Boards More Effective
Conducted by: Harvard Business School’s Jay Lorsch, Krishna Palepu, Guhan Subramanian and Walter Salmon.
Synopsis Presented by: Brent Longnecker, Chairman and CEO of Longnecker & Associates, Board Member of ATP Oil & Gas and AmReit.
Participants: Board members from various organizations. Half of the group was made up of international representatives with a strong contingent from Africa, Australia, the UK and other destinations. This proved to be very interesting in that their insights were from a different perspective throughout.
Preface: This is Part 2 of my notes and subsequent research performed from the week I spent with Jay Lorsch and a handful of Harvard Business School faculty members discussing board effectiveness. I am trying to share this information to the best of my abilities so that others can gain additional insights for the companies they lead. Note, these are my notes but I do not necessarily agree with all of the comments and/or insights shared. Also note that these professors are all pro-business and serve on boards as well.
Finally, and as mentioned in Part 1, although I did this to be a better board member for the boards I serve on, Chris Crawford and I believe the knowledge gained here will help L&A and all of the great clients we serve as we assist them in the analysis, design, review and risk assessment of their compensation plans going forward. RECAP
TOP 25 GOALS FOR THE WEEK
What are the best board practices in the U.S. and abroad?
Learn effective board dynamics (dialogue, agenda topics, etc). Learn from the financial meltdown; what role did the boards play? How to avoid spending too much time on regulation compliance and not enough time on company strategy and shareholder value.
Learn about board level principles (not regulations) that will improve governance and performance.
Discuss information asymmetry; how do you make decisions from the limited information presented to you as a board member?
Can inside board members be independent directors?
How do you change the structure of a board? (Change the board to keep up with new challenges, new constituencies, and growth opportunities) How do you allocate time most effectively? (Especially time devoted towards compliance issues)
10. Learn about the board’s roles and responsibilities under crisis situations (and the board’s role in preventing crisis).
11. How do US companies get their board roles right?
12. Learn about the board’s role in formulating or monitoring healthy long-term strategy.
13. Learn about the board’s jurisdiction in strategic issues. 14. What is the board’s dashboard for monitoring current operations? 15. How does a director know the business well enough so that he or she knows what to monitor?
16. Knowledge of how to deal with current corporate governance “hot topics” (CEO compensation, risk management).
17. How does a director sustain constructive board dissatisfaction in good times? 18. What principles are applicable to state-owned, family enterprises? 19. When does the board need outside counsel of all kinds?
20. How do directors avoid leaning too much on outside advisors? 21. How do you migrate boards from private to public status? 22. What are the proper qualifications for new board members? 23. Should sitting CEO’s sit on outside boards?
24. How can a CEO capture interest from busy board members?
25. What are the long-range trends in corporate governance?
In Part 1, we ended with Case Study 7-Bank of America and Merrill Lynch
Case Study 8: Hewlett-Packard Company: The War Within
This was a continuation of Case Studies 5 and 6. In September 2006, HP’s Board of Directors was in despair. The acquisition of Compaq (Case Study 5) had taken a toll. Board members were leaking confidential information and felony counts ensued. All of this marred what seemed to be a great turnaround for HP under...
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