work. They will need to be up to date on consumer trends and technological changes, to geopolitical and other risks, to name a few. Even those directors who are immersed in all of this disruption and change are finding it hard to keep up. The board of the future will have to fully understand the landscape the company is operating in and recognize the potential disruptors that could affect the company and its strategy. To do that, directors will have to spend a lot more time educating themselves, and boards may have to consider reaching out and finding their own advisors from time to time.”
Michael McGuire CEO, Grant Thornton
“Directors need to keep the probability of rapid disruption top of mind, and then marshal the right resources and habits of mind to stay ahead of it. What are those resources? Imagination. Curiosity. Agility.”
Deborah D. Rieman Director, Corning and Neustar
“Boards are inherently risk averse and may devote too much of their attention to avoiding mistakes. In a slower world, that may have sufficed, but today, slow and steady can be fatal. Successful boards in the years ahead will be the ones that encourage the disruption of their own businesses, because if you don’t disrupt your own market, somebody else will.”
James K. Wolfe
James K. Wolf Managing partner, Meridian Compensation Partners
“Regulations and statutes should continue to protect a board’s business judgment, but boards should understand that the general public will have increasingly more information from which to reach their own evaluations and verdicts about a board’s governance.”
What’s the most fun you have had while serving as a director?
Mary Ann Deacon Director, Lakeland Bank
“It has been exciting to be a part of Lakeland’s success. Our accomplishments over the years have given me enormous admiration for our wonderful employees, who make it all possible. And by far, the most fun has been interacting with all the members of the Lakeland family. It’s important for directors to step out of the boardroom and connect with people. I think of this as leadership by walking around—letting employees, shareholders, and customers know that the board is interested in and fully engaged with their needs.”
Edward B. Rust, Jr. Director, Caterpillar, Helmerich & Payne, and S&P Global
“Growing up during the initial buildout of the interstate highway system, I became fascinated with big earth-moving equipment. Later in life, I started buying antique Caterpillar tractors to restore. Joining the Caterpillar board was a natural move. I had a connection to my past but also a fascination with the rapidly changing world of manufacturing. The real fun is when we tour the proving grounds and have the opportunity to operate some of the really big equipment. ‘Getting in the dirt’ is a joy for an old farm boy, and even a director.”
What was the greatest challenge you’ve faced in your career?
James W. DeLoach
James W. DeLoach Managing partner, Protiviti
“I never worked harder in my life to build the Protiviti brand. But the most gratifying part of the experience for me personally was working side-by-side, shoulder-to-shoulder with men and women who were as committed to our collective success as I was. Protiviti’s market presence today is one of the treasures of my working life.”
We sometimes all wish we could go back in time to advise ourselves on how to approach a new challenge or community given the knowledge and experience we have today. For the 2015 NACD Directorship 100 (D100), each honoree was asked to do just that. D100 directors were asked to provide a short, written response to this question: “What is the best advice you would give to a first-time director?” The D100 editorial team received responses from most honorees and they ranged from pithy maxims to stories about the challenges of staying independent.
A portion of the responses from the Class of 2015 D100 directors follows. Profiles of D100 honorees can be found in the November/December issue of NACD Directorship magazine.
Gary E. Anderson
Chemical Financial Corp., Eastman Chemical Co.
“I found that the best way to [contribute] was to frame appropriate questions dealing with the topic at hand. It doesn’t matter what the issue is, whether on corporate strategy, short-term tactics, succession planning, compensation, or risk management. The use of appropriate questioning also can work at home with the family!”
Avnet, Southwest Airlines
“I fully embrace the Southwest Airlines and Avnet way of doing business: treat your people well and they will be equipped and motivated to treat your customers extraordinarily well, and that will produce distinguished rewards for your shareholders. Everyone is important, in every nook and cranny of the business, and every decision at the board level should involve the question, ‘How will this affect our people, our principles, and our culture?’”
“Know your shareholders. What are their expectations? Is the company meeting them?
“Know your colleagues. Diversity of views, backgrounds, and experience enriches the company bottom line. Learn where your colleague’s views differ from yours. Understand why. Have courage and join them in candid discussion.
“Know your management team. Do they live their values? Are they delivering results?
“Be involved in NACD, as governance is a learned skill and doing it right keeps our private enterprise system strong.”
Betsy D. Holden
Diageo PLC, Time Inc., Western Union Co.
“The best advice that I received as a new director was, first of all, choose wisely. Select an industry and company that you are really interested in, a management team that you believe in, and a board where your skills and experiences are relevant and will add value.
