En cette veille de Noël, voici un article de Kerry E. Berchem*, paru aujourd’hui dans le Harvard Law School Forum, qui présente une liste détaillée des 10 plus importantes préoccupations des conseils d’administration en 2015.
Cet excellent article devrait intéresser tous les membres de C.A., notamment le président du conseil et les présidents des comités du conseil. Même si l’article peut vous paraître assez dense, je crois qu’il fait vraiment le tour de la question.
Vous trouverez, ci-dessous, les sujets chauds à considérer par les C.A. en 2015.
1. Oversee strategic planning in the face of uneven economic growth and rising geopolitical tensions
2. Oversee cybersecurity as hackers seek to infiltrate even the most sophisticated information security systems
3. Assess the impact of advances in technology and big data on the company’s business plans
4. Cultivate shareholder relations and assess company vulnerabilities as activist investors target more companies
5. Consider the impact of M&A opportunities
6. Oversee risk management as newer and more complex risks emerge
7. Ensure appropriate board composition in light of increasing focus on diversity, director tenure and board size
8. Explore new trends in reducing corporate health care costs
9. Set appropriate executive compensation
10. Ensure the company has a robust compliance program as the SEC steps up its enforcement efforts and whistleblowers earn huge bounties.
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In light of these developments, it is critical for companies to have comprehensive and effective compliance programs in place, including a transparent process for internal investigations. Companies should also review and update as necessary their anti-retaliation policies and procedures and make sure employees and executives at every level are sufficiently trained in this area.
The complete publication, including footnotes, is available here.
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* Kerry E. Berchem, associé et co-responsable des pratiques de gouvernance de la firme Akin Gump Strauss Hauer & Feld LLP.
Vous trouverez, ci-dessous, un extrait d’un excellent article paru sur le site de Russell Reynolds Associates (www.russellreynolds.com), une firme spécialisée dans la recherche de cadres supérieurs à l’échelle internationale.
On a souvent abordé l’importance de la recherche de nouveaux administrateurs dans ces pages, mais ici nous attirons votre attention sur les facteurs qui conditionnent les relations entre le conseil et le PCD.
Les auteurs ont identifié 25 éléments essentiels sur lesquels se fondent une solide relation entre le CA et la haute direction. Ces facteurs ont été regroupés en quatre catégories de responsabilités :
1. Les responsabilités relationnelles du président du conseil d’administration (PCA);
2. Les responsabilités relationnelles du président et chef de la direction (PCD);
3. Les responsabilités relationnelles des administrateurs;
Essential Elements of an Effective CEO-Board Relationship builds on the ongoing work of our global CEO and Board Services practice in assessing critical board composition, governance and performance issues. This discussion is meant to help boards led by non-executive chairmen understand the defining activities and attributes of the best CEO-board relationships— relationships that consistently contribute to organizational performance and superior results.
Our goal is twofold: To provide boards and CEOs with a clear understanding of the essential elements of an effective CEO-board relationship and to enable boards and CEOs to both assess and improve their current performance in delivering against each of these relationship attributes. We have identified 25 essential elements of an effective CEO-board relationship, each with an actionable defining standard. We hope these prove useful in assessing the health and quality of the relationship dynamics in your firm.
……
Conclusion
We developed the framework for Essential Elements of an Effective CEO-Board Relationship with the input of sitting CEOs, chairmen and directors from a range of industry sectors and regions to provide guidance and structure for boards as they assess the clarity of their roles and the effectiveness of their relationships across the board as a whole. The 25 essential activities and attributes identified here can serve as a diagnostic to help those involved in the process rate the importance of each role’s responsibilities, as well as determine how effective individuals currently in these roles are delivering against those responsibilities.
Our Global CEO and Board Services practice has an ongoing commitment to investigate critical corporate governance and board performance issues and to share our findings—with the aim of promoting discussion and adoption of best practices in board oversight.
Récemment, nous avons abordé l’épineuse question du benchmarking dans l’établissement de la rémunération des hauts dirigeants et montré les effets insidieux de l’utilisation de cette approche.
Aujourd’hui, je vous propose la lecture d’un court article paru sur le site de Equilar. Les auteurs suggèrent la considération de trois pratiques exemplaires pour la fixation de rémunérations équilibrée et justes.
1. Mettez l’accent sur des comparaisons réalistes de l’univers des pairs;
2. Divulguez vos critères de choix;
3. Assurez-vous de bien démontrer comment la rémunération est liée à la performance, notamment à la performance de l’entreprise à long terme.
