accountability
of shareholders, 40–41, 46, 47, 65
Ackman, Bill, 39, 40, 51, 55, 68
Actavis, 67
activist investors, 39–40, 50–51, 54–56, 65, 67–72, 98
African American board candidates, 130–132
age, of board members, 5–6, 106
Millennials on boards, 125
agency costs, 43
agency model, 40–56, 62–63, 65
implications for companies of, 52–54
agency theory, 40–48, 56–60, 64
agenda management, 10, 31, 33–34, 37, 95
Alaska Air Group, 202
Allergan, 39, 40, 46–48, 51, 55, 67–71
Alza, 13
Amelio, Gil, 160
American Express, 10
anchoring, 141
anonymous surveys, 11
Arthur Andersen, 13
assumptions, challenging, 4, 11, 13–14
Axcan Pharma, 35
backroom decision making, 108
Balanced Scorecard, 146
Bank of America, 171
Baxter, Clifford, 13
Bell, Charlie, 168
Bennett, Benjamin, 203
Berkshire Hathaway, 7
Berle, Adolf, 44
best practices, conventional wisdom on, 2–8
Bettis, J. Carr, 203
Blair, Don, 219
board meetings
agendas for, 31, 33–34, 37, 95
attendance at, 2
board members
accountability of, 5, 12, 15, 86
back channels to line managers by, 10
equity involvement of, 3
expertise of, 122, 124–125, 211–213
meeting attendance by, 2
new CEOs and, 182
on nonprofit boards, 85–86, 98–99
outside interests of, 109
trust and respect between, 8–11
boards of directors
business disasters and, 1
committees, 5, 7–8, 16, 34, 89, 93–95
composition of, 29–31, 124–125
corporate responsibility and, 210–223
dynamics of, and gender, 112–115
encouraging dissent on, 11, 13–14
evaluating performance of, 5, 12, 16, 20–22, 30–32
fiduciary responsibility of, 44, 73–74
information sharing with, 34–36, 73, 96–97
interactions between management and, 123–124, 127–128
performance evaluations, 20–22
power balance between management and, 74
role of, 43
setting executive performance targets by, 195–204
size of, 7
as sounding board, 213, 216–217
as source of knowledge and expertise, 211–213
standards for, 1
succession planning and, 157–178
sustainability issues and, 209–223
tactics for building better, 4–5, 8–16
Boeing, 158
Boston Consulting Group, 52
boundaries, 139
Bourgeois, L.J., 14
Bower, Joseph L., 39–66, 68, 72
Brokaw, Tom, 168
Buffett, Warren, 7
Burns, Ursula, 189
Business Roundtable, 6
business strategy, 59, 70–73, 114, 126. See also strategy risks
Calloway, Wayne, 15
Cambia Health Solutions, 119
Cantalupo, Jim, 168
capabilities profiles, 30
capital gains taxes, 70
CBS, 168
Cendant, 8
Center for Effective Organizations, 20
CEO. See chief executive officer (CEO)
Chan, Elsa, 131
change, resistance to, 101
Charles Schwab, 5
chief executive officer (CEO)
board building and, 33
boomerang, 158
failure of new, 180–182, 188–189
innovation and, 122
interactions between boards and, 123–124, 127–128
nonprofit boards and, 88–90, 92
power balance between board and, 71–72, 74
presence of past, on board, 6
tenures of, 158
360-degree feedback for, 202
transition process for, 179–203
trust building by, 11
chief human resources officer (CHRO), 185–187
China Mobile, 60
Cisco, 5
Citrin, James, 182
CKE Restaurants, 6
CLP, 154
codes of business conduct, 139
committees, 5, 7–8, 16, 34, 89, 93–95
communication, between boards and senior management, 9–11, 34–36, 73, 96–97
Compaq, 13
competence, of board members, 29–31
competitive advantage, 119
competitive compensation packages, 200–201
competitive risks, 151
compliance issues, 135
Conference Board, 6
confirmation bias, 141
constituents. See stakeholders
constructive criticism, by board, 213, 216–217
Continental Airlines, 30
Conway, Jill Ker, 209–217, 219–220
Cook, Tim, 192
Corning, 158
Corporate Accountability and Standards Committee, 6
corporate governance
agency-based model of, 40–56, 62–63, 65
company-centered model of, 56–65
keys to better, 19
long-term performance and, 61
models of good, 40
reform, 38
Corporate Horizon Index, 78–79, 80
corporate leadership. See leadership
Corporate Leadership Council (CLC), 157
corporate responsibility committees, 214–223
corporate social responsibility, 42, 43, 57, 60, 210–223
leadership of, 57–58 (see also chief executive officer (CEO); leadership)
long-term prosperity of, 58
objectives and strategies of, 57, 59
socioeconomic systems and, 60
value creation by, 59
corruption, 1
