02 Aug. 2017 | Comments (0)
“Just What Is the Corporate Director’s Job?” That is a question The Conference Board’s Governance Center is in the midst of posing to different groups of stakeholders over the next two years.Led by Executive Director Doug Chia, the Center has begun hosting roundtables with these stakeholders. So far, it has met with proxy advisors, directors, and investors. It will continue such meetings over the next two years with six more stakeholder groups: hedge funds, academia, the Delaware bar, the media, corporate secretaries, and regulators, among others. According to Gary Larkin, report author and research associate with The Conference Board, “Over time, the range of expectations for doing the corporate director job well has widened, and the job has become a prism. How it’s defined shifts depending on the perspective of the observer.” On June 20, The Conference Board released the first of its series of reports based on those meetings: Just What is the Corporate Director’s Job? Proxy Advisors’ Perspectives on the Board Member’s Job Description. While there has been some coverage in the corporate governance press (See Proxy Advisors Seeking More Than ‘Male, Stale, and Pale’ Directors, Directors & Boards), The Conference Board’s report has provoked critical discussion from corporate governance thought leaders as well.
Here’s what Activist Insight, an activist investing information supplier and publication, had to say about the report: “The Conference Board has a new report out this week that is critical of proxy advisers’ approach to directors’ responsibilities, calling their evaluation ‘consistent with what some proxy advisory firm critics characterize as a ‘check-the-box’ approach.’ That’s a bit of a blow to spring on proxy advisors, especially when the roundtable the report was based on consisted mostly of proxy advisors trying to explore governance weaknesses and propose responses. Per The Conference Board, ‘But when it came to what to do about making boards younger, more diverse, and less entrenched, there was no agreement. The solutions ran the gamut from term limits and mandatory retirement age to improved board evaluations and succession planning. There was little discussion about how these structural items relate to the job description/expectations of a public company director.’ “Really, there are two practical ways of approaching corporate governance. One is to know the board of each company as well as you possibly can, meet with them often to discuss strategy, vote against members of committees on the basis of actions you don’t like and so on. It’s a time-consuming process for both investors and directors. The other is to say boards that fail or underperform have certain characteristics, such as diversity, short tenures, independence, etc., and vote for directors on boards that meet that standard, or withhold when not. Proxy advisors fairly evidently exist to serve the latter approach, evaluating boards and issuing recommendations. Putting the onus on them to determine the duties of a director and come up with solutions for board tenure seems a little harsh.” This is exactly the kind of discussion the Governance Center hopes to prompt in the marketplace over how we look at the job of the corporate director in today’s environment. We look forward to hearing more feedback on our work. The views presented on the Governance Center Blog are not the official views of The Conference Board or the Governance Center and are not necessarily endorsed by all members, sponsors, advisors, contributors, staff members, or others associated with The Conference Board or the Governance Center.