Tag Archives: boardrooms

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.

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

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.

 

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

Increase the number of women on corporate boards? Some business women gave advices…

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Here, you can read some advice from business women about How Can We Increase the Number of Women on Corporate Boards?

business-woman-400

Adele Gulfo, Pfizer, Regional President, Latin America

“Before we see a trend-break in the percentage of women in the boardroom, we need to solve the “leaky pipeline” that diminishes the potential talent pool. Start by encouraging women to find “sponsors,” not “mentors.” Simply put, mentors help you personally, acting as a coach and helping with decisions or challenges. But sponsors have significant influence inside an organization and advocate on your behalf, especially when high profile assignments are being discussed and names considered. Getting more women on boards begins with getting more women in mission-critical P&L roles. And sponsorship is critical to opening doors to these jobs.”

Grace Lieblein, Vice President, Global Purchasing and Supply Chain, General Motors

“If you look on boards, one of the primary reasons we are not seeing more women joining them is that typically they are looking for candidates who either have board experience or are leading large operations. We are locked in a kind of vicious circle: Because there aren’t many women on boards today and also not enough women in CEO or in key positions, they aren’t seen as natural candidates for joining boards.”

Ilene H. Lang, President and Chief Executive Officer, Catalyst

“Let’s talk about what’s not holding women back. It’s not lack of CEO experience. Almost half of F500 board seats in 2011 are occupied by directors without CEO experience. And it’s not a supply problem with respect to board-ready women. If you look at only one potential source of directors—current Executive Officers of F500 companies—you will find over 700 women, enough to fill every board seat that comes available in the next year (with women to spare). When you consider that boards often seek directors with international expertise, and you add women in top leadership positions at companies in just four countries (Australia, Canada, Great Britain, and Israel), your pool expands to over 2,000 women.

“So why the lack of progress? Men join boards every year at a higher rate than women. When Catalyst analyzed new appointments to F500 board seats from 2009 to 2011, we found that men filled 81 percent of the new seats! Thus, women’s appointments to boards have only been sufficient to maintain the status quo, rather than move the needle.”

Liz Mohn, Vice-Chairwoman, Bertelsmann Foundation

“For many women it remains difficult to have it all: career, children, partner, and household. And major decisions on all those issues often come to the fore between the ages of 30 and 40—the “rush hour” of life. For many people, especially mothers, rush hour is all day. A woman’s work is never done, as they say. It is here that employers must play a role. They must move away from office time towards flexible working hours and focus on results. By doing so, organizations and their leaders can serve to encourage women.”

Rossana Fuentes Berain, Editorial Vice President, Grupo Editorial Expansión

“A major initiative is needed to bridge the gender gap and use it as one of the variables to measure a country’s competitiveness. What is the path for achieving it? Education, mentoring, and support in the careers of women must be a priority to improve conditions for diversity in the business world, and make way for a generation that has been prepared and is ready. There are no excuses.”

Susan Segal, President and CEO, Americas Society and Council of the Americas

“One of the key reasons is an unwillingness to take a risk. Existing CEOs, boards, and headhunters appear unwilling to take the risk to incorporate new people and different perspectives—so the easy path is just more of the same: same pool of candidates, same process, and same ideas.

“Women must also take some responsibility for the current dilemma. They must promote themselves better and proactively find mentors willing to fight for them inside and outside of their companies. Women also need to network more effectively and aggressively, while standing up for their goals and ideas.”

 

His article is extract from: How Can We Increase the Number of Women on Corporate Boards?

 

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.

The Board of Directors & Compliance: 4 Ideas for Improving the Effectiveness of & Reducing the Risk to Directors

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By Stuart M. ALTMAN for www.corporatecomplianceinsights.com

“A number of high profile corporate scandals at some large and supposedly sophisticated companies have, if nothing else, driven home the fact that no matter how strong you think your corporate compliance and ethics program is, the risk of failure is still there. This month I want to look at this issue from the standpoint of the board of directors.

Right now, there are a number of very concerned directors asking themselves whether they have done all they could, or should, have to prevent this and what are the ongoing risks, not only to the company, but to them personally. True, directors should always be thinking about the institutional risk to the company, but nothing motivates effectiveness like the risk of personal liability.

Ordinarily directors are protected by the business judgment rule which provides that well informed decisions of directors taken after due consideration and in good faith will not be attacked by a court because the decisions turned out wrong. In cases of compliance failures – whether issues of foreign bribery, cartel activity or environmental hazards, to name a few – the issue for a board is usually one of omission. Rarely has a board approved such activity. Rather, the issue is whether it has done everything possible to avoid such conduct. Here are four ideas that can help strengthen the effectiveness of the board in these situations and thus, limit risk.

Training

Interestingly, in many companies directors do not necessarily receive the same compliance training that employees do. Directors may claim they are too constrained by time, or that they, of course, know this material already. Perhaps they do, but even if the directors are compliance experts shouldn’t they know how the employees are trained? How do you measure the effectiveness of a program you have opted out of? In short, directors should go through, at a minimum, the same training employees receive.

But that is not enough. Directors need specialized training, not just in the nuts and bolts that line employees receive but also in the issues at the center of compliance and ethics. Directors need to be focused on the big picture of why a company has a compliance program. They need to know what questions their compliance professionals should be asking, and if directors don’t see this happening, they need to act quickly.

Moreover, at least some of this training should be external to the company. Even if management is well intentioned, it is vital that directors get an occasional different perspective on compliance from that which prevails in the company.

Structure

A long discourse of the various pros and cons of possible compliance structures would fill several of these columns. There is an active professional debate out there as to whether or not the chief compliance officer should be separate from the general counsel? Should both ethics and compliance roles be rolled into one position? Where does internal audit fit in? I won’t attempt to evaluate these debates here. Indeed, there may be no one right answer. But the way in which your company structures these roles is vital to your governance and your ability to address compliance and ethics.

Boards of directors should be intimately involved in planning for these issues. Directors should regularly review the existing structure and make sure they are comfortable with it and it is serving the company’s interests. Whatever the specific structure chosen, those primarily responsible for compliance must have direct access to the board or a compliance committee. Given this dictate, you can decide what works for your company. Is your organization hierarchical in nature? Are managers expected to closely follow superiors with little questioning? If so, asking a GC who reports directly to the CEO to also serve as CCO and report to the board may place him or her in an unworkable position. If the CFO uses internal audit as a personal resource how comfortable can the board be that the head of IA would bypass that CFO if the situation called for it? On the other hand, where a company operates in a matrix environment with multiple reporting lines standard, such dual roles and reporting may come naturally.

Seek Advice

Most boards of directors do not have separate counsel from the entity they serve. Directors typically rely on the general counsel and regular outside counsel to do their job except in the rare situation such as the need for a special committee and counsel thereto. In general, most boards do not need regular and continuing counsel involved in every decision they make. But that does not mean such outside advice may not be useful some of the time…”

To read the complete article : www.corporatecomplianceinsights.com

Toward Effective Governance of Financial Institutions

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“Drawing lessons from the financial crisis, the G30 calls on boards of directors of financial institutions to do far more to strengthen governance. The report stresses that values influence the behavior of those with governance responsibilities and the key to reform is to promote changes in the ways in which these individuals think about their responsibilities.”

Toward effective governance of financial institutions