Published on March 3, 2014
©Copyright 2007. CBIZ, Inc. NYSE Listed: CBZ. All rights reserve d. Building Better Boards Angie Salmon, EFL Associates CBIZ Human Capital Services, Inc. February 27, 2014
Trends in Board Governance • Leadership Structures • Succession Planning • Board Composition/Diversity • Director Development • Service Restrictions www.eflassociates.com
Board Leadership • Define board/committee chair qualifications to utilize for evaluation and recruitment • Independent chairs are a hot topic for shareholders – Ranked third for proposals put forth in the 2012 proxy season • Boards are trending toward splitting chair and CEO roles – 45% in 2013 versus 23% ten years ago Deloitte. “The Split CEO/Chairman Structure Debate.” The Wall Street Journal, CFO Journal 2012 Spencer Stuart US Board Index 2013 www.eflassociates.com
Board Succession Planning • Responsibility of nominating/governance committees • Lack of planning can lead to: – Entrenchment – Challenges to re-election of directors – Shareholder proposals • Institutional investors are increasingly expecting boards to have and disclose director succession plans Respelier, Patrick and Scott Gootee “Nominating & Corporate Governance Committee Update” Stinson Morrison Hecker Director’s Institute & 2014 Proxy Season Workshop. 4 December 2014 www.eflassociates.com
Board Succession Planning • Plan ahead • Determine preferences rather than replicating background of departing directors • Consider long term company strategy and emerging trends against the current and future board composition Hanson, Lee & Les Csorba. Heidrick & Struggles Governance Letter “Be Strategic…” 2013 www.cbiz.com
Board Composition Matrix Critical Requirements Director/Candidate Cultural/Gender Diversity Financial Expert (Audit Chair) Industry Operations 1 Illbe There 1 Justin Case Helen Back 1 Ima Example 1 1 Social Media Totals Preferred Attributes Entrepreneurial Customer Knowledge IPO Experience 1 1 M&A Sales/Business Development Total Critical Overall Total 1 1 3 1 1 2 3 4 3 4 2 3 1 1 1 John Doe 1 1 1 Brian Melby 1 1 1 1 2 Jack Nimble 1 1 Industry, financial, and operational expertise cited most often www.eflassociates.com
Board Composition - Diversity • Boardroom diversity is progressing slowly • Customer demographics ≠ director diversity – 73% of Fortune 500 directors are white men and four of five new board appointments are filled by men • Lack of diverse perspectives can pose a governance risk…and PR problems (Apple, Twitter, Facebook) • Forward-thinking boards consider skills/experience not just titles Alliance for Board Diversity. “Missing Pieces: Women & Minorities on Fortune 500 Boards” August 2013 Catalyst, “Setting the Record Straight.” 2012 www.cbiz.com
Director Development • Orientation needs to prepare new directors for more immediate impact • Continued director education is critical in dynamic business environments • Board Assessments & Evaluations – Most significant listed companies in the US have an annual assessment process – not all are robust – 35% of directors believe that someone on their board should be replaced Rogers, Mark. Forbes “Sarbanes-Oxley Ten Years Later” July 2012 Spencer Stuart US Board Index 2012 www.eflassociates.com
Service Restrictions • Limitations on executive outside board service are becoming more prevalent • US companies are trending away from mandatory retirement and term limits – Companies with a mandatory retirement age dropped from 79% to 73% in the past five years – Only 16 companies on the S&P 500 had director term limits in 2013, none shorter than 10 years (down from 25 companies in 2009) – 64% of directors have served 10-15 years and another 5% have served 15+ years Hymowitz, Carol & Jeff Green. Businessnweek “Corporate Directors Get Older, Hold Their Seats Longer” May 2013 www.eflassociates.com
Panel • Tim Barton – Executive Chairman & Founder, Freightquote.com • Robert Druten – Audit, Finance, and Nominating/Corporate Governance Committee Member, Kansas City Southern – Board Chair & Nominating/Corporate Governance Committee Member, EPR Properties • William Lyons – Nominating/Governance Committee Chair, NIC, Inc. – Nominating/Governance and Compensation Committee Member, Morningstar, Inc.
Introducing The Directors’ Prism The Directors’ Prism The directors’ Prism: Building Better Boards - 7 Questions to Help Shape Board Success | 3
Building Better Boards. David A ... At the start of any board-building program, the directors and the CEO should agree among themselves which of the ...
Louise Ellison, BBP Chairman. Head of Sustainability, Hammerson Louise Ellison is Chairman of the Better Buildings Partnership and the Head of ...
Building a Better Board While corporate board members take their jobs more seriously than ever, ...
Barry highlights three things that work well for Twin Cities Habitat’s Board of Directors. Each is worth considering for other nonprofits looking to ...
Building a First-Class Board of Directors ... new board, it is generally better to ... when building a board is diversity. When directors with ...
Building A Better Boyertown (BBB) is governed by its Board of Directors which consists of twenty (16) members. These board members sustain the grassroots ...
Building Better Boards A review of board effectiveness in the Gulf GCC BOARD DIRECTORS ... are sent to the board, as this could be better handled by ...
Building a better board. A board, like a house, needs solid foundations, but the evidence coming out of some of the recent boardroom problems such as the ...