2011 corporate board survey

8/4/2019 2011 Corporate Board Survey

1/26

1 2011 Corporate Board o direCtors survey

2 0 1 1 C O R P O R A T E B O A R D O F D I R E C T O R S S U R V E


2/26

T A B l E O F C O n T E n T S

Itroductio

2

Executive Summary: Key Resuts ad Recommedatios 2

Survey Questios ad Descriptive Statistics 4

About The Rock Ceter or

Corporate Goverace at Staord Uiversity 21

About Heidrick & Strugges 21

Cotact Iormatio 24

Copyright 2011 by the Board o Trustees o the lead Staord Juior Uiversity ad Heidrick & Strugges. A rights reserved


3/26


d ac Ceo M h

B B Mmb?

New Survey rom Stanords Rock Center and Heidrick &

Struggles Examines the Pros and Cons

Active CEOs Might Be Too Busy to Be Eective

CEOs also more tainted by ethics lapses than

board directors

A ew survey rom Staord Uiversitys Rock Ceter or

Corporate Goverace ad Heidrick & Strugges has

ucovered surprises about who makes the best board

directors: its ot ecessariy the curret CEOs that most

compaies seek out.

The popuar cosesus is that active CEOs make the

best board members because o their curret strategic

ad eadership experiece, says David larcker, proessor

at the Staord Graduate Schoo o Busiess. I the 2011

Corporate Board o Directors Survey, whe asked about

potetia probems a u 87 percet said that active CEOs

are too busy with their ow compaies to be eective

directors. A third o the respodets said that active CEOs

were too bossy/used to havig their ow way.

Its great to have sittig CEOs o a board, but compaies

eed to be aware o the costs associated with havig

them, says Stephe A. Mies, Vice Chairma at

eadership advisory rm Heidrick & Strugges. Because

active CEOs are so busy, they might be uavaiabe durig

a crisis or have to cace meetig attedace at the ast

miute. They aso have ess time to review materias. For

some, the demads o their u-time job make it hard or

them to cosistety be as egaged as they eed to be.

Aayzig resposes rom 163 directors o pubic ad

private compaies across north America, the 2011

Corporate Board o Directors Survey reveas how

directors thik about the compositio o the board ad

the eectiveess o various types o board members. Key

digs icude:

n Despite the act that sitting CEOs are highly

sought-ater or board seats, 79% o directors

said that, in practice, active CEOs are no better

than non-CEO board members. Compaies eed

to dieretiate betwee a CEO who brigs cach to

the board ad oe who wi activey cotribute rea

work as a director, says Mr. Mies.

n CEOs o companies that have experienced public

ethical lapses are seen as ar more tainted by

the scandal than their boards are. Whie oy 37%

o directors beieve that a ex-CEO o a compay

that experieced substatia accoutig or ethica

probems ca be a good board member, 67% beieve

a director o a simiary-pagued compay ca, says

Proessor larcker. Some directors do see vaue i

havig a CEO who has experieced ad hopeuy

eared rom mistakes i judgmet. But ar more

are cocered about the stigma ad perceptio

issues i brigig aboard a CEO ike this.

n Boards are struggling to evaluate whether

prospective board members will be a good ft or

the company. Fity-oe percet o directors see it

as moderatey dicut ad 20% see it as extremey

or very dicut to gauge whether a prospect wi be a

good additio to the board, says Mr. Mies. Boards

are ceary dig it a chaege to determie

someoes t. A sige perso ca rui a greatboard, so boards eed to sped cosiderabe time

evauatig this very subjective quaity.

n More than hal o directors think that board

turnover is too low. The chaege o gettig rid

o board members is that there is a widespread

assumptio o board teure, says Proessor

larcker. You may wat to brig them o or three

to ve years, but they ed up stayig or te. Whie

egregious probems might be take care o more

quicky, it is much more dicut to get rid o a

uderperormig or irreevat director who just

happes to stay o too og.

n Forty-six percent o companies do not engage in

succession planning or their board o directors.

Just as we oud i our study ast year that

compaies are seriousy aggig i CEO successio

paig, boards aret doig a great job o paig

or board successio either, said Mr. Mies. Sixty-

six percet o directors do beieve that board

successio paig is a impor tat best practice,

but oy 54% actuay do it.

