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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
8/4/2019 2011 Corporate Board Survey
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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
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2 2011 Corporate Board o direCtors survey
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/8/4/2019 2011 Corporate Board Survey
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3 2011 Corporate Board o direCtors survey
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
mailto:[email protected]:[email protected]:[email protected]:[email protected]8/4/2019 2011 Corporate Board Survey
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4 2011 Corporate Board o direCtors survey
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
$5 billionto $10 billion
$1 billionto $5 billion
$500 millionto $1 billion
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5 2011 Corporate Board o direCtors survey
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
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6 2011 Corporate Board o direCtors survey
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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7 2011 Corporate Board o direCtors survey
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
Total Percentage 100
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
Total Percentage 100
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
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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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
0 10 20 30 40 50 60
Much too high
High
About right
Low
Much too low
Percent
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9 2011 Corporate Board o direCtors survey
C. Board suCCession planning
15. d cm cc
h b c? (pease
check oy oe)
Percent
yes 54n 46
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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10 2011 Corporate Board o direCtors survey
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
Total Percentage 100
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
Total Percentage 100
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
Selected other responses:
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
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11 2011 Corporate Board o direCtors survey
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
Selected other responses:
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
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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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
29. p bf x w q28
Selected other responses:
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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13 2011 Corporate Board o direCtors survey
31. p bf x w q30
Selected other responses:
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
Total Percentage 100
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
Total Percentage 100
0 5 10 15 20 25
Always
> 10
6 to 10
5
4
3
2
1
Percent
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14 2011 Corporate Board o direCtors survey
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
Selected other responses:
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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51. (i y q50) Hw m b b
c m?
Percent
1 32
2 5
3 04 26
>4 37
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
Total Percentage 100
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
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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
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59. (i y q50) d h c b
b fc h c
c h m bm?
Percent
yes 17
n 83
Total Percentage 100
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
Total Percentage 100
0 10 20 30 40 50 60 70 80 90 100
No
Yes
Percent
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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/8/4/2019 2011 Corporate Board Survey
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22 2011 Corporate Board o direCtors survey
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.
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23 2011 Corporate Board o direCtors survey
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.
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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.
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