Costco, 130
credit risk, 139
critical thinking, 126
CtW Investment Group, 130
culture
changing, 38
risk, 141
customers, 59
customer satisfaction, 202
Davis, Kim, 132
Deepwater Horizon, 135
devil’s advocates, 143
digital directors, 125
Dimon, Jamie, 156
director independence, 1, 6–7, 29
discrimination, 110
disruptive technologies, 151
dissent, fostering open, 4, 11–14
diversity
quotas for, 116
Dodd-Frank Act, 210
Domet, Jack J., 154
Dow Chemical, 158
DuPont, 54
Dutch East India Company, 60
DyeCoo Textile Systems, 221
earnings per share (EPS), 196, 197
earnings growth, 79
earnings quality, 79
Ecomagination, 60
economic disasters, 150
Edmonson, Amy, 129
Eisenhardt, Kathleen, 14
Ely, Robin, 110
Emerson Electric, 174
employee satisfaction, 202
engagement
Enrico, Roger, 15
Enron, 1, 3–6, 8, 9, 13, 15, 47
environmental changes, 150
equity involvement, 3
executive committees, 98
executive compensation, 48–49, 58, 73
disclosure of, 49
intrinsic motivation and, 206–207
long-term incentive plans, 204–207
nonfinancial targets and, 202–203
relative pay and, 206
relative to competitors, 200–201
executive recruiters, 166–168, 171
expertise
lack of, 122
experts
external risks, 136, 137, 140, 149–153
failure
Federal-Mogul, 6
feedback
lack of, 16
360-degree, 202
financial services industry, 144–145, 151
Fink, Larry, 77
Ford, 119
Franklin, Barbara Hackman, 71–74
Fraser, John, 144
free market system, 59
Gallagher, Michael, 48
gap analysis, 25
General Electric (GE), 3, 7, 15, 60, 158, 162, 174, 177
General Motors, 164
geopolitical changes, 150
Gerstner, Lou, 161
Global Alliance for Workers and Communities, 212
global financial crisis, 80, 81, 135, 150, 153, 156, 210
Goldman Sachs, 156
Goldner, Brian, 122
golf, 108
good governance, 40
Google, 133
Gopalan, Radhakrishnan, 195–204
governance failures, conventional wisdom on, 2–8
governance reform, 6
government regulations, 70
Gow, Ian, 51
Grove, Andy, 6
Hasbro, 122
Hayward, Tony, 135
hedge fund activists, 51, 55–56, 67–72
Hekman, David, 130
Hewlett, Walter, 13
Hewlett-Packard, 13
high-performance boards, 20, 21
Houghton, Jamie, 158
human element, importance of, 8–16
hyperbolic discounting, 205
independence, of boards, 1, 6–7, 29
individual accountability, 5, 12, 15
information sharing, 9–11, 34–36, 96–97
Ingram, Doug, 70
innovation, 55, 119–129, 142, 219–222
insiders
for CEO candidates, 158, 160–161, 163–164, 183
institutional investors, 44–47, 50
institutional priorities, 93–95
Institutional Shareholder Services, 3
internal audit department, 139
international assignments, 107
International Youth Foundation, 212
investor activism, 39–40, 50–51, 54–56, 65, 67–72, 98
investor relations, 67
Jager, Durk, 174
Jet Propulsion Laboratory (JPL), 141, 142–143
job creation, 81
Johnson, Stephanie K., 130–133
JPMorgan Chase, 156
JP Morgan Private Bank, 145, 147
Kelleher, Herb, 6
Kendall, Don, 15
Kozlowski, Dennis, 9
Lafley, A.G., 174
LaManna, Mary Ellen, 191
Lancaster, Richard, 154
leadership
development of, 61, 161, 163–164, 168–169, 173–178
succession planning and, 157–178
Lewicki, Chris, 143
Lewis, Ken, 171
limited liability doctrine, 46, 59
line managers, back channels to, 10
long-term incentive plans, 204–207
LTV Steel, 6
male social networks, 108, 113
management responsibilities, 50
margin growth, 79
Mark, Rebecca, 13
Mark, Reuben, 174
Marriott, 154
maternity leave, 114
McColl, Hugh, Jr., 171
McDonald’s, 168
McGurn, Patrick, 3
McKessonHBOC, 8
McKinsey Global Institute, 75, 78
Means, Gardiner, 44
meeting attendance, 2
Mercer Delta, 20
micromanagement, 124
mindset, for board building, 20–22
Minow, Nell, 2
mission statements, 138
Mulcahy, Anne, 189
National Association of Corporate Directors (NACD), 6, 157
National Endowment for the Arts, 90
natural disasters, 150
NBC, 168
negative externalities, 60
Nestlé, 119
New York Stock Exchange, 6, 20
New York Times Company, 188, 190–193
collaborative character of, 98–99
information sharing with, 96–97
institutional priorities and, 93–95
old work of, 94
outside experts and, 91
performance indicators and, 91–92
policy implementation and, 92–93
problems with, 100
resistance to change in, 101
task forces, 95
normalization of deviance, 141
