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A good agenda leads to a successful meeting

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An agenda is a one page document which sets the purpose of the board meeting. It is essential to prepare an agenda to lead a successful and high quality meeting.

Agenda sur iPad

The Chairman of the board is responsible for creating the agenda and must focus on the vision, mission and goals of the company. This agenda must be specific to each meeting and different from one meeting to another.

In this document must figure a useful and informative name explaining the purpose of the meeting, its details (date, start and end time, place) and all attendees expected.

All topics to discuss must be identified, the length of time expected for each topic and the person responsible for leading the discussion. The agenda must also include the appropriate documents for the board members to carry out a diligent examination of each issue.

The chairman must advise all members of the agenda in advance to get their feedback and so they can prepare the meeting and ask to include new topics they feel should be discussed.

Some tips to run a great meeting:

  • Beforehand, solicit ideas and topics from other members to get them involved and make sure all necessary documents are available.
  • Start in the morning by the most important topics to allocate enough time to them and have the full attention of the participants.
  • Don’t surprise the board: all issues even bad news should be shared before the meeting.
  • Set deadlines for the vote of each topic.
  • Focus on the future of the company not the past.
  • Allow sufficient time for discussion and opposing points of view.
  • End the meeting with a unifying issue and keep time for questions for the next meeting.

Having a good meeting agenda will allow an easier meeting and lead to effective everyday governance.

Note that the Leading Boards board portal allows you to submit and share your agenda including all documents with other members.

CEO turnover and succession planning

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HandShake

Selecting a new CEO is one of the board’s most important responsibilities and represents a critical moment in a company’s history. A smooth transition is necessary to maintain the confidence of stakeholders. This is why a well defined succession plan is needed.

The annual study, by Booz & Company, on CEO turnover among the largest 2 500 public companies revealed that in 2012, 15% of CEOs left office. This is the second-highest rate of CEO turnover since 2000. With this rate rising, companies are becoming more proactive about the CEO succession process. The amount of planned successions reached 72% in 2012, the highest in the 13 years history of the study and forced turnovers represented 19%, their second-lowest share ever. This indicates that companies take a more thoughtful approach to transitions and to ensure they put in place new leaders who will best serve the company for years to come. These new CEOs are for the most part familiar faces. Indeed, 71% were people already working in the company when they became CEO. This represents a significant decrease from previous years with an average share of insiders of 80%.

Interestingly, in planned successions, the share of insiders has dropped from an average of 82% between 2009 and 2011 to 70% in 2012. With careful and thoughtful plans, it seems that companies feel stable enough to take a bit of a risk on an unknown leader. Moreover, these risks were reduced since 56% of the outsiders came from the same industry as their new company.

Also, 81% of the new CEOs were from the same country as the company’s headquarters and 95% were men. The proportion of women reaching a CEO position has risen from an average of 3 % over the last 3 years to 5% in 2012, but still remains a tiny share.

Regarding the apprenticeship model, (the outgoing CEO remains or becomes chairman of the board and can “apprentice” the incoming CEO), this happened in 29% of turnovers in 2012. In this case, the share of an insider named CEO reached 92%. Companies in Brazil, Russia, and India had the highest increase in turnover rates between 2007 and 2012 (15.4% to 23.9%) and the highest increase in share of planned turnovers (8.8% to 15.5%). The telecom and utilities industries had the highest turnover rates in 2012 (both at 24%), closely followed by energy (21%). The lowest turnover rate was in the consumer discretionary industry with 9%.

> Read the full study by Booz & Company

Everyday Governance: “in-camera sessions”

When a board decides to discuss private matters like management, employee negotiations, law enforcement matters, reviewing the functioning of the Board… They have an “in-camera session”, this refers to a closed meeting of the board where only board members and possibly specifically chosen others may attend. All non board members and management such as the CEO, are “recused”, this means removed from participation in a decision on a matter because of a conflict of interest or a position.

This allows the board to discuss freely about some topics which could be difficult if the people concerned were present, especially when it concerns their performance. This provides an opportunity for the board to share their views, discuss results and develop recommendations for the future of the company. Except for the absence of some individuals, the session unfolds like an open session. There is an agenda and the same decision making process.