E x E c u t i v E S u m m a r y:K E y r E S u lt S a n d r E c o m m E n d at i o n S
http://rockcenter.stanford.edu/http://rockcenter.stanford.edu/http://www.heidrick.com/http://www.heidrick.com/Consultants/Pages/12923.aspxhttp://rockcenter.stanford.edu/2010/06/16/new-ceo-and-board-research-from-heidrick-struggles-and-stanford%E2%80%99s-rock-center-reveals-serious-gaps-in-ceo-succession-planning/http://rockcenter.stanford.edu/2010/06/16/new-ceo-and-board-research-from-heidrick-struggles-and-stanford%E2%80%99s-rock-center-reveals-serious-gaps-in-ceo-succession-planning/http://www.heidrick.com/Consultants/Pages/12923.aspxhttp://www.heidrick.com/http://rockcenter.stanford.edu/http://rockcenter.stanford.edu/


4/26


n Nearly 20% o lead directors are chosen by the

CEO or chairman. For obvious reasos, CEOs

shoud ot choose the ead director, says Mr. Mies.

The CEO shoud be asked or iput, but the utimate

choice eeds to be made by the board. Forty-seve

percet o respodets said that their ead director

was eected by the idepedet directors, but this

umber shoud be much higher.

n More than 80% o board members are somewhat

skeptical o the value o proessional directors.

Eve though there has bee a ca amog some

or icreased use o proessioa directors those

who make it a u-time job to s it o boards most

directors dot thik that proessioa directors are

ay better tha traditioa board members, says

Proessor larcker. Whie some respodets beieve

that this groups diversity o experiece is a asset

to a board, may are cocered that proessioa

board members are too busy with other directorships

to be eective.

As compaies thik about who to brig oto the board

that ca deiver the greatest vaue, Proessor larcker

ad Mr. Mies oer the oowig suggestios:

1. Re-think appointing the name CEO to the

board. Yes, a compay gets great pubicity whe it

recruits a big ame oto the board, says Proessor

larcker, but you reay eed to thik about what this

perso wi actuay deiver i vaue. I they are too

busy or i they dot t the cuture or have the right

chemistry, it might ot be worth it.

2. Weigh ailure when evaluating a prospectiveboard member. Obviousy, persoa ethica apses

shoud precude someoe rom beig chose as

a director, but there might be vaue i someoe

comig rom a compay that aied, says Proessor

larcker. Boards eed to uderstad what this

persos cotributio was to the aiure. Did they

ear importat essos, or are they ikey to repeat

past mistakes?

3. Tread careully when evaluating proessional

directors as board candidates. Its importat to

remember that boards must have a good, workig

reatioship with their CEO i order to buid vaue,

says Mr. Mies. Ideay, a proessioa director comes

rom a backgroud o mutipe eadership positios

where he or she has a deep uderstadig or whatthe CEO is goig through. For these reasos, retired

CEOs have the potetia to make great proessioa

directors. They ca have a costructive diaogue with

the CEO ad ca reay cotribute strategicay ad

operatioay.

4. Take the lead director position much more

seriously. You shoud coduct a successio

process or your ead director just as you woud or

a CEO or board seat, says Mr. Mies. The ead

director shoud be the most respected member o

the board a rst amog equas. The omiatig/

goverace committee eeds to ru this process

ad make sure that the best director is i the

positio. It shoud ever be rotatioa as ot every

director is suited or this eadership roe.

5. Evaluate and reresh your board. O course most

board members thik they are above average, says

Proessor larcker. Its huma ature. However, the

evauatio process shoud be structured so that

compaies get a cear uderstadig o who is addig

rea vaue ad who is ot. It is time to move beyod

check-the-box board reviews ad start to seriousy

evauate the boards eectiveess ad its idividua

directors. Oce you have this iormatio, the chairma

or ead director has to be ready to have the dicutcoversatio about how a director ca improve, or

whether it is better or them to step dow.

To speak with David Larcker or Stephen Miles about

this research survey, please contact Helen Chang,

Stanord Graduate School o Business, (650) 723-

3358 or [email protected]; or Jennier

Nelson, Heidrick & Struggles, (404) 682-7373 or

[email protected].
mailto:[email protected]:[email protected]:[email protected]:[email protected]


5/26


a. BaCkground

1. Wh ?

(Pease check a that appy.)

Percent

che Eee ofe 15

ree che Eee ofe 15

ch he B 17

ree ch he B 5

le de 10

Eee ofe 13

ree Eee ofe 7

ose B mebe 66

ohe 9

0 10 20 30 40 50 60 70 80

Other

Outside

Board Member

Retired

Executive Officer

Executive Officer

Lead Director

Retired Chairman

of the Board

Chairman

of the Board

Retired Chief

Executive Officer

Chief Executive

Officer

Percent

S u r v e y Q u e S t i o n S

a n d d e S c r i p t i v e S tat i S t i c S

t nmb r = 163 (m cm) cc a M, 2011

2. Wh h h cm h

m c wh?

