Tag Archive: NASDAQ

Board Composition: The Rudder to Help Corporate Boards Navigate Through Changing Corporate Climates

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Though the Dodd-Frank financial reforms were signed into law a year ago, the corporate governance environment remains at a crossroads of uncertainty in many ways. While business leaders continue to adjust to the sweeping legislative reforms that have already been implemented, regulators are still drawing up the details on a host of issues and deciding how to interpret and implement many other pending regulations.

As an example, a U.S. Circuit Court of Appeals recently rejected a rule (on proxy access) by the U.S. Securities and Exchange Commission, which would have allowed investors to bypass a company’s nominating and governance committee by nominating their own candidates and placing them directly on the company’s proxy. This was one of the most challenging governance features of Dodd-Frank.

Many other proposed rules are being enacted without delay, including a host of reporting requirements aimed at director and board accountability. What’s more, shareholders continue to exert pressure by questioning the qualifications of individual directors when they are displeased with board performance or compensation decisions.

Evolving regulatory requirements, combined with recent market fluctuations and an increased scrutiny of the board, will put pressures on board leadership and structures, particularly on the board’s nominating and governance committee.

The strategic landscape is also adding complexity to a director’s job description. One of the board’s primary roles is to approve winning strategies and monitor their execution. Major shifts—from an expanding global marketplace to the rapid pace of technology and data creation—must be considered. And by no means should such oversight be considered an amateur’s venture. Today’s directors need to be well versed on the latest trends and developments that impact their specific industries.

That is why it is crucial to continually assess and optimize a board’s composition and ensure that boards have the right people at the right time—competent directors who possess the knowledge, experience and skill sets most closely aligned with the company’s strategies. Equally important is a board’s ability to establish and maintain a set of policies for board recruitment—and ongoing evaluation and education–that will steadfastly guide a corporation through a business climate that may be at times precarious.

This year’s NACD Board Leadership Conference will host a special Nominating and Governance Committee Forum to help directors identify the leading practices they need to navigate the new and evolving business environment. The forum will feature in-depth insights and analysis that will focus on enhancing the value directors can bring to their corporate tables and examine best practices for board and C-suite cooperation and productivity. Combining classroom sessions with confidential peer discussions, the session will also offer techniques that can be put to work immediately to identify and address strategic and operational gaps on a board.

To register for the NACD Board Leadership Conference, go to nacdonline.org/conference. Early-bird discounts are in effect until July 31. Additionally, for directors and executives from NASDAQ-listed companies to save 10 percent on registration prices, please enter coupon code OMXSAVE. To register or ask questions in person, please email registration@NACDonline.org  or call 202-572-2088.

Risk Assessment: Expect the Best, Plan for the Worst

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Organizations face risk on multiple levels and from an enormous range of factors. And being seen as a “high-risk” company certainly impacts valuation. Of the many concerns for risk managers today, two of the biggest are global economic uncertainty and information technology.

For boards concerned with how different economic forces will impact the corporations they oversee, today’s environment provides plenty of challenges and opportunities. Last month, the Wall Street Journal reported that as the Federal Reserve’s latest economic stimulus initiative (QE2) comes to a close, investors are keeping a close eye on their portfolios and shying away from riskier assets. According to a recent Bloomberg article, after his recent meeting with German Chancellor Angela Merkel, President Obama made it clear that U.S. economic growth is still at risk from the precarious economic situation in Europe.

Cyber attacks that lead to data theft threaten not only the valuable information a company might possess, but the trust and confidence of its investors as well. Just ask Sony, Epsilon and RSA Securities, who all recently suffered data breaches.

In a letter to Senate Commerce Committee Chairman Jay Rockefeller (D-WV), the Securities and Exchange Commission (SEC) recently stated that publicly traded companies should disclose the threats and potential impacts of cyber attacks. The SEC guidance came in response to a letter sent by Senator Rockefeller, who noted that “it is essential that corporate leaders know their responsibility for managing and disclosing security risk.”

Because of these new oversight and risk management demands and higher stakes for corporate boards, NACD is offering two separate sessions discussing risk assessment and management at this year’s NACD Board Leadership Conference in Washington, DC from October 2-4.

The Reshaping the Risk Agenda session features expert speakers who will explore possible blind spots in risk assessment and the implementation of early warning systems, as well as the importance of scenario planning. A major focus of the panel’s discussion will be the board’s role in overseeing risk versus avoiding risk in the current economic environment.”

This year’s conference also offers a Risk Board Committee Forum where professionals from the leading global management consulting firm Oliver Wyman will discuss methods for improving oversight processes and examine the links between strategy and risk. A special focus of this forum discussion will include the board’s role in overseeing IT risk.

NACD understands that the best way to mitigate risk is through education and learning from people who have already been on the front lines battling these issues—and winning. That is why we want you to be there to share your experience and hear from your peers.

To register for the NACD Board Leadership Conference, go to nacdonline.org/conference. Early-bird discounts are in effect until July 31.  Additionally, for directors and executives from NASDAQ-listed companies to save 10 percent on registration prices, please enter coupon code OMXSAVE. To register or ask questions in person, please email registration@NACDonline.org  or call 202-572-2088.

Assigning a Value: The Role of the Compensation Committee

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When a board’s compensation committee decides on executive pay, directors can be between a rock and a hard place. Activist shareholders may vote against generous executive compensation packages they feel are not merited, yet attractive pay can be a tool to attract needed talent in an increasingly competitive and global marketplace.

As debates continue on the proper levels of compensation and its regulation, directors need to educate themselves on the best practices and current trends to create packages that are acceptable to both shareholders and executives, while advancing the goals of the company.

We see headlines daily about executive and director compensation. The recent decision of the board of Indian company Tata Consultancy Services’ to increase their CEO’s annual compensation by 67 percent, for example, recently earned a Wall Street Journal headline.

Meanwhile, statewide media are busy tracking any trends and developments they find on compensation issues, usually in a negative light. Recently, the Arizona Republic reported that CEO compensation in the state rose 48 percent in 2010. Iowa’s Des Moines Register also reports that executive pay in Iowa is on the rise. A recent article in the Atlanta Journal-Constitution details the compensation packages for the chief executives at the top 25 public companies in Georgia.

In addition to focused media attention, there are new regulations around compensation. In March of this year, the Securities and Exchange Commission proposed a rule that would require certain financial institutions to disclose the structure of their incentive-based compensation practices. The rule would also prohibit the same institutions from issuing compensation packages that encourage inappropriate risk taking.

How can directors make the best decisions about compensation packages—both for executives and directors? One of the best ways is by looking at best practices and talking to other experienced directors and expert advisors about not only the right mix of equity and cash, but also performance metrics and how to communicate with shareholders about pay packages.

This year’s annual NACD Board Leadership Conference in Washington, DC from October 2-4, will feature a Compensation Committee Forum led by compensation experts from Pearl Meyer & Partners to provide in depth guidance for compensation committees. Attendees will discuss the latest challenges and strategies around executive compensation packages. Additionally, those in attendance will gain expert advice on communication strategies so that company talent is retained and shareholders and C-suites are satisfied.

To register for the NACD Board Leadership Conference, go to nacdonline.org/conference. Early-bird discounts are in effect until July 31. Additionally, directors and executives from NASDAQ-listed companies will save 10 percent on the registration price by entering coupon code OMXSAVE.  To register or ask questions in person, please email registration@NACDonline.org or call 202-572-2088.