The Conference Board Governance Center Blog


Uncertainty a major corporate governance theme in 2017

By Gary Larkin, Research Associate, The Conference Board Governance Center

As corporate governance goes, the uncertainty of 2017 will be its own separate risk for boards and management of companies, big and small, public and private. I say that because of three things: the incoming Trump administration, the lack of a quorum on the SEC and the widespread use of cyber-terrorism.

Consider the following as we start the new year: hacking of US companies by foreign governments has increased exponentially and has now crossed over into disinformation campaigns (see 2016 US presidential election), several proposed Dodd-Frank Act rules related to executive compensation have not been finalized and there is a good chance the SEC will be down to two commissioners come the end of this month.

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Why are women still not getting on boards? They are stuck on the bench

Our Executive Director, Douglas Chia, has penned an article on gender board diversity for the recent issue of Directors & Boards. Below is an excerpt:

The reasons women aren’t landing on boards—or perhaps excuses—are not new: not a priority . . . fear of change . . . unconscious bias.

In conversations with male and female board chairs, CEOs, and nominating committee members at Fortune 1000 companies, those were just some of the reasons heard for why women hold few board seats and why the rate of progress remains sluggish. The feedback came from approximately 60 meetings between business leaders at The Conference Board’s non-partisan Committee for Economic Development (CED) and their networks of boardroom decision-makers.
None of these reasons (or perhaps the more accurate term would be “excuses”) is new. But, as frustrating as these findings are after years of collective efforts to “move the needle,” we see opportunity. Removing or lessening these purported setbacks lies within the reach of companies and their boards, but if and only if they internalize the feedback and course-correct.
Start with the arguments over lackluster progress resulting from supply challenges. In these peer-to-peer conversations, many reported that their companies use what we view as narrow criteria, mainly experience as a public company CEO or CFO. Some interviewees whose companies use search firms lamented that they are typically presented with a limited list of familiar female candidates. It is not hard to see why—just look at how many female public company CEOs and CFOs exist today. (This is like seeking new members for your basketball team when the criteria is that they have to be English-speaking men who stand over seven feet tall!)
To read the complete article, click here.

Q&A on corporate political spending with Michelle Diggles

Michelle Diggles, a senior political analyst with third way, a centrist think tank that addresses such problems as public policy, recently spoke with Gary Larkin, the corporate governance research associate at The Conference Board.


Michelle Diggles

As another US presidential cycle has wound down, corporations are facing a huge perception problem when it comes to corporate political spending and lobbying. Studies completed by third way show that most voters rank special interest influence over government as the top personal worry tied with a possible terrorist attack. The problem is that most of these same voters believe corporations are among those special interests. The reality is that while overall political spending has increased more than $1 billion since the 2010 Citizens United vs. FEC decision, companies only made up only 8 percent of Super PAC money from January 2015-July 2016, according to The Conference Board’s Committee on Economic Development.

Diggles, who recently spoke to The Conference Board Committee on Corporate Political Spending, said that voters believe that money in politics keeps Congress from acting behalf of the American people. She also believes that American corporations can be part of the solution to correct this perception and work with other stakeholders to close the representation gap. (The Governance Center plans to publish highlights from the October 20 political spending committee meeting soon. For information on The Conference Board Committee on Corporate Political Spending, click here.)

She recently shared some of her thoughts on this issue as well as the disclosure of corporate political spending and lobbying. Read the rest of this entry »


A Strategic Cyber-Roadmap for the Board

To ensure proper oversight of cybersecurity issues, boards should consider either establishing a special committee of the board of directors or securing access by directors to the objective advice of a cyber-expert. That is one of the lessons learned from interviews with five corporate board members conducted by The Conference Board for the  recent Director Notes project.

The report, entitled “A Strategic Cyber-Roadmap for the Board,” also illustrates a three-phase cyber-risk governance roadmap, discusses elements of an effective dashboard to document progress, and articulates practical recommendations for directors. It is a follow-up to The Conference Board’s Emerging Practices in Cyber-Risk Governance study, published in 2015.

For more information on Director Notes and to read archives, visit the Director Notes page.


Is it Time for Sustainability to be a Pocketbook Issue for Executives?

The Conference Board’s newly released Sustainability Practices 2016 Key Findings report shows there is a significant uptick in the number of companies including sustainability metrics as part of their executive compensation schemes. While globally disclosure of most practices remained fairly flat this year, this particular practice saw an increase in disclosure across all indexes, sectors, revenue groups, and regions. To read the report, click here (membership required).

This post from Semler Brossy, an executive compensation consultant, explains how sustainability can be linked to executive pay.

By Seymour Burchman and Barry Sullivan

History suggests that many industries periodically reach inflection points, where factors other than profits, returns, and share price really matter. They generally occur when the business case for major change becomes clear and cannot be ignored. It’s at these points where compensation can help signal change.

Today, we believe many industries have reached such inflection points with sustainability (i.e., operating in the interest of corporate, environmental, and societal good at the same time). This significantly increases the urgency to respond.

The recent rise in public discourse that corporations are bad for society makes the time ripe to ramp up efforts to align sustainability with company missions, core competencies, strategies and pay. Putting corporate executive’s pay at risk would help demonstrate their commitment and help quiet critics who have been busy casting such executives as opportunists.

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