Percent

$20 b 9

Total Percentage 100

0 5 10 15 20 25 30 35

>$20 billion

$10 billionto $20 billion



$500 millionto $1 billion


6/26


3. Wh h c h cm

h m c wh?

Percent

n reses 5

n-bes 12

dbes 21rege u 2

Whese/re 7

Fs 13

Sees 26

Hgh tehg 14


0 5 10 15 20 25 30

High Technology

Services

Financials

Wholesale/Retail

Regulated Utility

Durables

Non-durables

NaturalResources

Percent

4. g

Percent

Fee 26

me 74


0 10 20 30 40 50 60 70 80 90 100

Male

Female

Percent

5. a

Percent

< 30 0

31 40 2

41 50 12

51 60 3761 70 40

> 70 9


0 5 10 15 2020 25 30 35 40

> 70

61 to 70

51 to 60

41 to 50

31 to 40

< 30

Percent

6. Wh b c?

6.. nmb bc, - b

Percent

0 26

1 402 16

3 13

4 4

5 1

0 5 10 15 2020 25 30 35 40

5

4

3

2

1

0

Percent


7/26


6.b. nmb , - b

Percent

0 48

1 32

2 10

3 44 2

5 1

> 5 3

0 10 20 30 40 50

> 5

5

4

3

2

1

0

Percent

6.c. nmb -- b

Percent

0 35

1 30

2 22

3 4

4 6

5 2

>5 1

0 5 10 15 20 25 30 35

> 5

5

4

3

2

1

0

Percent

6.. t mb b - h cm m

h b h q

Percent

0 5

1 13

2 19

3 22

4 13

5 10

>5 18

0 5 10 15 20 25

> 5

5

4

3

2

1

0

Percent

7. a b mmb

c ( c wh m jb

b)?

Percent

yes 29

n 71


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


8/26


B. planning or neW Board MeMBers

8. Wh cm b

w c h

b c (Pease check a that appy):

Percent

cEo 18ch 16

le de 6

ohe des 8

ng & Gee cee 28

F B des 15

Ee css 6

ohe (pese spe 1

0 5 10 15 20 25 30

Other

ExternalConsultants

Full Boardof Directors

Nominating& Governance

Committee

Other Directors

Lead Director

Chairman

CEO

Percent

9. Wh cm h m

b c

h b (pease check oy oe):

Percent

cEo 11

ch 14

le de 1

ng & Gee cee 62

F B des 7

Ee css 2

ohe 3


0 10 20 30 40 50 60 70

Other

ExternalConsultants

Full Boardof Directors

Nominating& Governance

Committee

Lead Director

Chairman

CEO

Percent

10. Wh cm c b h

c c

h b: (pease check oy oe)?

Percent

ae gg e hs seppe w 6

Whe gg e s he pess seppg w 26

Bee gg e es ps sep w 49

ohe 19


0 10 20 30 40 50 60

Other

Before

While

After

Percent

Selected other responses:

n w

Whe a eed or a particuar sk i set is idetied or required

(ew expertise sought OR repacemet)

Whe someoe that woud add vaue to the board is idetied

Ogoig with assumed 1-2 year ead; ogo ig review o

potetia cadidatesWe are costaty ookig to expad the Board

Whe board assessmets revea the eed or certai capabiities/

skis/isights that are ot currety represeted o the Board

Whe modicatios to the strategy are made

ach m m

We i advace o madatory retiremet dates

Whe a director is approachig madatory retiremet or

term imits

acq

Acquisitios brig directors


9/26


11. d cm m

w cm h h ,

cmc, xc q

h x b mmb (

xc )? (pease check oy oe)

Percent

yes 60

n 40


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

12. (i y q11) Hw h

xc x b

mmb m h xc

h c (pease check

oy oe):

Percent

Eee ee 4

ve ee 21

mee ee 46

Sgh ee 20

n ee 9


0 10 20 30 40 50 60

Not at alldierent

Slightly dierent

Moderatelydierent

Very dierent

Extremelydierent

Percent

13. Hw c whh

c b mmb w b

chc ( m chm, xc,

w) h cm? (pease

check oy oe)

Percent

Eee f 3

ve f 17

mee f 51

Sgh f 22

n f 7


0 10 20 30 40 50 60

Not at alldierent

Slightly dierent

Moderately

dierent

Very dierent

Extremelydierent

Percent

14. i h b mmb

u.s. C B (pease check oy oe)

Percent

mh w 8

lw 47 ab gh

Hgh 1

mh hgh 0


0 10 20 30 40 50 60

Much too high

High

About right

Low

Much too low

Percent


10/26


C. Board suCCession planning

15. d cm cc

h b c? (pease

check oy oe)

