Tag Archive for ‘Board of Directors’
With greater gender diversity on a corporate board, comes better performance. Opinions differ as to why, but myriad research studies from leading academic institutions and the private sector all make a compelling case for more balanced gender representation on boards. The debate should be long over, yet women’s presence on U.S. corporate boards remains frustratingly, persistently low.
A top Ernst & Young executive says that by not recruiting more women to corporate boards, U.S.-headquartered businesses are encouraging a “brain drain,” as women join the boards of non-U.S. competitors. It’s time, she says, for corporate leaders in America to “take advantage of the power of diverse views from leaders who don’t think, act or look like themselves.”
Boards of directors have an important role to play in ensuring that the management team is examining the threats and opportunities digital presents — and devoting appropriate resources to digital initiatives. Consequently, the demand for directors with an in-depth understanding of the trends and technologies shaping the digital landscape has risen substantially in the past 12 months. According to one 2011 survey, demand for directors with digital or technology backgrounds increased by 21 percent from 2010.
Corporate governance expert Paul Strebel says the repeated failure of boards to intervene early enough to avert corporate disasters reflects a serious problem in the boardroom that cannot simply be swept under the carpet: boards are out of touch often with those who can make or break a company.
The economic crisis, increased rules and regulations, and heightened scrutiny of boards’ roles have “corporate directors feeling pressure to be more effective in the boardroom,” according to an annual survey of directors of large companies by PricewaterhouseCoopers. Key concerns include executive compensation, risk management, strategy, succession planning, information technology security and fraud.
Corporate governance expert Paul Strebel says there’s need for a “fundamental change” in the way board directors are nominated, with members of the nominating committee drawn from a more diverse group of stakeholders than has been the case. “To improve public trust in business, the search for board directors has to extend beyond the world of top executives,” he says.
Columnist Gael O’Brien says the U.S. has failed to show leadership in gender diversity on corporate boards, raising questions about what it can learn from other countries that have imposed quotas for women directors. While quotas can stir up discomfort, she writes, there’s a “complacency, even smugness” about boardroom diversity in the U.S. that argues in favor of requiring companies to take action.
Shareholder proposals on social and environmental issues constitute about half of all resolutions in the 2011 proxy season and have become a serious strategic consideration for corporate boards and their members, according to a new report from the consulting firm Ernst & Young. “The degree of support for these types of resolutions is growing among mutual funds and other important investors,” the report finds.
Among the December 2009 proxy rule changes approved by the SEC was a requirement that companies discuss and analyze risks that are reasonably likely to have adverse effect on the company’s reputation and/or sustainability. This means companies must not only identify the risks facing them but also determine the probability and severity if realized and how that relates to the company’s compensation policies and programs.
No board of directors should feel smug about how well their company has prepared for a crisis, writes Betsy Atkins, an independent director of several publicly-held companies. Instead, she says, a board needs to insure there’s an effective crisis management plan in place – one that can protect shareholder value and the value of the corporate brand.