Tag Archives: board room

The “Glass ceiling” is cracked but not yet broken!

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Maile Carnegie, Google Australia Director, Amy Hood, CFO at Microsoft, Marissa Mayer, President and CEO of Yahoo, Sheryl Sandberg, CEO of Facebook… Progress has been achieved in corporate governance diversity practices and we can notice cracks in the glass ceiling but still, in 2013, women only account for 10.5% of board seats in the world(1).

gender diversity

Gender equality is a worldwide issue and is now becoming a priority for companies and their Boards. Recent research has shown that companies with more women in charge survived the 2008 financial crisis better: concerning French companies with a highly feminized management, at least 38%, declined less than the CAC 40… Hermès was the only large company whose share price rose and it has the second largest feminized management (55%). On the contrary, companies with mainly male management recorded the highest declines…(2)

Having more women on Boards seems to in a way protect companies from the crisis mostly because women behave differently to men, according to gender studies, women tend to take fewer risks and focus on long term priorities. The presence of just one woman as director can reduce the risks of going bankrupt by 20%!

Greater female representation on Boards also leads to increase the company’s performance. Boards with high female representation experience a 53% higher return on equity, a 66% higher return on invested capital and a 42% higher return on sales(3).

The close relationship between corporate performance and female directors proves that having “women on the Board is no longer just the right thing but also the smart thing to do” as said by Chris Bart, McMaster University business professor.

Women take decisions differently than men by reviewing more factors and competing interests to make the decisions fairer whereas men base their decisions on rules and traditions. Women directors will also answer in a better way to the needs and expectations of their female customers. This is significant since women account for 85% of purchasing decisions. They also bring value to the boardroom by expanding the content of discussions, raising new perspectives, asking more questions and promoting collaboration.

Studies show that one woman alone can make important contributions and bring value to Boards, adding a second woman to a Board helps but it takes the presence of at least three women to change boardroom dynamics and enhances everyday governance(4).

(1) GMI Ratings’ Women on Boards Survey
(2) Michel Ferrary : financial times
(3) Joy et al., 2007
(4) Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance


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

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

Peter Hadekel: Montreal startup develops governance tool

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This article come from Thegazette, write by Peter Hadekel

MONTREAL — Better corporate governance has become a top objective of just about every publicly traded company. Boards of directors are more scrutinized than ever before by analysts, shareholders and regulators.

Amid an outbreak of corporate fraud over the last decade, legislative changes have placed a lot more responsibility and accountability on the shoulders of directors.

Now, a small Montreal startup has identified a way to help boards work more efficiently and with greater transparency

The business, known as Leading Boards, started four years ago under entrepreneur Jean-Marc Félio after he had served as director of a non-profit organization.

At the time, the organization needed to distribute a number of documents to directors and Félio realized that a digital system for sharing and archiving documents would make sense.

He spent a couple of years developing a software program with an information-technology specialist and then took eight months testing the product with a range of small, medium and large enterprises.

At the end of 2010, Leading Boards began to commercialize the system and has signed 60 clients so far — many of them either publicly traded firms or non-profit institutions.

The system is a secure “board portal” that reduces or eliminates printouts and multiple copies of documents. It can eliminate courier service costs and reduce meeting preparation time, Félio says.

“Just look at the amount of paper that is sent to the board of a large company — it’s the equivalent of about two telephone books every month.”

Directors often find they need to consult a corporate document of some kind only to find that it’s not at hand and they need to have it sent. They get another set of the same binders when they come to a board meeting.

That wastes even more money. Document costs can run to more than $15,000 a year for a single committee of seven directors.

Leading Boards puts together a complete archive of documents ranging from agendas and minutes of meetings to financial statements, directors’ committee reports and corporate policy statements.

The system has been developed with the practical needs of directors in mind. “You get powerful search engines, information sharing, quick, easy access,” Félio says. Agendas are interactive and directors can write personal or shared notes in a “Post-it” style.

Perhaps the biggest gain is increased transparency. The system can be set up to allow different levels of access, whether by shareholders, regulators or fellow directors.

It’s best suited for iPads and tablets, he says.

Félio worked in film and television and taught communications at the university level before taking the entrepreneurial plunge. He financed the startup out of his own pocket but recently got an additional investment from an angel investor to help him develop the market.

Leading Boards is not the only player in this game. Two other software providers — BoardBook and BoardVantage — service the market for Fortune 500 companies in the U.S.

But Félio hopes to capitalize on the market in Canada for smaller, listed companies that need to save time and money on governance and compliance.

Among clients that have recently signed up are two publicly traded mining companies in Quebec: Argex Titane Inc. and St-Georges Platinum & Base Metal Ltd. Both companies said they expect the software package will wind up improving board governance.

The trilingual nature of the software package, offering English, French and Spanish capabilities, will open up new avenues of growth in Europe and Latin America, as well the Middle East and North Africa, Félio believes. He is already in discussions with a firm about a joint venture to sell the product in France.

The company hosts the web-based system for clients who pay an annual service fee. It has about half a million dollars in annual revenue so far and six employees, expecting to double in size every year.