Percent

yes 54n 46


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

16. (i y q15) Wh b cc

m c (pease check

oy oe):

Percent

meegs he b 21

meegs he g gee ee 71

i g es 4

ohe (pese spe) 4


0 10 20 30 40 50 60 70 80

Other(please specify)

Informallyamong directors

Meetings ofthe nominating

and governancecommittee

Meetings ofthe full board

Percent

17. (i y q15) Hw b cc

c m b

cmm m (pease check oy oe):

Percent

oe eeg pe e 24

tw eegs pe e 36

me h w eegs pe e 33

Ee ew es 6

nee 1


0 5 10 15 20 25 30 35 40

Never

Every few years

More than twomeetings per year

Two meetingsper year

One meetingper year

Percent

18. Whch h w m b

mmz b cc

(pease check oy oe):

Percent

i s p bes pe 66

i s se whe he b hs es

whse ss w be e b he p 26i s se 8


19. d cm h b mmb

wh x Ceo cc

(.., h h h c

h m cc c h

Ceo c):

Percent

yes 66

n 34


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


11/26


20. (i y q19) Whch h w c

h x cc (pease

check a that appy):

Number

ch 79

le de 48

ch he ng Gee cee 69

de(s) he h hese 93

0 10 20 30 40 50 60 70 80

Other(please specify)

Informallyamong directors

Meetings ofthe nominating

and governancecommittee

Meetings ofthe full board

Percent

21. Wh c b ,

cm c whh c

h xc Ceo cc

?

Percent

yes 24

n 76


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

d. Ceo as Board MeMBers

22. a c wh c Ceo b h

-Ceo b mmb?

Percent

yes 21

n 79


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

23. Wh c Ceo m hm

c b c (pease check a

that appy):

Percent

Seg epese 77

rsk gee epese 45

ope epese 74

Epeee espg ss e 43

leeshp qes 67

Eese pes / pess ewks 46

ohe (pese spe) 13

0 10 20 30 40 50 60 70 80

Other

Extensivepersonal

Leadershipqualities

Experienceresponding

Operationalexpertise

Risk manage-ment expertise

Strategicexpertise

Percent


C kw

Curret idustry kowedge

Curret issues, curret issues experiece

Extera goba market dyamics perspective

ab wh h Ceo m

They are currety i the fow o busiess issues

They are currety experiecig some o the same probems

as our CEO

Retired CEOs brig cosiderabe perspective but ot the

immediacy o servig CEOs


12/26


24. Wh c Ceo m hm

c b c (pease check a

that appy):

Percent

t bs wh he p be eee es 87

t eese ewkg/pg he

w p be eee es 21

t bss/se hg he w 33

n g bs 28

ohe (pese spe) 5

0 20 40 60 80 100

Never

Not goodcollaborators

Too bossy

Too interested

Too busy

Percent


Big ego

not good isteers

Too geerous with compesatio

25. a c wh Ceo b

b mmb h c Ceo?

Percent

yes 55

n 45


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

26. a c wh Ceo b

h b mmb?

Percent

yes 46

n 54


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

27. Hw m b h xc

Ceo bcm

b c b c?

Percent

less h 3 es 10

me h 3 b ess h 5 es 16

me h 5 b ess h 10 es 20

me h 10 es 16

cEo epeee ee bees e 38


0 5 10 15 20 25 30 35 40

CEO experiencenever outdated

More than10 years

More than 5 butess than 10 years

More than 3 butless than 5 years

Less than 3 years

Percent


13/26


28. C x-Ceo cm h

xc b cc

hc bm b b mmb

h cm? (pease check oy oe)

Percent

yes 37

n 63


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

29. p bf x w q28


n cb hc

Directors eed to be roe modes or ethica behavior

Ethica probems are ot caused by a ack o kowedge, they

are caused by character faws (ad character doest chage)

I woud have more probems with the ethica issues tha the

accoutig oes, but both are probematic he/she was i

charge.

Athough I thik someoe with this experiece coud be great,

the stigma ad perceptio issues woud prevet them rom

beig eective

May have dicuty estabishig credibiity/trust, howeverdepeds o who caused them, but it does show a probem

maagig ad cotroig iormatio ad risk

Toe at the top is a key dri ver o corporate cuture ad the

CEO is the most ifuetia perso i settig toe at the top.

Accoutig ad ethics issues at his / her compay are usuay

the resut o probems with CEO perormace.

n

jm

Absoutey ot. This cocept smacks o reward or bad

behavior thikig. Dieret i the CEO wet i ad reversed

the probems.

The risk to the ew orgaizatio is too dicut to assess

reative to the upside. Was it a aiure i oversight, kowedge,other? How does the board assess whether the CEO has

eared rom the past probems adequatey? How ca the

board assess this?