Bonne lecture ! Vos commentaires sont les bienvenus.
Determining compensation is a process of comparison. What’s a candidate worth to the organization in relation to others? What if this candidate took their talents elsewhere? What could they expect to earn from another employer? How does location, industry, and company size play into the picture?
When you’re dealing with compensation at the executive level, the stakes become higher and the compensation package more nuanced, which means the process of comparison becomes more complex.
Initially, attracting and motivating executive talent involves a large investment. And without performance-based incentives, annual salary increases can become an expectation rather than a reward.
On one end of the spectrum, ineffective benchmarking can lead to underperformance, over-inflated salaries, and sometimes even negative media coverage. On the other end of the spectrum, you don’t want to undercompensate talented executives and leave them feeling unmotivated—or worse—lose them to a competitor with better pay.
Effective executive compensation benchmarking can help an organization keep high-performers happy and motivated while staying out of the media spotlight. Use the following best practices to do it right.
1. Focus on authentic peer comparisons
Avoid the trap of performing “peer comparisons” using oversimplified criteria. In order to get an authentic benchmark, use more complex data mining. For example, not every CEO of a mid-sized organization in Silicon Valley deserves to be compensated at the same level as one who has just successfully led their company through an IPO. Factors like profitability are critical to getting an accurate compensation benchmark. Alternatively, age may be a completely irrelevant data point in determining appropriate peer comparisons.
2. Don’t dodge disclosure
The clarity with which your organization justifies compensation is important. When you can easily—and clearly—disclose data-driven justification for your compensation decisions, you’re supporting an atmosphere of transparency. And with transparency comes investor, client, and consumer confidence.
3. Bring up performance
Executive compensation packages that link pay to performance are critical in an era of increased scrutiny from institutional investors, regulatory agencies, proxy advisors, and shareholders. Incentive plans also benefit the executive and the organization with clear, detailed annual and long-term incentive points.
Le Dr Eugene Fram a récemment publié un article pertinent qui fait l’apologie des OBNL, lesquelles doivent accomplir leurs missions en dépit de conditions sous-optimales.
L’article expose une série de caractéristiques des OBNL qui, trop souvent, contribuent à sous-estimer leur œuvre et qui teintent les perceptions du public envers celles-ci.
Parmi les particularités inhérentes à plusieurs OBNL, on retrouve souvent des éléments qui servent à justifier des lacunes de gouvernance; ces indices de dysfonction influent sur la perception des donateurs éventuels :
La plupart des organisations sont de très petites tailles;
Le défi de la gestion des bénévoles est très grand;
Les locaux et les équipements sont souvent peu attrayants;
Les relations entre le CA et la direction sont perçues comme immatures;
Les parties prenantes, notamment les donateurs, sont souvent mal informés de la distribution aux bénéficiaires, contribuant ainsi à créer l’impression qu’ils sont à la merci de la direction;
Les relations avec le CA sont souvent inhabituelles … en ce sens que les administrateurs ont tendance à s’immiscer régulièrement dans les activités des gestionnaires.
L’article tente de décrire ce qui peut être fait pour contrer ces perceptions.
Solomon R. Guggenheim Museum 1071 Fifth Avenue (at 89th Street) New York, NY
Judging from the vast literature on dysfunctional nonprofit boards and organizations (my own posts included!) one might conclude that the majority of nonprofits are struggling, incompetent and/or in crisis. I argue that this is not the case. Decades of experience lead me to believe that nonprofits have the same functional variables as profit making organizations—dysfunctional at times like Target or GM; efficient like Apple or Whole Foods; adaptable like Del Monte and Cisco. Everybody doesn’t get it right all the time.
Perceptions become reality to those who are quick to embrace popular labels such as the overused term, “dysfunctional.” Obviously, in the case of nonprofits, such perceptions are harmful. Once evaluated in this way the stigma persists and can seriously reduce the level of support that is so critical to the work of these organizations.
What characteristics color these perceptions?
• Small Organizations: About one-third of the charitable nonprofits have gross receipts under $25,000 a year. At that level the vast majority can’t employ more than one full-time person, overworking those with job responsibilities that can’t be delegated. While small organization can’t do much to improve the misperceptions about nonprofit dysfunctions, more mature ones can take deliberate steps over time.