Among the non-profit or public organizations using the system is Montreal’s Palais des congrès, he said. Expressions of interest have come from a number of other provincial agencies.

Five principles for getting the most out of a board assessment

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Corporate boards today are expected to be more engaged, more knowledgeable and more effective than in the past. One tool that a growing number of boards are using to examine and improve their effectiveness is the board evaluation.

How can boards make sure that they get the most out of the assessments, so that they really improve board effectiveness?

 

1. The board agrees on clear objectives for the assessment.

One of the most common mistakes boards can make when embarking on an assessment is failing to agree at the outset on the purpose and objectives of the process. While it may seem obvious, coming to a shared agreement about what directors collectively want to accomplish through the assessment encourages board members to commit time to the process and to provide the candid feedback that is essential to identifying and addressing potential roadblocks to board effectiveness. Without the commitment from the board as a whole and directors individually, an assessment is unlikely to yield the desired results. Clarifying objectives and defining the scope of the assessment also helps to avoid a situation in which the board is using the process as a way to put off dealing more directly with non-performing directors.

 

Among the questions boards should consider at the outset:

What is the scope of the assessment?

What’s the most appropriate assessment approach for the board?

Should board leaders be assessed?

What areas does the board want to delve into more deeply?

What gaps exist in the current assessment process?

 

2. A board leader is responsible for driving the process.

 

Essential to a successful evaluation is having an independent board leader champion the assessment process. The independent board chair, chair of the governance committee or the lead independent director is in a position to drive the process — involve the right people, ask for directors’ time, schedule time on the agenda to discuss the results and ensure that the board follows up on the issues that emerge. And while the CEO should be an integral part of the process, he or she should not be leading it.

 

3. The process incorporates perspectives beyond the board directors themselves, including those from senior management and best practices from outside the company¸

 

Another way the board can limit the value of a board assessment is to look only inwardly at its own effectiveness. An emerging best practice among U.S. boards, although still less common in European boards, is to seek input about the board’s effectiveness from the key senior management team members who interface with the board.

 

4. The assessment process should go beyond compliance issues to examine board effectiveness.

 

Many boards have relied on director questionnaires to conduct their assessments. This paper-and-pencil approach can provide a sense of how directors are feeling about compliance issues — whether or not the board is involved in strategy discussions or CEO evaluations, for example — but they are less valuable in revealing issues or concerns that are affecting the board’s effectiveness.

 

5.  Directors commit to reviewing the results of the assessment and prepare an action plan for addressing issues that emerged.

 

Another way assessments can fall short is when boards do not commit the time to review the results and address the issues that are raised. Some boards, for compliance reasons, begin an assessment process, but then spend little or no time on discussing the findings.

 

Conclusion

 

Done properly, a board assessment is not a report card for the board as a whole or for individual directors. Furthermore, a board portal should help administrators to set up assessment with some tools as pool or debates…  Instead, it should be viewed as a tool for continuous improvement and learning. Successful assessment processes:

Þ     Reflect the culture of the organization and its board

Þ     Are championed by a chairman or other board leader who participates actively in the process

Þ     Have shared support among all directors

Þ     Begin with clearly stated objectives for the board assessment process

Þ     Include adequate time on the board’s agenda to discuss the results and establish a clear approach for acting on the findings, including developing an action plan with a timeline and milestones

Þ     Are characterized by confidentiality throughout the process

 

This article is an extract from: Improving board effectiveness: Five principles for getting the most out of a board assessment

Say On Pay = New tool of Social Responsibility?

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“If it makes good sense to tie compensation of top executives to the financial performance of their firms, it is also wise to gauge that compensation in relation to other corporate performance factors,” says Peter Madsen.

But, what is «Say on pay»? Is it an answer to the compensation issue? Or just another practice to pay more the CEO?

 

As an example, in 1991, President Clinton wanted to permit companies to write off executive compensation amounts of more than $1 million only if executives hit specified performance goals.

In a 2011 paper titled Killing Conscience: The Unintended Behavioral Consequences of ‘Pay for Performance,’ Stout offers three reasons to explain why the Clinton administration’s revisions to the Internal Revenue Code (I.R.C. Section 162(m)) didn’t work.

First, incentive schemes frame social context in a fashion that encourages people to conclude purely selfish behaviour is both appropriate and expected. As a result, pay-for-performance rules “crowd out” concern for others’ welfare and for ethical rules, making the assumption of selfish opportunism a self-fulfilling prophecy.

Second, the possibility of reaping large personal rewards from incentive schemes tempts people to cut ethical and legal corners, and for a variety of reasons, once an individual succumbs to temptation, future lapses become more likely.  The result can be a downward spiral into opportunistic and unlawful behaviour.

Third, industries and firms that emphasize incentive pay tend to attract individuals who, even if they are not « psychopathic », nevertheless are more inclined to selfish behaviour than the average.

It isn’t easy, however, to find companies that specifically state that the compensation of their executives is tied to more than financial performance. PepsiCo, for example, has established Performance with Purpose, a global initiative that makes an effort to deliver sustainable growth by investing in a healthier future for people and our planet. However, the company is cautious about linking executive compensation to the results of this program.