Reputatio risk outweigh[s] the experiece

n b m b c

Assumig the probems occurred durig his/her teure, there is

a reputatioa risk that may aect his/her abiity to perorm we

I the issues arose o the CEOs watch they shoud have had

the processes i pace to see the risks ad correct beore

they became probems or the compay, the empoyees ad

sharehoders

e xc m b ch

A good CEO ears why he missed the faws, ad does ot

drop the ba twice, though be careu o fawed characters.

As og as the CEO was ot ivoved ( aware o or actig i)

i persoa egregious behavior ad the CEO is abe to opey

speak to essos eared so that Board ca ear rom his /her

experiece. However, there may aways be a questio mark

aroud that perso

I woud say yes depedig o the situatio i the CEO has

eared rom the mistake, he/she coud be very vauabe

They may be a productive board member i a private compay

depedig o their expertise i the segmet or growth

iitiatives that do ot track cuture

I the CEO recogized the deciecies ad tried to be

trasormatioa, the yes. But i the CEO accepted status

quo, the o

There either is or is ot a cuture o ethica behavior ad

compiace or ot. The CEO sets the toe. HOWEVER, there

are CEOs who have iherited probems they did ot create ad

they shoud ot be baketed with the above statemet

These probems may have stregtheed the CEOs abiit y to

respod eectivey ad pa proactivey

30. C b mmb ( h Ceo)

cm h xc bcc hc bm b

b mmb h cm? (pease

check oy oe)

Percent

yes 67

n 33


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


14/26


31. p bf x w q30


ok c - hh

As og as they are ot too cosey associated with the scada

ad the perceptio is that this particuar board member was

ot compicit i the probemsEach circumstace ca be dieret. A board member must

rey o iormatio suppied to him. You ca questio, but ot

get hoest aswers

I this board member was part o the soutio ad ot par t o

the probem, (s)he might make a outstadig board member

n , jm

Athough ess strogy tha the expaatio to the precedig

questio (we may thik o mitigatio actors such as the

behavior o the Board Member i tryig to prevet or resove

the probem), there is aso a potetia reputatioa risk

ivoved

I it is ot the CEO or the CFO - possiby. Eve the you have

to decide i it is worth the reputatioa risk to the compay

At the ed o the day it is the Board that sharehoders pace

trust i ad they must have ad show uderstadig o the

compays accouts

Most ikey ot sice the eve o the perso beig recrui ted to

the Board is C Suite ad they are resposibe or ruig the

Eterprise aog with their peers ad CEO

Yes, i they were brought i to sove the probem. no i they

were part o the probem. I they were part o ethica issues,

nEVER!

y xc ch

A good director ears why he missed the faws, ad does otdrop the ba twice, though be careu o fawed characters.

As og as the perso was ot the cause o the probem

s/he must have high itegrity ad scrupuous ethics

Assumig the Board member was ot ivoved i the

irreguarities, he or she shoud have eared vauabe essos

rom the experiece

I the director was the perso who ucovered the probems

ad ed the ivestigatio, he/she coud be a great board

member. I cotrast, i he/she was there or a decade ad

ever dug ito issues that utimatey proved probematica

This truy depeds o the situatio. For exampe, i a ew

board member was istrumeta i discoverig the probems,

the this board member is hugey vauabe to others!

e. separating tHe CHairMan and

Ceo positions

32. d cm h Chm

Ceo ? (pease check oy oe)

Percent

yes 68n 32


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

33. (i y q32) Hw m w h

?

Percent

1 6

2 8

3 11

4 8

5 16

6 10 24

>10 8

aws


0 5 10 15 20 25

Always

> 10

6 to 10

5

4

3

2

1

Percent


15/26


34. (i y q32) Wh c

h Ceo/Chm ?

(pease check a that appy)

Percent

Pesse ge shehes 4

P s (iSS Gss-lews) ee 4

legse 2

B ebes ew hs s bes pe 38

i hs ws bee he se p 25

ohe 20

0 5 10 15 20 25 30 35 40

Other

It has alwaysbeen the case

Board membersview this

as a best practice

Legislative action

Proxy advisor (ISSor Glass-Lewis)

recommendation

Pressure fromlarge shareholders

Percent


Cocer over eadership quaities o promoted CEO

Part o impemetatio o successio pa. needed

trasitio period

Retiremet o the previous CEO ad hirig o a ew rst timeCEO who the board et eeded metorig

35. (i y q32) i h Ceo

cc ?

Percent

yes 41

n 59


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

36. (i y q35) i h xc

b m m?

Percent

Pee 95

tep 5


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

. lead independent direCtor

37. d cm h

c?