• The Volunteer Challenge: A large cadre of board and operational volunteers take time to assist struggling charities, which give the organizations appearances of nonprofit always being on the edge or existence. Many outsiders are unaware that those on management and staff are highly competent people who accept this employment condition because they know how their work can positively impact the lives of clients.
• Facilities: Nonprofit facilities are often second rate and appear highly dysfunctional. Client needs, not facilities, are primary to the board, management and staff.
• Board Relationships: Many relationships between the board and management can be similar to that of a “parent-child” one. In the words of one nonprofit director, “We tell the executive director exactly what to do.”
• Stakeholders: They often do not appreciate the tremendous impacts that the staff can have. Example: Donors often don’t have contact with those who directly benefit.
• Board Dysfunctions: A root cause of the perception may be due to a dysfunctional board trying to resolve internal conflicts, and there is little the management and staff can do about it. Valiant managements and staffs can sometimes achieve productive impacts without board support.
What can be done?
Competency & Relationships: I have encountered many CEOs who have more management expertise than many of their board members who are professors, accountants or physician, etc. While I appreciated that dealing with volunteer directors may involve working with some persons with outsized egos, the CEO must strive to portray himself as a competent manager. The positive outcome is that the CEO is viewed as a peer working with the board, not under the board.
Many staff persons figuratively stand ten feet tall for what they accomplish on behalf of clients.. The CEO has an obligation to make sure that the stories about outstanding staff personnel are well acknowledged, so that stakeholders know about them. This takes more then simple public relations events. It involves highlighting and rewarding those who are highly productive.
Facilities: I understand the tradeoff between expenditures for facilities versus expenditures for clients. Having first class facilities may even hinder achieving a mission if donors perceive their donations are being used for plush facilities. At the least, the nonprofit needs to have an uncluttered area for board meetings and events with outside stakeholders.
Implications: Many suggest that a nonprofit organization being perceived as dysfunctional is not an important issue, as long as mission objectives and impacts are achieved. I argue that more resources for clients could be developed if the perception is not a diminished one. Some can equate dysfunction with being inefficient. In addition, a positive perception might make it easier to attract more qualified board members, management and staff.
Voici une étude très intéressante conduite par Kobi Kastiel, fellow à la Harvard Law School Program on Corporate Governance. La publication aura lieu en janvier 2015, mais le sommaire présenté ici résume bien le sens de celle-ci.
L’auteur montre que les compagnies qui ont un actionnaire de contrôle ont plus tendance à offrir des rémunérations « excessives » au premier dirigeant (PCD), qui lui, en retour, a tendance à s’entourer de dirigeants très bien payés.
L’étude explique que les actionnaires de contrôle paient plus pour s’assurer de la loyauté de la direction et maximiser les bénéfices qui leurs reviennent. L’auteur avance plusieurs autres raisons qui expliquent cette situation.
Le phénomène est tellement répandu dans ce type de compagnie que les recommandations des firmes de conseil en votation (telles que ISS), eu égard au « Say on Pay », devraient être suivies afin de neutraliser l’effet des actionnaires dominants qui ont l’habitude d’accepter des « packages » de rétribution beaucoup trop généreux, lesquels ne sont pas dans l’intérêt de tous les actionnaires …
L’article qui paraîtra dans Indiana Law Journal aura sûrement un impact sur les motivations derrières les rémunérations jugées excessives par beaucoup d’experts en gouvernance.
More than a decade ago, Professors Lucian Bebchuk and Jesse Fried published the seminal work on the role and significance of managerial power theory in executive compensation. Their work cultivated a vivid debate on executive compensation in companies with dispersed ownership. The discourse on the optimality of executive pay in controlled companies, however, has been more monolithic. Conventional wisdom among corporate law theorists has long suggested that the presence of a controlling shareholder should alleviate the problem of managerial opportunism because such a controller has both the power and incentives to curb excessive executive pay.
My Article, Executive Compensation in Controlled Companies, forthcoming in the Indiana Law Journal, challenges that common understanding by proposing a different view that is based on an agency problem paradigm, and by presenting a comprehensive framework for understanding the relationship between concentrated ownership and executive pay. On the theoretical level, the Article shows that controlling shareholders often have incentives to overpay professional managers instead of having an arm’s-length contract with them, and therefore it suggests that compensation practices in a large number of controlled companies may have their own pathologies.
