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©Copyright 2007. CBIZ, Inc. NYSE Listed: CBZ. All rights reserve
d.

Building Better Boards
Angie Salmon, EFL Associates
C...
Trends in Board Governance
• Leadership Structures
• Succession Planning
• Board Composition/Diversity
• Director Developm...
Board Leadership
• Define board/committee chair qualifications to utilize
for evaluation and recruitment
• Independent cha...
Board Succession Planning
• Responsibility of nominating/governance committees
• Lack of planning can lead to:
– Entrenchm...
Board Succession Planning
• Plan ahead
• Determine preferences rather than replicating
background of departing directors
•...
Board Composition Matrix
Critical Requirements
Director/Candidate

Cultural/Gender
Diversity

Financial Expert
(Audit Chai...
Board Composition - Diversity
• Boardroom diversity is progressing slowly
• Customer demographics ≠ director diversity
– 7...
Director Development
• Orientation needs to prepare new directors for more
immediate impact
• Continued director education...
Service Restrictions
• Limitations on executive outside board service are
becoming more prevalent
• US companies are trend...
Panel
• Tim Barton
– Executive Chairman & Founder, Freightquote.com

• Robert Druten
– Audit, Finance, and Nominating/Corp...
Questions?
Angie Salmon
Senior Vice President
EFL Associates
11440 Tomahawk Creek Parkway | Leawood, KS
66211
Direct: 913....
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Trends in Board Governance

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Trends in Board Governance:
-Leadership Structures
-Succession Planning
-Board Composition/Diversity
-Director Development
-Service Restrictions

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Transcript of "Trends in Board Governance"

  1. 1. ©Copyright 2007. CBIZ, Inc. NYSE Listed: CBZ. All rights reserve d. Building Better Boards Angie Salmon, EFL Associates CBIZ Human Capital Services, Inc.
  2. 2. Trends in Board Governance • Leadership Structures • Succession Planning • Board Composition/Diversity • Director Development • Service Restrictions www.eflassociates.com
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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.
  11. 11. Questions? Angie Salmon Senior Vice President EFL Associates 11440 Tomahawk Creek Parkway | Leawood, KS 66211 Direct: 913. 234.1576 www.eflassociates.com www.cbiz.com
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