Key Take-Aways | May 2, 2019

Key takeaways

The critical lessons from this session of the Board Leadership Forum are:

- Capital formation in the U.S. is undergoing a significant transition. More companies are electing to become or remain private and fewer companies are undergoing IPOs or remaining public. At the same time, the size of public companies has been growing, and public companies still represent a very large market capitalization.

- There are several elements of this transition which merit further research, including whether elements of private company governance can be adapted for public company boards. One potential idea is to expand the use of board level strategy committees which task specific board members with overseeing strategy and provide them with robust resources to help them do so.

- Key features of a successful lead director identified by participants include:

• playing a key role in the CEO succession planning process;

• maintaining a close relationship with management through informal discussions while remaining independent;

• understanding what makes a company unique and knowing the key drivers of the company’s success;

• taking a lead role on important elements of board operations, such as orientation of new members, overseeing committee activities, and recruiting new talent;

• responding well to stress, leading effectively through times of pressure, and possessing high emotional intelligence; and

• taking an active role in working with management and the other board members to set meeting agendas, including to ensure that strategy is included.

• Boards can effectively oversee culture by: o ensuring that compensation structure incentivizes the desired culture;

• clearly defining culture and making it tangible, and ensuring it is reported to the board;

• engaging with the broader organization, including soliciting employee feedback directly;

• setting the example through culture at the board level; and

• paying especially close attention to culture during times of transition.

- Nelson shared some specific pieces of advice for fellow board members on how to help their companies stay on the right path, based on his experience:

• Be highly engaged and ask the tough questions of management.

• Try to settle issues with management outside the boardroom.

• Take advantage of the executive session.

• Be deeply involved in the strategy of the company.

• Encourage and incentivize management and the company to be best in class, including by asking for monthly performance metrics.

• Ask for and review quarterly, annual, and three-year comps to understand how the company stacks up to the competition.

• Closely examine management compensation and ensure that it is aligned with shareholders’ interest.

• Acknowledge the power of your “nay” vote.

• Keep in mind that culture is the hardest thing to change in an organization. Do so through structural changes.

The meeting summary is available for download here.