Note that in-camera sessions should be held regularly, for instance 15 minutes at the end of each board meeting; otherwise it may put a lot of stress on the management since they will suspect that a special request for a private session is to talk about them.

10 important topics for board of directors in 2013

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The havard law school forum gave ten good topics that board of directors should consider for the next years 2013.

“A fog of uncertainty hangs over U.S. public companies as 2013 approaches. The looming fiscal cliff, increased regulatory burdens, the ongoing European debt crisis, growing Middle East unrest and slowing global growth are just a few of the uncertainties companies will have to navigate as they chart a course for the coming year. Here is our list of hot topics for the boardroom in 2013:

1.Oversee strategic planning amid fiscal and economic uncertainty as America approaches the fiscal cliff

2. Assess the impact of mobile technology and social media on the company’s business plans

3. Address cybersecurity

4. Oversee the management of reputational risk

5. Set appropriate executive compensation as shareholders increasingly voice dissatisfaction with pay practices

6. Assess the impact of health care reform on the company’s benefit plans and cost structure

7. Ensure appropriate board composition in light of changing marketplace dynamics and increasing calls for diversity

8. Monitor the company’s need for, and ability to retain, key talent

9. Prepare for more government regulation

10. Manage information overload “

 

Read more: Top 10 Topics for Directors in 2013

Several keys questions for board members and their comittees.

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The PwC (refer to Price water house Coopers) has published a report about the keys questions that a board should consider in order to carry out their governance duty.

 

Here you have the questions and a link to read the Pwc answer to this thematic.

 

1/ how is management evaluating and executing its strategic plan and risk management practices to address today’s competitive global marketplace?

 

2/What is the company doing to comply with anti-corruption laws and regulations?

 

3/How is management addressing contemporary accounting hot topics, including asset impairments, income taxes, and segment reporting, and ensuring the transparency and appropriateness of the company’s disclosures?

 

4/Does the audit committee engage in sufficient discussions and interactions with the external auditor in response to the current dialogue relative to audit quality and the reliability of financial reporting?

 

5/Has management considered the financial and business implications of the new tax law, and what is it doing with respect to the impact of potential corporate tax reform?

 

6/is the company effectively addressing the key opportunities and risks of IT?

 

7/Does management have processes in place to address cybersecurity risks?

 

8/what is the board’s approach to communications with shareholders and other stakeholders, and should it be reconsidered?

9/As regulatory bodies and lawmakers continue to discuss, propose, and enact laws and regulations, and shareholders continue to be active, is management analyzing possible effects and considering “no regrets” moves?

 

Here read the all report and answers: Key questions for board and audit committee members

 

The 2013 Director Compensation and Board Practices Report

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The Conference Board, NASDAQ OMX and NYSE Euronext jointly released the 2013 edition of Director Compensation and Board Practices, a benchmarking study with more than 150 corporate governance data points searchable by company size (measurable by revenue and asset value) and 20 industrial sectors.

The report is based on a survey of public companies registered with the U.S. Securities and Exchange Commission. The Harvard Law School Forum on Corporate Governance and Financial Regulation, Stanford University’s Rock Center for Corporate Governance, the National Investor Relations Institute (NIRI), the Shareholder Forum and Compliance Week also endorsed the survey by distributing it to their members and readers.

The following are the major findings from the 2013 edition of the study:

