Report of the NACD Blue Ribbon Commission on Talent Development

From the board’s perspective—and the investor’s—few things in business are more rewarding than the execution of a winning strategy by a successful executive team. Having the right leadership in place to drive strategy, manage risk, and create long-term value is essential to an enterprise.

This report draws on the experiences and insights of our Blue Ribbon Commission members and research from the National Association of Corporate Directors (NACD), as well as the thoughtful work and writings of others in the business, human resources (HR), and governance arenas. With a focus on the board’s responsibility to help ensure that the company is appropriately developing talent to meet expected future needs, this report addresses:

• The role of the board and its standing committees in overseeing talent development and retention
• Elements of an effective talent development program— from hiring philosophy, sourcing, and onboarding, to the role of HR and business units
• Ongoing assessment and reporting on the company’s talent development efforts
• CEO and C-level succession—the culmination of an effective talent pipeline

These and other key elements are highlighted throughout— and at the end of—this report in the Ten Imperatives for Effective Oversight of Talent Development Programs.

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.