NACD Convenes Nominating and Governance Committee Chair Advisory Council to Identify Leading Boardroom Practices

WASHINGTON, Dec. 8, 2011 /PRNewswire/ -- As part of its ongoing efforts to promote exemplary corporate leadership, the National Association of Corporate Directors (NACD)—together with worldwide executive search firm Heidrick & Struggles—convened the second annual meeting of its national Nominating and Governance Committee Chair Advisory Council to identify ways that board nominating and governance committees can help build investor confidence in publicly traded companies.

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This influential delegation, comprising the nation's most experienced board nominating and governance committee chairs from Fortune 500 companies, along with key shareholder representatives and regulators, met to develop a more reasonable national dialogue on the issues of proxy reporting, transparency of board processes, how boards deal with composition of directors and other nominating and governance committee responsibilities related to measures of investor confidence.

"Assembling directors, shareowners and regulators in one room is crucial to understanding each party's expectations and making a more informed decision about how to achieve better governance," said Ken Daly, president and CEO of NACD. "Through advisory councils like this, we want to ensure that rule makers understand the impact of universal policies on corporate performance, and that directors are empowered with a better understanding of how to adjust board practices to tell the company's story to investors and the public."

In addition to corporate directors, the delegation also included representatives from the Securities and Exchange Commission (SEC), Vanguard, T. Rowe Price, California State Teachers Retirement System (CalSTRS), the Council of Institutional Investors (CII) and Institutional Shareholder Services (ISS). 

The group discussed how boards can avoid pitfalls in proxy reporting and why shareholder proposals in 2012 are expected to focus on individual directors. The Advisory Council then discussed board practices for dealing with those issues, including more thoughtful disclosure about pay and board composition, aligning board composition with corporate strategy and communicating the rationale for director elections to shareholders more proactively. The group agreed that the nominating and governance committee should lead the board discussion on disclosures versus management asking for the committee's signoff. 

"This NACD forum advances our shared goals to improve communication and build trust between Corporate America and its key stakeholders," said Ted Dysart, vice chairman with Heidrick & Struggles, and a leader in the firm's board practice. "Through these meetings, directors, shareholders and regulators can more effectively address leading practices for board composition and independence and how boards engage in corporate strategy.

The group also addressed the increasing pressure to consider a board leadership structure where the CEO and chairman are separated. Most of the delegation concluded that there is no "one-size-fits-all" model but that both separate and combined structures should be considered with the company's needs in mind. All agreed that the most important issue is to achieve a healthy dialogue and debate where directors exhibit "independent-mindedness," and the board leadership structure nurtures that behavior, either through a "lead director model" or an "independent chairman model."

The NACD Nominating and Governance Committee Chair Advisory Council plans to issue a Summary Paper with board practice recommendations from its November 29 meeting, in order to aid the dialogue on these issues in Washington and in U.S. boardrooms. The delegation first began to identify areas where boards could take a lead role in improving confidence after its inaugural meeting in November 2010, in a paper entitled "Facing New Challenges, Improving Communication," available at  http://www.nacdonline.org/Resources/Article.cfm?ItemNumber=3339.

NACD also convenes advisory councils of board compensation committee chairs and audit committee chairs. All three advisory councils convene throughout the year to exchange ideas for improving investor confidence and to advocate for the board's perspective on key issues.

About NACD

The National Association of Corporate Directors (NACD) is the only membership organization delivering the information and insights that corporate board members need to confidently confront complex business challenges and enhance shareowner value. With more than 11,000 members, NACD advances exemplary board leadership. NACD is focused on creating more effective and efficient boards through director-led education and peer forums to share ideas and leading practices based on more than 30 years of primary research. Fostering collaboration among directors and governance stakeholders, NACD is shaping the future of board leadership. To learn more about NACD, visit NACDonline.org. To become an NACD member, please contact Kelly Dodd at [email protected] or 202-380-1891.

Contact:

Henry Stoever, Chief Marketing Officer
National Association of Corporate Directors
202-775-0509

SOURCE National Association of Corporate Directors