Board Effectiveness

That benchmarking question is coming…

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“Good question, Maya. That topic is on agenda for our next meeting.”

As you prepare for a board or committee meeting, you just know that you are going to get the question: “What are our peers doing?” You may get it from the CFO, the GC, the CEO, or the Committee Chair. If you are lucky, you get the question before the meeting. If you are really good, you anticipate and have the answer.

Why does the questioner care about what others are doing? It is as simple as the questioner wants to know if the company is or will be an outlier; there is sometimes safety in numbers.

Even if you do not get the question, knowing what your peers are doing about certain things can help you in your role:

  • Provide better advice to your board and board committees
  • Spot trends and be ready to explain them
  • Explain your approach in meetings with shareowners

Typical “peer questions” are –

  • Do our peers split the Chair and CEO roles?
  • Who are our peers’ independent auditors? What are our peers paying in audit fees, tax fees and non-audit fees?
  • Who are our peers’ compensation consultants?
  • What board committees do our peers have?
  • Do our peers have a board succession plan in place?
  • How many directors do our peers have? What is their gender make-up?
  • Do our peers have anti-hedging, clawback, and executive stock ownership policies?

If you are really organized, you already have your compensation peer group proxies bookmarked on your computer or you have saved some recent surveys by director recruiting firms or a professional association to your laptop. But still you need to dig around for the right data.

Being able to display those comparisons effectively allows you to convey your analysis clearly and make your point more powerful. That is where knowing when to use a “bar chart” or “donut” versus “radar” versus “sankey” graph to convey the information allows you to provide added value to deliberations.

Foresight presents peer information for just these occasions (it is just a click or two away) in the most clear and compelling manner.

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