NACD's BRC Report Series
The world in which boards operate has been transformed in fundamental ways, prompting the critical question of whether a board's composition, director skill sets, and core board processes remain fit-for-purpose. The Commission believes that boards must adjust: by moving beyond traditional approaches to "board refreshment" and establishing a system for continuous improvement in the boardroom. This new mandate places substantially different demands on directors, and boards need to ask themselves, "Are we ready?"
Change in the Boardroom: Evolution or Revolution?: Commission seeks to transform boards into high-impact strategic assets Metropolitan Corporate Counsel
Architects of Change NACD Directorship
Directors should prepare for the possibility of “shock treatments” imposed from the outside, in the form of activist challenges, regulatory mandates, or quotas. Put another way, without sufficient and timely evolution, boards could face revolution.
The mission of the board as [becoming] a strategic asset of the company measured by the contributions we make—collectively and individually—to the long-term success of the enterprise.
Boards are unique entities. While (in the case of public companies) they are elected by and accountable to shareholders, they are self-constituting, self-evaluating, self-compensating, and self-perpetuating: that is, in the normal course of business, they control their own composition and succession planning. This also means that boards are equipped to take action to elevate their performance on an entirely self-directed, voluntary basis—and they should do so.
The velocity of information and the speed of change mean that it’s impossible to have experts on everything on any single board. Instead, we need directors who are agile, with the appetite to learn on a continuous basis.
A Clean-Sheet Approach To Director Succession Planning
Nominating and governance committees should develop a “clean-sheet” assessment of the board’s needs in terms of director skill sets and experience at least every two to three years, and use it as an input in continuous-improvement efforts (including recruitment and director education).
Alignment Between Director Recruitment and Long-Term Strategy
The director recruitment process should have a time horizon that matches the organization’s long-term strategy, typically three to five years or more. The process should be designed to include candidates from diverse backgrounds.
A Balanced Mix of Director Tenures
Tenure is an important aspect of boardroom diversity. Nominating and governance committees should strive for a mix of tenures on the board—for example, maintaining a composition that includes at least one director with <5, 5–10, and >10 years of service.
Investor Communications About the Board’s Continuous-Improvement Process
Communications with investors and other key stakeholders should include a detailed explanation of the link between the organization’s strategic needs and the board’s composition and skill sets, as well as information about the board’s continuous-improvement processes.
The report's commissioners are distinguished corporate directors and governance experts. In aggregate, they serve on a total of 34 publicly traded, 10 privately held, and 62 nonproﬁt company boards.
Director, California Water Service Group; former lead director, Home Depot
Senior Advisor, CamberView Partners; Director, IRRC Institute, NACD; former deputy executive officer and general counsel, CalPERS
Jean M. Birch
Director, Cosi Inc., Darden Restaurants Inc., Papa Murphy’s Holdings Inc.
Principal and Treasurer, Vanguard Group Inc.
Sue W. Cole
Director, Martin Marietta Materials Inc., Biscuitville Inc., Diversified Trust Co., NACD
CEO, NACD; Director, Powerlytics Inc., NACD
Nora M. Denzel
Director, AMD Inc., Ericsson, Outerwall Inc., NACD Northern California Chapter
Director, Manpower Group Inc., Triple-S Management Corp., NACD
Nicholas M. Donofrio
Director, AMD Inc., BNY Mellon Corp., Delphi Automotive PLC, Liberty Mutual, MITRE Co., NACD
Vice Chairman, Heidrick & Struggles
Edgar S. Woolard Chair in Corporate Governance and Director, John L. Weinberg Center for Corporate Governance, University of Delaware; Director, Bob Evans Farms Inc., HealthSouth Corp.
President, NACD; Director, Nura Health Inc.
Partner, Luse Gorman PC; Director, Assure Holding Corp.
Partner, Sidley Austin LLP
Karen N. Horn
Director, Simon Properties Group, National Bureau of Economic Research; Chair, NACD
Partner, Mercer International Inc.
Reatha Clark King
Director, Malcolm Baldridge National Quality Award Board of Overseers; Chair Emeritus, NACD
Patrick A. Lee
Senior Advisor, KPMG Audit Committee Institute
CEO, Executive Consulting Group; Director, MDU Resources, NACD
Director, AIG, Navient Corp.
Director of Corporate Governance, CalSTRS
President and CEO, Pearl Meyer
Partner-in-Charge, KPMG Board Leadership Center
Professor, Northwestern University; Director, ContextMedia, The Field Museum, NACD
Founder, Relational Investors; Former chair, Apria Healthcare Group Inc., Hewlett-Packard Co., Waste Management, Inc.
Our 2016 Blue Ribbon Commission Report and related NACD resources feature a range of practical tools directors can use to accelerate the development of a strategic-asset board. The full report offers 12 tools that any board can apply to introduce new practices or change existing approaches, including board and committee evaluation templates, guidelines for enhancing board evaluation processes, and a multiyear board succession planning matrix.
Reference list of more than 25 questions that can help directors evaluate
Our Blue Ribbon Commission Reports (BRCs) are NACD’s annual signature publications that propose new principles and practices to address the most critical boardroom issues. Read more about the history and impact of the BRC report series here.