To begin with, controllers may wish to overpay managers in order to maximize their consumption of private benefits, while providing professional managers with a premium for their “loyalty” and for colluding with tunneling activities. This tendency is further aggravated by the use of control-enhancing mechanisms, such as dual-class share structures, which distort controllers’ monitoring incentives due to the wedge it creates between controllers’ cash flow rights and control rights. In addition, certain controllers, such as second generation controllers, could be “weak” due to their lack of experience, motivation or talent, and thus are more easily captured by professional CEOs. Controllers could also be biased due to their longstanding professional and social relationship with professional managers, and cannot be expected to exercise an impartial influence over the formulation of compensation contracts. This alternative view presented in the Article could also help explain recent puzzling phenomena such as the overly generous pay patterns in Viacom or other controlled companies, as well as the rise in say-on-pay rules in countries with concentrated ownership (as observed in a recent study by Thomas & Van der Elst).
On the empirical level, the Article questions conventional beliefs on executive pay by reviewing the recommendations on say-on-pay votes of Institutional Shareholder Services, Inc. (ISS), the leading and most influential proxy advisory firm in the United States. In determining whether to recommend shareholders to vote against a management say-on-pay proposal, ISS examines the company’s pay-for-performance alignment compared to peer group alignment over a sustained period, as well as the use of problematic pay practices. This, in turn, makes the ISS recommendation a useful tool for determining whether a pay package is accurately calibrated to maximize shareholder value.
The data presented in the Article, which is based on the review of ISS recommendations for say-on-pay votes at companies included in the Russell 3000 Index during the 2011 and the 2012 proxy seasons, provides an indication that the compensation packages of professional managers in controlled companies appears to be a bigger problem than initially predicted. In particular, it shows that a controlled company managed by a professional CEO has a slightly higher likelihood to receive a negative recommendation than a widely held company. This result remains substantially similar and statistically significant even when controlling for firms’ market value and industry, or when neutralizing the effect of controllers who are also the CEOs of their firms.
Finally, on the normative level, the Article shows that a U.S. style say-on-pay rule, which requires a non-binding vote by the shareholders as a whole, is unlikely to mitigate the agency problem in determining executive compensation in controlled companies. Since controlling shareholders exercise significant control over the directors’ election process, receiving a failed say-on-pay vote and facing a risk of a withhold vote recommendation for the election of certain directors is unlikely to have any effect on controllers’ ability to elect their directors. And when controllers face no sanctions for failing their say-on-pay votes, they are more likely to ignore shareholders’ concerns, and to use their voting power to approve compensation packages that are suboptimal for other shareholders. The Article, therefore, calls for a new regulatory approach: re-conceptualize the pay of professional managers in controlled companies as an indirect self-dealing transaction and subject it to the applicable rules that regulate conflicted transactions.
Voici une discussion très intéressante paru sur le groupe de discussion LinkedIn Board of Directors Society, et initiée par Jean-François Denault, concernant la nécessité de faire appel à un comité exécutif.
Je vous invite à lire les commentaires présentés sur le fil de discussion du groupe afin de vous former une opinion.
Personnellement, je crois que le comité exécutif est beaucoup trop souvent impliqué dans des activités de nature managériale.
Dans plusieurs cas, le CA pourrait s’en passer et reprendre l’initiative !
I’m looking for feedback for a situation I encountered.I am a board member for a non-profit. Some of us learned of an issue, and we brought it up at the last meeting for an update.We were told that it was being handled by the Executive Committee, and would not be brought up in board meetings.It is my understanding that the executive committee’s role is not to take issues upon themselves, but to act in interim of board meetings. It should not be discussing issues independently from the board.Am I correct in thinking this? Should all issues be brought up to the board, or can the executive committee handle situations that it qualifies as « sensitive »?
Depends whether it’s an operational matter I guess – e.g. a staffing issue below CEO/Director level. If it’s a matter of policy or strategy, or impacts on them, then the Board is entitled to be kept informed, surely, and to consider the matter itself.
Helping boards improve their performance and contributionI’ll respond a bit more broadly, Jean-François. While I am not opposed to the use of executive committees, a red flag often goes up when I conduct a governance review for clients and review their EC mandate and practices. There is a slippery slope where such committees find themselves assuming more accountability for the board’s work over time. Two classes of directors often form unintentionally as a result. Your situation is an example where the executive committee has usurped the board’s final authority. While I don’t recommend one approach, my inclination is to suggest that boards try to function without an executive committee because of the frequency that situations similar to the one you describe arise at boards where such committees play an active role. There are pros and cons, of course, for having these committees, but I believe the associated risk often warrants reconsideration of their real value and need.