“Secondly, what really differentiates the best directors is how they interact with management and the other directors. Good directors are confident and courageous, and challenge management in a positive, constructive way…They understand that chemistry is the intangible that drives board effectiveness and they really listen to and treat other directors with respect.”
Nancy J. Karch
Genworth Financial, Kate Spade & Co., Kimberly- Clark Corp., MasterCard
“Some of the best advice I received as a new director was to accept that this role is different than anything I had ever done, and to have patience to learn the ropes. [A director] is an advisor, a member of a peer team, a leader on governance matters, a decision maker on some matters—[it’s] a mix unlike anything else. Plus, as in any job change, one is entering a new culture, and in the case of a board, both a company and a board culture. So be patient.”
Bemis Co., Delphi Automotive
“The best advice I received was pertinent to me both as a director and as a chair/CEO. That is: ‘Tim, be yourself, remember that is what got you here.’ [That advice] caused me to think about hard work, integrity, ethics, and striving to make the proper decisions.
“It also reminded me that as my career evolved from working summer jobs in automotive plants to the boardroom of BorgWarner, I listened to, learned from, and developed relationships with people from all levels of society. This has become a valuable tool in the boardroom. Each time ‘a sticky issue’ is discussed, I remember to think back to my previous experiences and express what I think is the proper approach.”
Sarah E. Raiss
Canadian Oil Sands, Commercial Metals Co., Loblaw Cos., Vermillion Energy
“The best advice I received came from a very seasoned director. He said that I should find a person or two on the board that I could best relate to and either ask them to be my ‘board buddy’ or just make them my ‘board buddy’ without even asking. This person would help me understand current board dynamics, help me understand the history as necessary, and provide feedback on the value I brought to the board. I have used this technique on every board to which I am appointed, [and it] has allowed me to be more productive and a valuable contributor more quickly. I am most appreciative of my ‘buddies.’”
Molina Healthcare, Park Ohio Holdings Corp.
“Three people gave me great advice when I decided to accept board positions at Molina Healthcare and Park Ohio. The first was Mary Molina, the company’s chair. It was simple but profound: ‘Remember the mission. It is the cornerstone of our corporate culture.’
“The second came from Ed Crawford, chair and CEO of Park Ohio. He said, ‘Act with integrity at all times and have the courage to do the right thing.’
“The third was from my husband, Bruce Kulp, former general counsel of Ford Europe. He counseled me to listen, get as much information as possible, trust in the power of common sense, and to always think strategically.
“Lastly, the people you deal with in management and the board are human. They have families. They have good days and bad days. Kindness is powerful, even in the boardroom.”
Olympia J. Snowe
Aetna, T. Rowe Price Group
“One of the key components of executing critical judgment is ensuring an ongoing evaluation of how the company’s short term goals enhance its strategy for creating long-term value. That requires early and extensive director engagement in the shaping of the strategy, greater understanding and knowledge of business operations, and constant assessment and management of the risk.
“In this era of deeper investor involvement, it is more essential than ever for boards to communicate to shareholders the extent to which the independent directors are vigorously exercising their due diligence towards maximizing the value of the enterprise.”
Ronald D. Sugar
Air Lease Corp., Amgen, Apple, Chevron Corp.
“Select your boards carefully…You should be mindful of geography, meeting schedules, and be prepared to put in whatever time is necessary. And when trouble comes, you must be committed to see things through—whatever it takes.
“In well-run companies, board meetings enter a predictable rhythm, and are fairly routine. It has been said that in routine times, the quality of a board doesn’t really matter—until suddenly those moments when it matters enormously. Such ‘moments’ might include a significant market shift, a technology disruption, a planned (or unplanned) management succession, a serious regulatory or litigation threat, an environmental or safety crisis, a significant acquisition, a hedge fund activist campaign, or a hostile takeover attempt. In those moments, the board’s collective wisdom, perspective, and mature judgement can make—or break—a company.”
David A. Wilson
Barnes & Noble Education, CoreSite Realty Corp.
“The best advice came from the counsel I engaged for [a] special committee. He noted the fiduciary duties of directors formed a foundation but not the entire structure. The greatest challenge I will ever confront as an independent director, he said, is ‘independence.’ He was speaking not of the independence necessary to meet SEC and NYSE thresholds. Rather, he spoke of the independence of mind, thought and action.
“What our attorney never told me was how challenging it may be to hold fast when you are in the minority, but how critical it is to our governance system that you do.