  • Directors are best compensated in the energy industry, but company size can make a huge difference. Computer services companies are the most generous with full value share awards, but equity-based compensation is widely used across industries and irrespective of company size.
  • Stock options are not as favored as they used to be, except by the smallest companies Increasing skepticism on the effectiveness of stock options and stock appreciation rights as long-term incentives has led to their decline, especially in the last few years.
  • Additional cash retainer for board chairmen is seldom offered by larger companies, which are more likely to reward lead directors.
  • A corporate program financing the matching of personal charitable contributions is the most common among the director perquisites reported by companies.
  • While many nonexecutive directors have C-suite experience, former or current CFOs are less represented than expected in the board of financial services companies.
  • Larger financial services companies often set stricter director independence requirements than national securities exchanges.
  • While larger companies continue to combine CEO and board chairman positions, three-quarters of financial institutions have appointed an independent lead.
  • Majority voting is being increasingly embraced even among smaller companies, but incumbents failing to obtain the required votes are rarely expected to resign.
  • According to the director nomination policy of large companies, diversity matters as much as business skills. Yet, aside from some level of female representation, corporate boards remain remarkably uniform.
  • Most smaller companies save board search firm fees and use personal connections to recruit new director nominees.
  • Proxy access rights and reimbursement of solicitation expenses remain marginal practices.
  • While traditional takeover defenses (including poison pills and board classification) are being dismantled, large financial companies tend to restrict action by written consent and prohibit special meetings called by shareholders.
  • Directors of large company boards take a corporate aircraft to travel to board meetings, unless it is a financial institution.
  • Financial services companies of all size are ahead in the use of secure online technology for intra-board communication.
  • While an annual say-on-pay vote appears to be the standard for most companies, almost one-third of the smallest financial institutions opt for a less frequent consultation of shareholders.
  • While designing new executive compensation policies, large financial companies set equity retention periods and go above and beyond regulatory requirements in the formulation of contractual clawback clauses.
  • Large companies are more likely to enforce anti-gross-up policies.
  • Compensation benchmarking disclosure also tends to be a feature of larger companies, with industry and company size the most frequently used criteria in the selection of the peer-comparison group.
  • Compensation consultant fees tend to be lower than the amount for which disclosure is required.
  • While directors of smaller companies collaborate directly with management in the business strategy setting process, larger company boards review strategy more frequently than others.
  • Frequency of risk reporting to the board and institution of chief risk office reveal the differing state of risk governance practices among industry groups.
  • Responsibility for sustainability oversight depends on company size, with larger companies elevating it to the board committee level and smaller companies delegating it to the CEO.
  • Environmental impact and, for financial services companies, data security are among the main sustainability items in board agenda.
  • Boards of directors at almost half of the smallest companies (as measured by annual revenue) do not review political contribution practices, while formal policies for senior business leader are seldom in place.
  • Small companies do not have a board process for the systematic and periodic review of their CEO succession plan.
  • Formal policies on board retention of the departing CEO are uncommon, except in large companies where the CEO is formally required to also leave the board.
  • Formal board-shareholder engagement policies begin to emerge, and may include the requirement for director to actively participate in annual shareholder meetings as well as the adoption of a protocol detailing when and how shareholder can reach out to directors and expect a response to a material query.
  • Large financial companies are less inclined to use an over-boarding policy as it may impair their ability to attract director talent.
  • More than one-third of companies with less than $100 million in revenue do not periodically evaluate their director performance.
  • Approximately two companies out of 10 require their board members to attend some type of continuing education programs to remain abreast of regulatory and compliance developments.
  • As the workload and challenges facing board committees increase, member rotation policies remain infrequent.

 

This article is an extract from : The 2013 Director Compensation and Board Practices Report , the harvard blog.

 

A small quizz about governance and boardroom !

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Test your knowledge about governance and rules on boardroom !

Quick Quiz

1. Why should a board have independent directors?

A. They can take over for executives if necessary.
B. They are able to make decisions free of conflict of interest
C. They do not hold large share positions in the company

2. Who has primary responsibility for risk management in a company?

A. The CEO
B. Board of directors
C. Shareholders

3. Scorecards are useful ways to:

A. Determine whether companies are following good corporate governance practices
B. Figure out which companies’ shares are likely to go up
C. Find out which directors serve on multiple boards

4. What is the difference between an executive director and a non-executive director?

A. The executive director heads a board committee; the non-executive director does not
B. The executive director is also a member of management, while the non-executive director is not
C. There is no difference

5. Which characteristic would disqualify a director from being independent?

A. A member of the company’s management
B. An expert in the company’s industry
C. An executive at another company

6. One of the following committees is most common for a board of directors. The others are optional. Which one is most common?