I currently sit on the EC and have been in that role with other boards. Although I can see the EC working on projects as a subset of the board we Always go back to the full board and disclose those projects and will take items to the full board for approval. The board as a whole is accountable for decisions! There has to be transparency on the board! I found this article for you. http://www.help4nonprofits.com/BrainTeaser/BrainTeaser-Role_of_Executive_Committee.htm , which concurs to John’s comment. If used correctly the EC or a subset of the board can work on board issues more efficiently then venting through the full board, but they should always go back to the Full board for consideration or approval.
I have experienced couple of EB’s and unless the company is in deep financial or legal trouble for the most part the took away from the main board and in the whole worked ok but not great. If the board has over 10 to 15 board members it is almost a requirement but the board them is there for optics more than or effective and efficient decision making
Experienced CEO & Board member of Domestic and European companies.
I think Mr. Dinner, Mr. Molina, and Mr. Chapman summed it up beautifully:
– You cannot have two classes of Directors
– You have to have transparency and every Board member is entitled to the same information
– A Board of 10-15 members is inefficient and may need committees, but that does not change the fact that all Board members are entitled to have input into anything that the Board decides as a body.
– An Executive Committee is a sub-committee of the entire Board, not an independent body with extraordinary powers.
I agree with John, executive committees tend to be a slippery slope to bad governance. The board of directors has the responsibility of direction and oversight of the business or organization. If anything goes substantially wrong, the board of directors will also be accountable, legally. The rules of thumb for any and all committees is
– Committees must always be accountable to the board of directors, not the other way around.
– Committees must always have limits defined by the board of directors on authority and responsibility, and should have limits on duration.
– Committees should always have a specific reason to exist and that reason should be to support the board of directors in addressing it’s responsibilities.
Judging from the responses, we need to clearly define the context of what an Executive Committee is. Every organization can have it’s own function/view of what an Executive Committee is.
From my experience, an Executive Committee is under the CEO and reflects a group of trusted C-level executives that influence his decisions. I have had NO experience with Executive Boards other than the usual specific Board Committees dealing with specific realms of the organization.
So coming from this perspective, the Executive Committee is two steps down from the organizational pecking order and should be treated or viewed in that context..
President & CEO at Prevention Pharmaceuticals Inc.
I concur with Mr. James Clouser (above).
They should be avoided except in matters involving a performance question regarding C-Level Executive Board member, where a replacement may be sought.
James hit the nail on the head. Executive committees are a throwback to times when we didn’t have the communication tools we do now. They no longer have a reason for their existence. All directors, weather on a not for profit or a corporate board have equal responsibilities and legal exposures. There is no room or reason for a board within a board in today’s world.
My experience is; Board members have the last say in all policy issues- especially when it concerns operational matter. But in this case, where there is Executive Committee, what it sounds like is that, the organization in question has not clearly identified, nor delineated the roles of each body- which seem to have brought up the issue of ‘conflict’ in final decision- making. Often Executive Committees are created to act as a buffer or interim to the Board, this may sometime cause some over-lapping in executive decision-making.
My suggestion is for the organization to assess and evaluate its current hierarchy- clearly identify & define roles-benefits for creating and having both bodies, and how specific policies/ protocol would benefit the organization. In other words, the CEO needs to define the goals or benefits of having just a Board or having both bodies, and to avoid role conflict or over-lap, which may lead to confusion, as it seems to have been the case here.
CEO / PRESIDENT/BOARD OF DIRECTORS /PRIVATE EQUITY OPERATING PARTNER known for returning growth to stagnant businesses
The critical consideration for all board members is ‘ fiduciary accountability’ of all bod members. With that exposure , all bod members should be aware of key issues .
I think for large organizations, that executive committees still have an important role as many board members have a great deal going on and operational matters may come up from time to time that need to be handled in a judicial manner. While I think that the Executive committee has an important, at times critical role for a BOD, it is also critical that trust is built between the executive Committee and the BOD. This is only done when the executive committee is transparent, and pushes as many decisions that it can to the full board. If the committee does not have time to bring a matter to the full BOD, then they must convey to the BOD the circumstances why and reasoning for their decision. It is the executive committees responsibility to build that trust with the BOD and work hard to maintain it. All strategic decisions must be made by the full BOD. It sounds like you either have a communication failure, governance issue, or need work with your policies and procedures or a combination of issues.