Percent

yes 50

n 50


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


16/26


38. (i y q37) Hw h c

c?

Percent

chse b he cEo h 18

chse b he ng Gee cee 21

Eee b epee es 47

re g epee es 7

ohe es 7


0 10 20 30 40 50

Other reason

Rotated amongindependentdirectors

Electedby independent

directors

Chosen bythe Nominating

and GovernanceCommittee

Chosen by theCEO or chairman

Percent

39. (i ec q38) Hw q h

c c cc?

Percent

Ee e 43

Ee 2 es 12

Ee 3 es 12

n se shee 33


0 10 20 30 40 50

No set schedule

Every 3 years

Every 2 years

Every year

Percent

40. (i r q38) Hw q h

c ?

Percent

Ee e 20

Ee 2 es 60

Ee 3 es 0n se shee 20


0 10 20 30 40 50 60

No set schedule

Every 3 years

Every 2 years

Every year

Percent 41. (i y q37) i h c

cm h -m

(xc) c?

Percent

yes 40

n 60


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

42. (i y q37) i h c

cm h m hh c

xc c?

Percent

yes 39

n 61


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


17/26


43. (i y q37) d h

c h b (ch h

b b c) h c q

h b c h ?

Percent

yes 86

n 14


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

44. (i y q38) d h

c h b xc h

m x h h c?

Percent

yes 55

n 45


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

45. Whch h w m b

mmz h

c

cm (pease check oy oe):

Percent

i s eee ps h s bes pe 81

i s sehg h s e sp ssehge sg eqees 7

i s sehg h s sp ww essg shehes 12


0 20 40 60 80 100

Window dressing

Exchange listingrequirements

Effective position

Percent

g. proessional Board MeMBers

I the oowig questios, we reer to a proessioa

board member as a director whose primary job is

to serve o boards (i.e., these idividuas have prior

executive experiece, but currety they have o other

u-time job tha to sit o boards). Traditioa board

members are idividuas that either have a u-time job orother proessioa iterests. Most o their aua icome

is ot derived rom compesatio or board positios.

46. d h c

b?

Percent

yes 63

n 37


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

47. a c b h

b mmb?

Percent

yes 19

n 81


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


18/26


48. Wh b b

mmb m hm c b

c (pease check a that appy):

Percent

Epeee wh pe pes 86

des bkg 62

Epeee wh sess pes 58

Epeee wh e pes 36

Epeee gg ss 50

Eese pess ewks 40

0 20 40 60 80 100

Extensive profes-sional networks

Experiencemanaging a crisis

Experience with

failed companies

Experiencewith successful

companies

Diversityof background

Experiencewith multiple

companies

Percent

49. Wh b mmb

m hm c b c

(pease check a that appy):

Percent

t bs wh he eshps be eee 56

t eese ewkg/pg hew ee be eee 27

lk epeee (bese he e e ees s p e) 24

n e epeee eee ps 31

the e sp g hs he e 26

t 16

ohe 10

0 10 20 30 40 50 60

Other

Too old

Doing thisfor the money

No experience

Lackindependence

Too interestedin networking/

promoting

Too busy withdirectorships

Percent

H. Board oBservers

I the oowig questios, we reer to a board observeras a idividua who atteds board meetigs or

committee meetigs, but is either a u-time board

member or a paid cosutat.

50. d cm h b b?

Percent

yes 17

n 83


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


19/26


51. (i y q50) Hw m b b

c m?

Percent

1 32

2 5

3 04 26

>4 37


0 5 10 15 20 25 30 35 40

> 4

4

3

2

1

Percent

52. (i y q50) Hw b b

cm h c? (pease check

a that appy)

Percent

csh 12

ops sk 4

the e pese 84


0 20 40 60 80 100

They arenot compensated

Options or stock

Cash

Percent

53. (i y q50) d b b

c mm mh h hh bcm

xc wh h cm?

Percent

yes 52

n 48


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

54. i y q53 d h m

m h cm (.., w

() h )?

