The Conference Board Governance Center Blog

Apr
25
2017

What causes corporate directors to overreach their fiduciary responsibilities?

By Patrick R. Dailey, Ph.D.

Present-day corporate directors are being equipped by governance educators, driven by regulators, and pressured by activists to be more actively engaged in pursuing their fiduciary and governance responsibilities. They are encouraged not to be simply fiduciary custodians of the interests of shareholders but active leaders with specialized knowledge of risks and visionary opportunists.

Directors have responded. They have increased their attention and time commitment to their responsibilities: strategic transformation, compliance oversight, succession, and governance duties. They are more alert in protecting their enterprise from risks and more inclined toward increased transparency expected by their shareholders and the media.

With the corporate landscape increasingly filled with “watch dogs,” astute directors clearly recognize that errors in their judgment and/or timing are not casually overlooked by stakeholders these days. As the job has become more demanding, it certainly has become less forgiving. With the increasing scrutiny and expectations, what are directors inclined to do to guide their companies and protect their reputations, if not their wealth? Read the rest of this entry »

Apr
17
2017

Why corporate governance failures continue

By Frederick D. Lipman, Esq

In 2012, I wrote a Director Notes publication for The Conference Board entitled “From Enron to Lehman Brothers:  Lessons for Boards from Recent Corporate Governance Failures.”  It included a review of independent investigative reports, books and articles on various financial disasters, including Enron, AIG and Lehman Brothers and noted the presence of actual and potential whistleblowers who might have warned the audit committee or other independent directors of the impending calamity. However, the information never reached the independent directors. The article advanced the proposition that in order for boards to fulfill their oversight obligations, the organizations they serve must have established robust whistleblower and compliance policies and programs to encourage reporting that can help identify risk exposures, fraud, or other illegal activity. The corollary of that proposition is that the current practices of audit committees and other independent directors are not sufficient to protect shareholders from unpleasant surprises.

Since 2012, the march of corporate governance failures has continued unabated. Financial disasters have occurred in the automotive, banking, and medical products industries. In the case of General Motors, there was in 2014 yet another publicly released investigative report by Anton Valukas which recited that the GM board of directors and its audit committee had complied with all currently considered good corporate governance practices and, nevertheless, never knew of the impending major enterprise risk resulting from faulty ignition switches on the Chevrolet Cobalt and other vehicles.

Read the rest of this entry »

Mar
27
2017

What Every Board Member and C-Suite Executive Should Know About Transforming Sustainability into Business Strategy

By Terry F. Yosie

A growing number of the world’s largest companies are turning to “sustainability” as a strategic lens to help anticipate and navigate the complexity of the international economy, meet the expanding expectations of a growing global middle class, and manage the heightened risks to their businesses from environmental and social disruptions. As a result, sustainability has migrated from the periphery to the core of business strategy and planning. Boards and C-suite executives across multiple business sectors—chemicals, consumer products, information technology, transportation, and retail, to name a few—are on an accelerated course to understand the sustainability concept and its implications for their businesses.

Four major parameters define sustainability from a board and C-suite point of view:

  • Decoupling the intensive use of natural resources and materials from growth strategies;
  • Transitioning to a lower carbon economy;
  • Collaborating with value chain partners, governments and citizens so that business products and solutions ameliorate larger-scale societal problems; and
  • Ensuring the adaptability of a business to global megatrend challenges such as climate change, water resource scarcity, population growth and large scale urbanization.

Read the rest of this entry »

Mar
09
2017

Does your Board Lead or Spectate When it Comes to Strategic Transformation?

By Patrick Dailey and Joel Koblentz

Transformation is one of the most challenging competencies a board must master. McKinsey & Co. estimates that 70 percent of transformations fail to achieve their objectives. Yet board and management teams instinctively know, change is unavoidable and transformation is compulsory.

Companies including Macy’s, JC Penney, The Limited, Yahoo, Hewlett-Packard, Yellow Taxi, and many, many others have “failed” transformation while “out of nowhere” disrupters advance. Playing catch up is rarely successful and typically leaves a wake of dispirited leadership teams, disillusioned investors, and eager activists.

It seems too few boards take seriously the role of proactively “making over” their companies. Except for responding to major crises, transformation has been largely left to senior management to strategize and implement. Other than performing an advisory or approval role, boards have often taken the “back bench” in critical transformational decisions.

Read the rest of this entry »

Mar
06
2017

Q&A with Katie Paine: How to Prepare for a Trump ‘Tweetstorm’

By Gary Larkin, Research Associate, The Conference Board

As I have researched the impact of social media attacks on public companies— namely the recent campaign by President Trump—I have discovered that good advice is hard to find on this matter. That’s why I reached out to Katie Delahaye Paine, a pioneer in the field of communications measurement who has written extensively about social media attacks and how to survive a Trump “tweetstorm.” (For more about the President’s penchant for tweeting and its impact, see my recent blog post , “Is your board prepared for a Trump Tweet attack? Check again.” )

Founder of Paine Publishing, which produces The Measurement Advisor, and author of Measure What Matters (Wiley, 2011) and Measuring the Networked Non-Profit written with Beth Kanter (Wiley & Sons, 2013), Paine also gives speeches and consults on crisis management and reputation risk. Also, she is a senior fellow with The Conference Board’s Society for New Communications Research. Read the rest of this entry »