Corporate Directors Forum 2012, Part 9: The "Big Deal" in One Act

These are some relatively quick notes that I’m sharing from the Corporate Directors Forum 2012, held at the University of San Diego, January 22-24, 2012. This post may be a cryptic… incomplete sentences bt hopefully mor intelligible thN txt msgN or Tweets.

Chatham House Rule prevailed, so little here in the way of attribution but should provide some sense of the discussion. Many opinions below are those of panelists. Some were from the audience. Some are just what I’ve heard that I hope is related. Attend next year and you’ll get a more complete picture.


Board Meetings: The Good (Bad & Ugly) in One Act

  • Moderator James Hale, former EVP, general counsel & corporate secretary, Target Corp.; director, The Tennant Company
  • Carol S. Eicher, business group VP, The Dow Chemical Company; director, Tennant Company
  • Peter Gleason, managing director & CFO, National Association of Corporate Directors (NACD)
  • Bonnie G. Hill, director, The Home Depot; YUM! Brands; AK Steel Holding Corp.; FINRA; PCAOB
  • Yvonne R. Jackson, director, Winn-Dixie; former director, Best Buy; chair of the board, Spelman College
  • Gregory P. Williams, director, Richards Layton & Finger

Lots of opportunity taken here to ham it up, demonstrating both the best and worst kinds of behavior typically seen on boards. Educational but hopefully not realistic as board members spent too much time focused on the size of the table and not enough on the financials.

One major focus was Acme’s possible acquisition of “Big Deal.”  Two-thirds of acquistions destroy value. This is an allocation of assets question. Investment bankers are often selling and what they are selling is not fully understood. Questions re special committee to delve deeper into acquisition or should it be full board. Of course, full board must be involved in making decision.

Lots of good questions and advice was heard from the audience during interruptions from the acting. They were entering into a confidentiality agreement so the CEO explore the opportunity further. The trend is toward full boards being involved in risk analysis.

Consensus on range of vehicles for compensation, not just options as several have recommended and as boards move away from perhaps over-reliance on restricted stock. Compensation package should get the “full Monty” treatment; show it all. Over reliance on any one form is a mistake.

Discussed need on some boards to have their own outside counsel. The company’s law firm wants to keep that business and may find it harder to advise the board to push back against the CEO. It is often a good idea to have one to call on as needed for special situations but not for routine. Fundamental flaw might be to have one outside counsel rather than different outside counsel, depending on the special need.

They also discussed getting a coach for relatively inexperienced CEO who is  learning on the job. Get busy on succession planning. Has the board made it clear what the CEO needs to do to get an A, development plan, competency gaps vs acquisition opportunity. Critical that board also have relationship to other top managers, such as CFO, COO, HR. Interesting that the board in the play has three women on the board… leading to discussion around need for diversity of real life boards.

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