Percent

yes 23

n 77


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

55. (i y q50) a b b

(pease check a that appy)

Percent

iess 21

cses 1

Sppes 0

Epee epesees 18ohe 25

0 5 10 15 20 25

Other

Employeerepresentatives

Suppliers

Customers

Investors

Percent


20/26


56. (i y q50) Hw b b

c? (pease check a

that appy):

Percent

mgee ee 46

de ee 18

ree b es 1

ree b s 4

ree b se h p 0

ohe 18

0 10 20 30 40 50

Other

Recommendationby an outside

third party

Recommendation

by a consultant

Recommendationby an investor

Directorrecommendation

Managementrecommendation

Percent

57. (i y q50) Wh b b

h cm? (pease check a that

appy):

Percent

deepe p kwege 61

deepe s kwege 29

deepe kwege 29

Sef Kwege 4

reg Kwege 21

Bsess reshps 25

Gee reshps 4

ohe 11

0 10 20 30 40 50 60 70 80

Other

GovernmentalRelationships

BusinessRelationships

RegulatoryKnowledge

ScientificKnowledge

Deeper functionalknowledge

Deeper industryknowledge

Deeper companyknowledge

Percent

58. (i y q50) Whch h w m

h b b (pease check a

that appy):

Percent

meeg he b 79

meeg he ee 39

meeg he pes ee 21

meeg he g gee ee 11

meeg speze ee(sh s fe, sk, ehg, e.) 14

0 10 20 30 40 50 60 70 80

Specializedcommittee

Nominatingand governance

committee

Compensationcommittee

Meeting of theaudit committee

Meeting ofthe full board

Percent


21/26


59. (i y q50) d h c b

b fc h c

c h m bm?

Percent

yes 17

n 83


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent

60. (i y q50) H b b b

h b mmb?

Percent

yes 17

n 83


0 10 20 30 40 50 60 70 80 90 100

No

Yes

Percent


22/26


a b o u t S ta n f o r d u n i v e r S i t y S r o c k

c e n t e r f o r c o r p o r at e G o v e r n a n c e a n d

H e i d r i c k & S t r u G G l e S

ab Hc & s

Heidrick & Strugges Iteratioa, Ic., (nasdaq:HSII)

is the eadership advisory rm providig executive

search ad eadership cosutig services, icudig

successio paig, executive assessmet, taet

retetio maagemet, executive deveopmet, trasitio

cosutig or ewy appoited executives, ad M&A

huma capita itegratio cosutig. For amost 60

years, we have ocused o quaity service ad buit

strog eadership teams through our reatioships with

ciets ad idividuas wordwide. Today, Heidrick &

Strugges eadership experts operate rom pricipa

busiess ceters gobay. . For more iormatio about

Heidrick & Strugges, pease visit www.heidrick.com.

ab s u rc C

C gc

The Arthur ad Toi Rembe Rock Ceter or Corporate

Goverace is a joit iitiative o Staord law Schoo

ad the Staord Graduate Schoo o Busiess, created

with the idea that advaces i the uderstadig ad

practice o corporate goverace are most ikey to

occur i a cross-discipiary eviromet where eadig

academics, busiess eaders, poicy makers, practitioers

ad reguators ca meet ad work together. The Rock

Ceters goa is to coduct research ad tap this weath

o expertise to advace the practice ad study o

corporate goverace. The Rock Ceter works cosey

with the Corporate Goverace Research Program.
http://www.gsb.stanford.edu/cgrp/http://www.gsb.stanford.edu/cgrp/


23/26


david . larCker

James Irvin Miller Proessor o Accounting; Director o the Corporate Governance Research

Program; Senior Faculty, Arthur and Toni Rembe Rock Center or Corporate Governance at

Stanord University; Codirector o the Directors Consortium Executive Program

Website http://www.gsb.staord.edu/cgrp

Phoe (650) 725-6159

Emai [email protected]

Proessor larckers research ocuses o executive compesatio, corporate goverace, ad

maageria accoutig. His work examies the choice o perormace measures ad compesatio

cotracts i orgaizatios. He has curret research projects o the vauatio impicatios o

corporate goverace, roe o the busiess press i the debate o executive compesatio, ad

modeig the cost o executive stock optios.

Proessor larcker presety hods the James Irvi Mier Proessorship. He is the director o the

Corporate Goverace Research Program at the Staord Graduate Schoo o Busiess ad

seior acuty o the Arthur ad Toi Rembe Rock Ceter or Corporate Goverace at Staord

Uiversity.

He recety co-authored the book Corporate Governance Matters: A Closer Look atOrganizational Choices and Their Consequences, pubished by FT Press-Pearso Pretice

Ha i Apri, 2011. He has aso authored umerous academic research papers, case studies,

corporate goverace coser ook studies, ad artices or the popuar press icudig Do You

Have A Plan For Finding Your Next CEO?The Corporate Board September/October 2010 with

Stephe Mies o Heidrick & Strugges.

Daves research has bee ote cited by the WSJ, BloombergBusinessWeek, FT, Forbes, NY

Times, Agenda, NACD Directorship, Corporate Board Member, SHRM ad Corporate Secretary

Magazine amog others.