“Polonius may have been a pompous fool, but I still find value in these words: ‘This above all: to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man.’—William Shakespeare, Hamlet, Act 1 Scene III.’”
Review the full list of D100 honorees at NACDonline.org/Magazine, and take a few moments to consider who you might nominate for inclusion in our tenth anniversary list. A call for nominees will be issued to all NACD members in early 2016.
The NACD Directorship 100 is the preeminent annual list of the most influential people in the boardroom and corporate governance and we are calling on all public company directors and NACD members to tell us who you think deserves recognition. Online nominations are being accepted until 5 p.m. EST on March 31, 2015. You don’t have to be a director in order to participate. Sending a nomination takes only a few seconds and you can nominate as many individuals as you think worthy.
From its inception in 2007, the objective of the NACD Directorship 100 has been to elevate the directorship role by profiling exemplary directors and the governance institutions and related professionals who influence board agendas. There are three categories of recognition within the NACD Directorship 100 leadership awards:
The B. Kenneth West Lifetime Achievement Award
The NACD Director of the Year
The NACD Directorship 100, which encompasses three sub-categories:
The NACD Corporate Governance Hall of Fame
The B. Kenneth West Lifetime AchievementAward honors a single individual who has served on a public company board in a leadership capacity, such as board chair, lead director, or committee chair, or has been a leader in a corporate governance capacity. In 2014, we honored former Delta Chair Paula Rosput Reynolds. To be considered in this category, nominees are required to have additional documentation, including testimonial letters from colleagues or peers. The full selection criteria are available here.
The NACD Director of the Year is a director in a board leadership capacity on a public, private, and/or not-for-profit company. The 2014 recipient of this award was former Lone Star Chair and CEO Rhys J. Best. To be considered in this category, nominees are required to have additional documentation, including testimonial letters from colleagues or peers. The full selection criteria are available here.
The NACD Directorship 100 Corporate Governance Hall of Fame recognizes three to five individuals who are or have been a director in a board leadership capacity or a leader within an organization influencing corporate governance. These individuals are widely recognized and acknowledged by their peers as having made an indelible and lasting contribution to the field of corporate governance as demonstrated by their exemplary, ethical service on either their boards or for the governance organizations they serve.
Since its inception in 2008, the NACD Corporate Governance Hall of Fame now counts among its honorees such legendary corporate officers as Vanguard Founder John Bogle, Berkshire Hathaway’s Warren Buffett, Young & Rubicam’s Ann Fudge, and GE’s Jack Welch in addition to legal titans H. Rodgin Cohen, William B. Chandler, Martin Lipton, and Ira Millstein. In 2014, we inducted three governance luminaries: Catalyst’s Ilene Lang, former U.S. Secretary of Commerce and NACD chair emeritus Barbara Hackman Franklin, and the Honorable Myron T. Steele.
The NACD Directorship 100 recognizes a unique class of 50 outstanding directors currently serving in a public company board leadership capacity. Nominees must possess a sound ethical compass, be involved in board-related issues and activities outside of the boards on which they sit, and serve as models for their director peers. Nominees who have been honored in the director category in previous years are not eligible for consideration. Our evaluation process ensures a unique class of directors each year.
NACD Directorship 100 Governance Professionals are leaders representing no more than 50 organizations from relevant and related corporate governance advisory fields, encompassing attorneys, compensation consultants, audit firms, recruiters, investors, journalists, and policy advisers. Individuals nominated in the governance professional category must demonstrate exemplary, ethical service for their organizations, support NACD’s mission, and engage outside of their companies to train others on what constitutes good governance practices.
Nominees in all categories will be vetted by NACD Directorship editors then submitted to NACD’s board of directors for endorsement.
The full 2015 NACD Directorship 100 list will be published in the November/December issue of NACD Directorship magazine. Honorees will be notified in advance. In addition, directors and professional stakeholders will convene to celebrate this year’s honorees at a black-tie gala event to be held on December 2, 2015 at Gotham Hall in New York City. This exclusive invitation-only event will be a prime opportunity to meet your peers in the director and governance communities and to raise a glass to outstanding achievement.
Questions about the nomination process for Director of the Year and the B. Kenneth West Lifetime Achievement Award should be directed to Chris Barnard at pcbarnard@NACDonline.org.
All other questions may be directed to me, NACD Directorship Editor in Chief Judy Warner, at jwarner@NACDonline.org.
Along with everyone here at NACD, I’m looking forward to receiving your nominations and to taking yet another opportunity to celebrate the unwavering stewards of American business.