A. Mergers and acquisitions
B. Audit committee
C. Ethics

7. Tag-along rights means:

A. Public citizens may attend a company’s annual meetings
B. Minority shareholders can join in if a majority shareholder sells a stake
C. A method of voting on director nominations

8. Succession planning is the responsibility of:

A. Shareholders
B. Current managers
C. The board of directors

9. “Say on Pay” means:

A. Board chairman decides CEO compensation
B. Compensation committee makes a decision
C. Shareholders have an advisory voice in compensation issues

10. What is tunneling?

A. Separating management roles by function
B. Directing profits to company activities rather than dividends
C. Transferring the company’s assets to deprive shareholders of value

Answers:
1. B, 4. B, 7. B, 10. C
2. B, 5. A, 8. C,
3. A, 6. B 9. C,

Source: Who’s running the company ?

What should Frank do?

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Here, this is a good study case about a current problematic on a boardroom… a Powerful CEO and useless board. Published by Julie Garland McLellan in www.mclellan.com.au

The case studies are based upon real life; they focus on complex and challenging boardroom issues which can be resolved in a variety of ways. There is often no single ‘correct’ answer; just an answer that is more likely to work given the circumstances and personalities of the case.

 

Although these are real cases the names and some circumstances have been altered to ensure anonymity. Each potential solution to the case study has different pros and cons for the individuals and companies concerned. Every month this newsletter presents an issue and several responses.

 

Consider: Which response would you choose and why?

 

Frank has been recently elected to a board position with a NFP, which is quite large with 500 employees and $70m in assets. The board has a strong CEO, who seems to do what she wants. In the past the board was relatively weak and the CEO needed to use her expertise without relying on theirs. The board could have been described as ‘light weight’ in regard to governance and corporate knowledge. One board member, for example, is a microbiologist with great critical thinking but no understanding of how to run a company. This led to a culture where the CEO would respond to board queries by asserting that the matter of interest was “an operational issue” and for board members to rationalise her response by accepting that the CEO “has it under control”.

 

The board recognised its weakness and sought out some new company directors with governance training and corporate understanding; hence Frank’s invitation to stand for election. Frank is encountering opposition in asking critical questions of the CEO and trying to probe for information, because the board says the business is under the CEO’s control.

 

He is concerned the board has a weak Chairman who does not support the board in taking effective control or oversight. He is seriously considering if he should stay and try to improve matters slowly or if he should leave as he truly feels the board is dangerously negligent. However, he likes a challenge, believes in the objectives of the NFP, and feels that his fellow directors are honest and well intentioned.

 

What should Frank do?

 

Here, you have three different expert answers: click here

Drag your corporate boards into the digital age

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The Globe And Mail published the Monday, Feb. 25 2013 a new article about Leading Boards !!! By Ivor Tossell.

ipad-user

When corporate directors need to read up on company affairs in the run up to a board meeting, they can find themselves sitting on telephone books’ worth of paperwork. Never mind reading it – it also needs to be delivered and securely disposed of afterwards. Enter Leading Boards – content management software tailored to help boards of directors and built for the age of the iPad.

The goal is better governance, says Jean-Marc Félio, the company’s president: A more-informed board will make better decisions, and the sooner new directors can be brought up to speed on a board’s decision-making history, the sooner they’ll step up and offer effective guidance.

“Directors don’t have access to information. You have a new director coming in, it will take three to six months before they’re up to date,” he says. “Giving them access to their archives is already a big change.”

Leading Boards acts as both a security-minded information repository and a decision-making hub. Many of its features, which include access to old minutes and files, the ability to search documents by content and collaborative document-editing, are available through its regular web interface. But Mr. Félio puts his firm’s emphasis on its iPad app, which takes advantage of the touch interface to offer document-management tricks such as highlights and annotations. (In the interests of security, annotations are purged after a meeting has run its course, and documents returned to their original state.)

In addition to offering full access for board members, the software can act as a venue to create a virtual meeting space that puts specific users together with just the documents they need to see; anxious stakeholders, for instance, can be invited to a session with two or three directors, and just the relevant documents from the archives. Alternately, a suitor interested in buying a stake in the company could be given an account on the system allowing access for due diligence.