Proessor larcker was previousy the Erst & Youg Proessor o accoutig at the Wharto

Schoo o the Uiversity o Pesyvaia ad Proessor o accoutig ad iormatio systems at

the Keogg Graduate Schoo o Maagemet at northwester Uiversity. He received his PhD

i Busiess rom the Uiversity o Kasas ad his BS ad MS i Egieerig rom the Uiversity

o Missouri- Roa.

He is o the editoria boards o theJournal o Accounting and Economics, Journal o Accounting

Research, Accounting, Organizations and Society, Journal o Accounting ad Public Policy,

Journal o Applied Corporate Finance. Proessor larcker received the notabe Cotributio to

Maageria Accoutig Research i 2001. He is aso a trustee o the Wes Fargo Advatage Fuds.


24/26


stepHen a. Miles

Vice Chairman, Heidrick & Struggles

Phoe (404) 538-0119

Emai [email protected]

Stephe Mies is a vice chairma o Heidrick & Strugges. He rus leadership Advisory

Services withi the leadership Cosutig Practice ad oversees the rms wordwide executive

assessmet ad successio paig activities. He is aso a key member o Heidrick & Strugges

Chie Executive Ocer & Board o Directors Practice. With more tha 15 years o experiece i

assessmet, top-eve successio paig, orgaizatioa eectiveess ad strategy cosutig,

Stephe speciaizes i CEO successio ad has partered with umerous boards o goba

Fortue 500 compaies to esure that a successu eadership seectio ad trasitio occurs.

He aso has ed may chairma successios ad board eectiveess reviews, parterig

with boards o directors to hep them with their overa eectiveess, committee eectiveess

ad idividua director eectiveess. Additioay, he is a recogized expert o the roe o the

chie operatig ocer, ad has cosuted umerous compaies o the estabishmet ad the

eectiveess o the positio ad supportig the trasitio rom COO to eective CEO.

Stephe is a coach to may CEOs ad COOs aroud the word. He has buit the Practices

coachig expertise by ocusig o high-perormace eadership competecies with a heavyemphasis o the busiess ad cutura cotext. Stephe works extesivey iteratioay, ad

his ciets cut across a idustry sectors. Stephe ad his CEO advisory services were proed

i the BusinessWeekartice The Rising Star o CEO Consulting.

Prior to joiig Heidrick & Strugges, Stephe hed various positios at Aderse Cosutig.

Stephe is author ad co-editor o the best-seig busiess book Leaders Talk Leadership. He

aso co-authored Riding Shotgun: The Role o the Chie Operating Ocer, as we as the cover

artice i the May 2006 issue o Harvard Business Review* o the same topic. Stephe aso

co-authored the eature artice i the Apri 2007 issue oHarvard Business Review tited: The

Leadership TeamComplementary Strengths or Conficting Agendas? Great top teams work to

their members disparate strengthsbut those dierences can cause discord, too, especially

during succession.

His third book, Your Career Game: How Game Theory Can Help You Achieve Your Proessional

Goals, was reeased i Apri 2010 (Staord Uiversity Press) ad he has aso recety competed

a chapter o Assessig the leader or likage Ic.s Best Practices in Leadership Development

Handbook 2nd edition; Wiey 2009. Stephe is the author o the Staord Graduate Schoo o

Busiess case study etited Multimillionaire Matchmaker: An Inside Look at CEO Succession

Planning. Stephe has aso bee eatured i Forbes, BusinessWeek, Boardroom Intelligence,

Strategy + Business, WSJ/MIT, Consulting Magazine, MIT Sloan, Ivey Business Journal, ad

CEO Magazine. He is a requet speaker o the topics o CEO successio, coachig C-eve

executives, taet maagemet ad compemetary eadership at the top (high perormace

teams).

Stephe is a member o the Heidrick & Strugges Maagemet Committee. He is a idepedet

director or Overay.TV ad DnA13, ad a advisory board member at Ryppe ad The Pythia Group.He has ived i Keya, South Arica, Iraq, Argetia ad Caada.

* Second in Command: The Misunderstood Role o the COO was a McKinsey Award fnalist or the best article in Harvard

Business Review in 2006.


25/26


I you have ay questios about this survey, pease cotact:

Mch e. gm

Associate Director, Corporate Governance Research Programs

Arthur ad Toi Rembe Rock Ceter or Corporate Goverace

Staord Graduate Schoo o Busiess

Kight Maagemet Ceter

655 Kight Way, C222

Staord, CA 94305-7298 (USA)

Phoe: +1.650.736.7420

Emai: [email protected]

c o n t a c t i n f o r m a t i o n

Copyright 2011 by the Board o Trustees o the lead Staord Juior Uiversity ad Heidrick & Strugges. A rights reserved.


26/26

2011 corporate board survey

Documents