Tag Archive: Public Company Governance Survey

Cyber Savvy: Five Imperatives for a Technology Executive Whose Time Has Come

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Last month when NACD joined the Global Network of Director Institutes (GNDI) to convene a “cyber summit,” the 200-seat event filled quickly with the key to the future: people—namely directors, chief executives, and information executives empowered to build corporate value and form a powerful bulwark against information destruction.

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As information technology – including especially cyber security – rises as a board-level priority, the solution for addressing it is talent. Not every board can have a cyber expert, but today directors are all the more eager to hear from IT executives, and to consider them for ever-higher posts of company leadership. Chief technology officers, chief information officers, and chief information security officers form a “cyber-C-suite” that can make a critical difference in companies’ futures.

Board Priorities

Every year NACD surveys corporate directors to find out their views on a number of issues, including their “leading issues” for the coming year. NACD’s governance surveys are still in the field, but preliminary data from this year’s survey shows that information technology currently ranks 14th as a board priority; and a newly added category, “cyber security risk,” currently ranks seventh. Information technology ranked tenth in 2014 and thirteenth in 2013.

The NACD’s current survey results also show that boards are gaining more cyber knowledge. Based on responses received so far this year, 37.1 percent of respondents feel that they do not receive enough information regarding cyber security and IT risk, and 27.7 percent are dissatisfied or very dissatisfied with the quality of information of these matters. This represents an improvement in the situation. In 2014, when this was a new survey question, more than half (52.1 percent) indicated a shortage of information and a little more than one-third (35.5 percent) expressed dissatisfaction with cyber information quality.

Moreover, in NACD’s ongoing survey, 13.0 percent of respondents said their boards have “high level of knowledge” of cyber, 66.6 percent said they had “some knowledge, and 19.7 percent said they “little knowledge.” (Incidence of “no knowledge” was less than 1 percent.) These preliminary findings represent a slight improvement over last year, when only 10.5 percent of respondents claimed advanced knowledge.

Cyber Expert on Board?

So how do boards get cyber expertise? Is having an expert on board the answer? Not every board has room. After all, boards need to cover many areas of expertise with their available seats, and the typical board size is smaller than a dozen (8-11 is the range, depending on company size).

To get a handle on board talent recruitment, we asked directors what two attributes were most desirable for new director candidates to possess. The data collected thus far for the 2015 edition of the NACD Public Company Governance Survey shows that information technology ranked fifth, up from eighth in 2014 and up from ninth in 2013.

Preliminary survey findings – subject to change

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Dos and Don’ts for Board Reports

Clearly based on the above trends, information technology experts have an open invitation to give reports to the board – an experience that can enhance any career.

If you are an information technology expert who has an opportunity to give a report at a board meeting, here are five imperatives to consider.

  • Use plain English, not jargon. Present your material in clear, actionable terms.
  • Help the board understand the quality of leadership. This is not a time to stand out as a company savior; if the CEO is not the smartest one in the room, the company has a problem. As the recent cyber summit showed, cyber security should be viewed not as a technological issue, but as an enterprise risk that is addressed like all other risks disclosed in the MD&A. As such, the CEO is the star of this show.
  • Link your comments to the company’s strategy – the more concretely the better. If you work for a public company, one of the best places to find the strategy spelled out will be in the CEO’s annual letter to shareholders. As stated in a recent NACD blog, the CIO—and/or or CISO or CTO—can play a significant a role in strategy and tactical decisions.
  • Help the board prioritize the assets that can be enhanced through IT and protected through cyber security. Companies need to assess their most valuable and vulnerable points, including the potential strengths and weaknesses of third-party contractors.
  • Show them the money! Working with your CEO and CFO, take any opportunity offered to make the business case for a strong IT function. IT and cyber expenditures may not show up on the balance sheet as assets but they are in fact investments in the company’s future and a major contributor to financial value.

If you follow these suggestions, your company, and your career, will be the better for it!

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Note: Ted Sikora, NACD Research Analyst, contributed to this report.

This post was originally published on BlueSteps.

Kick-Starting the Conversation

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According to preliminary data from the 2012-2013 NACD Public Company Governance Survey, top board priorities continue to be strategic planning and oversight, corporate performance and valuation, and risk oversight.

In addition to the foundational areas of oversight, directors have even more responsibilities on their shoulders. Boardroom composition, the constantly evolving risks presented by information technology, and heightened scrutiny on executive compensation packages are just the tip of the iceberg. Regulatory activity has also heated up in recent years as agencies such as the SEC and the PCAOB continually issue new rules affecting corporate governance.

Every year, the NACD Board Leadership Conference convenes directors, business leaders, corporate governance experts, shareholders, and regulators to discuss the issues the boardroom is currently facing and what is just around the corner. This year’s sessions are pulled from today’s headlines, including panels on social media and reputational risk, doing business inChina, and risk and white-collar crime.

To kick-start the conversation ahead of the conference, starting next week, the NACD blog will spotlight key sessions and the speakers scheduled to join us in October. Also pay attention to our Twitter feed and let us know your thoughts—in 140 characters or less—with the hashtag #NACDBLC.

We look forward to hearing from you before the Board Leadership Conference and seeing you at the National Harbor in October.  

 

Boardroom Diversity

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In Wednesday’s edition of NACD Directors Daily, the Sacramento Bee reported that Sodexo was named to the Black Enterprise Top 40 Best Companies for Diversity list for the fourth consecutive year. The company was recognized, in part, for the number of ethnic minorities represented on the company’s board of directors.

While there has been a call for increased diversity in the boardroom for years, the majority of companies have not significantly added to the number of minority directors (based on race and nationality) currently on their boards. According to the 2011 NACD Public Company Governance Survey, 52.4 percent of companies do not have minority directors. Just over 27 percent of boards have one minority director, and only one in five have two or more.

Similarly, few women serve on America’s public company boards. Nearly one-third of public company directors indicate that their boards do not have any female representation. Half of respondents say their boards have just one female director. Just 11.5 percent responded that their boards have three or more women directors.

However, these percentages appear to be increasing. Survey responses indicate that the number of boards with at least one minority or female director has increased since 2006.  Over 38 percent of boards in 2006 had at least one minority director, and in 2011, this number increased to 47.6 percent. Additionally, boards that reported having one female director slowly increased from 64.8 percent in 2006 to 67.4 percent today.

The final 2011 NACD Public Company Governance Survey will be available in late August.