It also tackles the decision-making process itself, letting boards create structured debates, in which a question is mooted and members can add arguments into ‘pro’ and ‘con’ lists. After the meeting, the decision-making process is expunged, leaving only its result for the record.

The six-person startup’s software is used by about 60 companies in Canada and beyond. Mr. Félio says its touch-based capabilities are important in speeding adoption among board members – not always the youngest members of an organization, nor the most eager to embrace technology. The company experimented with buying small computers for clients, but found that, regardless of the training Leading Boards offers, the iPad was far more intuitive.

“There is one old board member who called and said ‘I don’t need your training any more. My five-year old granddaughter taught me.’”

See the article: Montreal startup drags corporate boards into the digital age

Major Differences Between Roles of Direction and Management

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In this article, we will remind the principal differences between the boards of directors and the management of the company.

Source: Guide Pratique de Médiatisation du Gouvernement D’Entreprise

DIRECTORS

MANAGERS
Decision-Making Required to determine the future of the organization and protect its assets and reputation. They also need to consider how their decisions relate to stakeholders and the regulatory framework. More concerned with implementing board decisions and policies.
Duties,Responsibilities They have the ultimate responsibility for the company’s long-term prosperity. Directors are normally required by law to apply skill and care in exercising their duty to the company and are subject to fiduciary duties. They can be personally liable if they are in breach of their duties or act improperly. They can be held responsible sometimes for the company’s acts. Not usually bound by directional responsibilities.
Relationship withShareholders Shareholders can remove them from office. In addition, a company’s directors are accountable to the shareholders. Appointed and dismissed usually by directors or management; they seldom have any legal requirement to be held to account.
Leadership Provide the intrinsic leadership and direction at the top of the organization. Day-to-day leadership is in the hands of the CEO; managers act on the director’s behalf.
Ethics, Values Play a key role in determing the company’s values and ethical positions. Must carry out the ethos, taking direction from the board.
CompanyAdministration Responsible for the company’s administration. Related duties associated with the company’s administration can be delegated to management, but this does not relieve the directors of their ultimate responsibility.
Statutory Provisions In many countries, there are numerous statutory provisions that can create offenses of strict liability under which directors may face penalties if the company fails to comply. These statutory provisions do not usually affect managers.

What is the purpose of a board?

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“The purpose of the board is to do governance, the process carried out by a group of people to ensure the health and effectiveness of the corporation.

 

It doesn’t matter what type or size of organization. It doesn’t matter if you’re young or emerging or highly sophisticated. The board does governance at its meetings. In fact, the only time that governance happens is when the board convenes at its meetings.

 

What are the elements of governance, the processes of ensuring the health and effectiveness of the corporation? These are things like defining values, mission, vision, and overall direction – and adhering to same. These are things like defining the rules of governance, e.g., bylaws, policies, recruitment and election of board members. Defining the performance expectations of board members. Hiring, appraising, and setting compensation for the executive director. So what do you talk about at your board meetings? (…)

 

The board may talk about information provided by staff. And it’s up to the staff to put together the right information, to explain trends and their potential implications. (…)

 

Board meetings require intentional design and good facilitation. Board meetings should be a gathering of wise and experienced people who talk about important things. Sometimes the board makes decisions. Sometimes the board learns and explores through conversation, preparing to make decisions in the future. Definitely, board members ask strategic questions, even cage-rattling questions. Board members probe to ensure that they are drawing on information that is accurate, insightful, and useful. (…)

 

How about these questions for periodic board meeting agendas?

1.            How is our adaptive capacity?

2.            How are we foreseeing the unforeseeable?

3.            How effectively do we recognize, anticipate, prepare for and respond to different       situations?

4.            How effectively do we anticipate unintended consequences?

5.            What might have once been inconceivable – but now seems as if it might become       inevitable?

6.            What is of concern that, if we don’t address it, can become alarming?”

 

This article is extract from: What Do You Talk about at Your Board Meetings?