Aron Cramer, President and CEO of BSR, a CSR consulting firm that works with a global network of nearly 300 member companies, believes that financial performance is inevitably linked to social and environmental performance.

Cramer’s emphasis on rewards rather than incentives is consistent with Professor Stout’s point of view. “We should set financial compensation ex post, on the basis of the employers’ subjective satisfaction with the employees’ performance,” writes Stout.

 

Ironically, the new imperative for corporations to be socially responsible could be jeopardized by attempts to tie executive compensation more closely to corporate responsibility through pay for performance incentives. »

 

This article is an extract from: Can Say On Pay Increase Social Responsibility?

Read more: Executive compensation: Shareholders have their say

Is executive compensation fair or flawed?

Say-on-pay voting process ‘highly successful tool’, according to survey of institutional investors

Senior Management Has No Idea where their Company Data Resides

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According to a recent article on our blog “Confidentialité: du papier au sans papier…“ and the issues of Data’s storage in companies, some societies by their Board of Director hesitate to transmit Data’s company at their IT services. Confidentiality is the key of the Data management and many directors indicate that their senior management has little or no idea where their company data resides.

 

The Agile IT Governance website by one of these author CJ wrote an article about this issue. 

“ The majority of companies surveyed also indicate they have no systems in place to account for which corporate files reside in systems managed by third-party service providers. Companies reported they have no way to track what data is being stored in the cloud and no process to manage access to that data.

In short, the survey reveals that:

- Only 9% of the companies surveyed have procedures in place to control access to data stored in the cloud;

- 23% of organizations are still developing their data access policies;

- 74% of respondents reported that they do not have a process for tracking which files have been placed on third party services;

- 68% either have no plans in place that they are aware of, or live without formal processes for granting and reviewing access

These survey results should be a wake-up call for all companies. CIOs should start developing and implementing strategies to ensure data security as quickly as possible.

Here are some questions that senior managers and the board of directors should be able to answer:

- Do managers know who is responsible for security?

- Does the head of security frequently meet the board of directors?

- When was the last time top managers got involved in security-related decisions?

- Would people recognize a security issue? Would they know who to call?

- Is the company clear on its position relative to IT and security risks?

- What percentage of staff had security trainings?

- Are managers convinced that security is being appropriately addressed in the company?

- Are managers aware of the latest information security issues and best practices?

- What can be done to successfully implement information security governance?

Protecting the interests of the stakeholders is a fundamental responsibility of senior management. This includes understanding the IT risks and ensuring that they are adequately addressed from a governance perspective. To do so effectively you need to manage information security risks, by integrating an information security governance framework into your overall enterprise governance framework. “

Read more on Agile IT Governance website

More articles: Confidentialité: Du papier au sans papier…
Caution – PATRIOT Act …
Les irréductibles du sans papier…

 


Board Governance Structure

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You may find this structure interesting as a template for your future governance manual or to compare it to your actual material.

 Each category may have one or more documents, for example the Role & responsibility  should have:
- role of the Chair
- role of the other officers (Vice, Secretary, trasurer)

- role of director
and also
- role of the CEO (no voting, etc.)
- corporate secretary.

If you have suggestions, we will update this template based on your comments.

The strategic planning process

Strategy

The board and strategic planning

VISION

MISSION

STRATEGIC PLANS

 VALUE CREATION

 

Board Effectiveness

Roles and responsibilities

Transparency

Important Board policies

Delegation of Authority

Conflict of Interest

Code of Conduct

Meetings of the governing body

Board orientation, development and retreat

Board structures

Important Board Processes

Board Orientation

Board Development

Board Assessment

Board Works Plans

Evaluation of performance

Reporting on Resources (Financial, Human)

Reporting on Quality

Quality Plans

Quality Report Cards

Board Composition and the Nominating Process

Membership of the governing body

 

The Board and the CEO

CEO Position Description

Accountability Agreements

Delegation of Authority Policy

CEO Performance and Development Process

Steps in the process

CEO Evaluation Form

Compensation Policy

 

Leadership development

Succession planning/talent management

Compensation policies and practices

Objective setting and performance reviews

Recruiting and selection

 

Board Structure (Committees)

Board Committee Mandates

Resources Committee (Finance)

Quality Committee

Governance and Nominations Committee

Management Resources and Compensation Committee

Audit Committee

Executive Committee

 

The Board and its Stakeholders

The board’s advocacy role

The annual report

Communicating with stakeholders

Stakeholder engagement in meeting needs

Stakeholder analysis

 

The Board’s Accountability

Risk Management

Accountability agreements

Accountability frameworks

 

The Annual Business Plan

The board’s role in monitoring performance

The board’s role in developing the annual business plan

 

Accountability for Resources

The external audit function

Resource utilization management

Financial goals and objectives

Financial policies and controls

Human resources

Information technology

New technology

Capital planning

 

Accountability-Quality of Service

The board’s role

The quality annual plan

Monitoring quality performance

The Governance Manual

The governance manual