Outline for The Directors' Consortium

Policy and Strategy

This session will deal with the broad set of challenges facing boards today and the policies that the board sets for its structure and operations. These include board size, committee structure, skills mix, board evaluation, and policies on compensation, retirement, conflicts, and leadership. Corporate governance guidelines, issued by many companies in response to investor/activist pressure for commitment to high standards of governance, will be discussed.

The session will also explore the role of the board in strategy development, evaluation, and evolution. How much does the board need to know about strategy, how often, and in how much detail? What should board members do when they are uncomfortable with the strategy?

Nominating Committee Issues and CEO Succession

Current nominating issues include making recommendations to the board regarding director independence and the appointment of a presiding director. Traditional issues include director pay, criteria for and nomination of new directors, retirement age for non-employee directors, performance of incumbent directors, and oversight of annual board self-evaluations. This session will analyze steps that together constitute current thinking on best practices for nominating committees.

Every board must be ready to choose a new CEO. This session will continue with a discussion of the need for succession planning and how to undertake these duties without damaging the morale of current management. As part of the succession process, the board should analyze prospective market opportunities and threats in each major line of business and match these future firm issues/needs to the capabilities of potential successor candidates.

Board Oversight and Spotting the Warning Signs for Management Failure

Boards of directors provide oversight of corporate strategy and of the business leaders responsible for that strategy. Boards need to know what to look out for, and especially what warning signs to pay attention to, if they are to effectively spot brewing failures. In this session, Professor Sydney Finkelstein will help directors spot the strategic, cultural, organizational, and leadership actions and signals that call for probing and discussion as part of their oversight work. Directors alert to what might go wrong at companies on whose boards they sit reduce the risk of unhappy surprises.

Compensation Committee Issues

Boards must choose compensation plans for the corporation’s executives. Directors must understand how the incentives produced by these choices impact the economic performance of the fi rm. This session will review the typical executive compensation plans and discuss the factors that the compensation committee should consider before approving remuneration arrangements. It will examine innovations in the design of compensation contracts, the role of compensation consultants, and how shareholder activists and other stakeholders assess executive compensation and equity ownership.

Audit Committee -- Qualifications, Responsibilities, and Content

What should audit committee members know? This session will explore the levels of independence, financial literacy, and financial expertise required for service on the committee. Mechanisms for achieving those levels, as well as their certification, will also be discussed. What duties fall to members of the audit committee? What accounting issues do they need to understand? This session will consider revenue recognition, off-balance sheet financing, and other critical issues.

Finance

This session will explore the various aspects of corporate finance that board members should know. It will cover three primary areas: (1) evaluating financial statements and financing decisions, including questions a board member should ask in trying to understand the company’s true economic position; (2) understanding the capital markets, including issues regarding how the markets evaluate a company and how a board should—and should not—respond; and (3) evaluating mergers and acquisitions transactions, including questions that a board member should ask of any transaction.

Directors’ Fiduciary Duties: The Core Duties of Directors, and What They Mean in Practice

This session will cover the legal duties of the board of directors. Directors’ duties have long included the fiduciary duties of care and loyalty, the origin of which is state common law. In 2002, Congress enacted the Sarbanes-Oxley Act, which imposes new obligations on boards, and the stock exchanges adopted corporate governance rules, which create yet additional responsibilities. In this session, we will discuss what these legal rules mean for board structures and processes, and what they mean for the risk of director liability. In both areas, the goal will be to embed these inquiries in real-world situations boards face in confronting difficult problems.

Power and Persuasion:
How Effective Directors Influence CEOs and Board Decisions

One of the most important roles directors serve is helping CEOs make higher quality decisions. To be effective, directors must be skillful at using power and influence in the boardroom and at communicating decision to the outside world, including the media and shareholders. This session will develop a framework for thinking about how effective directors use power and influence; it will focus on how to frame decisions more creatively and influence tactics for addressing controversial issues or conflict situations within boards.