onboarding, 182, 189, 191. See also transition process
organizational biases, 140–141
organizational forms, 57
organizational judgment, 177
out-of-the-box thinking, 125. See also innovation
Paine, Lynn S., 39–66, 68, 72, 209–223
Pan Am, 10
parental leave, 114
Parenty, Thomas J., 154
Parker, Mark, 218
partnerships, 57
pay for performance arrangements, 49, 55–56, 73, 195–204
peer pressure, 15
peer reviews, 16, 31, 32. See also 360-degree feedback
Peltz, Nelson, 54
PepsiCo, 16
performance, focus on long-term, 75–83
performance evaluations, of board, 5, 12, 16, 20–22, 30–32
performance metrics, 91–92, 128, 196–198
Pershing Square Capital Management, 51, 55, 67, 68
personal judgment, 176
preventable risks, 136, 138–139
prevention focus, 132
Price, Paula, 120
Procter & Gamble, 174
promotion focus, 132
proprietorships, 57
protectionism, 150
proxy fights, 51
public company shares, average holding period of, 45
quarterly earnings expectations, 75, 77, 79
quotas, 116
Ranganath, M.D., 146
Rather, Dan, 168
regulations, 70
relative pay, 206
reputation, 14
research and development, 55, 56, 77, 80
risk aversion, 205
risk culture, 141
risk function, 153
risk management, 72, 120–122, 135–156
risk categories and, 136, 137–140
rules-based, 135, 137, 140, 141–142
risk managers, 145
Risk Report Card, 149
risks
competitive, 151
credit, 139
external, 136, 137, 140, 149–153
incubation of, 141
strategy, 136, 137, 139–140, 142–149
Robinson, Jim, 10
role models, 139
rules-based risk management, 135, 137, 140, 141–142
Sandberg, Sheryl, 192
Schwab, 7
ScottsMiracle-Gro, 202
Selander, Bob, 127
self-dealing, 46
senior management
agency theory and, 50
alignment of interests between shareholders and, 47
communication between boards and, 34–36
fiduciary responsibility of, 44
information sharing by, 73
interactions between boards and, 123–124, 127–128
performance targets for, 195–204
power balance between board and, 71–72, 74
responsibility of, to shareholders, 42–43, 50
as role models, 139
See also chief executive officer (CEO)
Session C, 162
shareholder returns, 49
shareholders, 59
accountability of, 40–41, 46, 47, 65
activist, 39–40, 50–51, 54–56, 65, 67–72, 98
balancing interests of, with other stakeholders, 71–74
communication with, 73
interests of, 60
intervention by, 47
uniformity of, 48
shareholder value, 39–41, 43, 50, 51, 53–56, 58, 59, 65, 69
Shell Oil, 151
Sherwin-Williams, 174
short-term focus, 73, 75, 77, 78, 81–82, 121–122, 195, 222
Siegel, David, 160
society, functions of corporations in, 58–59
speculators, 64
Spencer Stuart, 182
Sprunk, Eric, 218
Srinivasan, Suraj, 51
stakeholder judgment, 177
stakeholders
balancing interests of all, 71–74
new CEOs and, 182
standing committees, 34
Stavropoulos, Bill, 158
Stemple, Bob, 164
stocks, average holding period of, 45
Stonecipher, Harry, 158
strategic planning, 146
strategy meetings, 126
strategy risks, 136, 137, 139–140, 142–149
stress tests, 151
succession planning, 61, 157–178
chief human resources officer and, 185–187
executive recruiters and, 166–168, 171
internal candidates and, 158, 160–161, 163–164, 183
leadership development and, 161, 163–164, 168–169, 173–178
outside candidates and, 159–160, 172–173
results of poor, 158
search committees, 170, 171–172
tips for succeeding at, 168–180
Sulzberger, Arthur, Jr., 191
Sunbeam, 8
suppliers, 59
sustainability issues, 209–223
tail-risk stress tests, 151
tandem assessment, 162
tax rates, 70
Teledyne, 5
Thomas, David, 110
Thomas, Richard, 160
Thomson Corporation, 168–169, 172–173
360-degree feedback, 202
time constraints, 122
total shareholder returns (TSR), 49, 59
transition process, for new CEO, 179–203
Trippe, Juan, 10
Trump Hotels and Casino Resorts, 6, 7
trust, climate of, 4, 8–11, 12
trustees, of nonprofits, 85–102
United Way, 93
Valeant Pharmaceuticals, 39, 46, 51, 55, 67–71
value creation, 54–56, 59, 75–83
value statements, 138
Visa, 202
vision, 22
Wachner, Linda, 6
Wal-Mart, 7
WannaCry attack, 154
Waste Management, 8
Watkins, Sherron, 9
Welch, Jack, 7
whistle blowers, 139
Williams, Brian, 168
Williamson, Sarah Keohane, 75–83
Wiseman, Mark, 77
Wright, Patrick, 184
Zhikarev, Gregoriy, 145
Zubrow, Barry, 156