Quels sont les pratiques exemplaires de gouvernance eu égard à l’appartenance des PDG (DG/CEO) aux conseils d’administration de leurs organisations, plus particulièrement des OBNL ?
C’est l’une des recherches les plus effectuées sur Google avec plus de cinq millions de références reliées à ce sujet… On note également des discussions très animées sur les groupes de discussion LinkedIn, tels que Non-Profit Management Professionals.
C’est un sujet très populaire et, comme vous vous en doutez, les avis diffèrent largement en fonction du (1) type d’organisation, (1) de son histoire, (3) de sa mission et (4) des obligations règlementaires.
Dans certaines organisations à but non lucratif, le ou la PDG siège au conseil d’administration mais, à mon avis, ce n’est pas le cas pour la plupart des associations de bénévoles, des fondations et des entreprises philanthropiques. Une recherche rapide montre que les PDG ne siègent pas sur des entreprises telles que la Croix Rouge canadienne, le Festival d’été de Québec, Centraide du grand Montréal, le Club Musical, l’OSQ, Musique de chambre à Sainte-Pétronille, l’Ordre des administrateurs agréés du Québec, pour n’en nommer que quelques-unes.
Français : Sainte Prétonille, Île d’Orléans, province de Québec, Canada (Photo credit: Wikipedia)
Généralement, si la législation ou la réglementation l’autorise, c’est au conseil d’administration de décider si le ou la PDG a le statut de membre du C.A., avec plein droit de vote, ou sans droit de vote. On observe que certaines législations américaines (la Californie, notamment) ne permettent pas aux PDG de voter à titre de membres du conseil. Au Québec, c’est le cas du CLD de Québec, par exemple.
Dans les sociétés d’état québécoises, les PDG sont nommé(e)s par le gouvernement sur recommandation du C.A.; les PDG siègent habituellement de plein droit sur les conseils d’administration. Dans le monde municipal, les DG ne sont pas membres des conseils municipaux, des MRC et des CRÉ.
Comme on le constate, un tour d’horizon rapide indique qu’il y a plusieurs possibilités : (1) le ou la PDG est membre à part entière du C.A., (2) le ou la PDG est membre du C.A., mais sans droit de vote, (3) le ou la PDG n’est pas membre du C.A. Dans presque tous les cas cependant, les PDG assistent aux réunions du conseil à titre de personnes ressource, même sans être membres du C.A.
Afin de bien départager les rôles complémentaires exercés par les membres du conseil et les membres de la direction et éviter les conflits qui pourraient naître dans certaines zones d’intérêt, notamment dans le domaine lié aux rémunérations, il m’apparaît être une bonne pratique de gouvernance de ne pas accorder un statut de membre du conseil d’administration à un ou une PDG.
Pour les organisations qui vivent avec une situation particulière, il serait souhaitable que le C.A., par l’intermédiaire du ou de la PCA, mette en œuvre une stratégie de changement (à plus ou moins long terme) pour revoir cet aspect de leur gouvernance.
L’article ci-dessous publié par Eugene Fram, Professeur émérite au Saunders College of Business du Rochester Institute of Technology, explique un peu la situation. Vos commentaires sont les bienvenus.
State Legislation: Most nonprofit charters are issued by states, and it appears that the vast majority of American nonprofits are governed by these regulations. California does not permit the CEO to be a voting member. Until a recent change, New York did allow the CEO to become a board member. The motivations behind the legislation center on preventing a CEO developing conflicts-of interest, especially as they relate to salary decisions. Also, there is a feeling among some nonprofit directors that the board must be the « boss. » This attitude can even go as far as one nonprofit board member’s comment: « We tell the CEO exactly what to do. »
It appears that the restriction is considered a « best practice. » Some nonprofits move around it by naming the CEO an ex-official member of the board, a member without a vote. However, there is a « better practice, » available where permitted by legislation.
Developing An Even Better Practice in a Nonprofit
Start At The Top: Allow the CEO to hold the title of President/CEO and allow the senior volunteer to become board chair. This signals to staff and public that the board has full faith in the CEO as a professional manager. In addition, the change absolves the senior volunteer of potential financial liability, not unlike the volunteer who unwittingly received a $200,000 bill from the IRS because it appeared he had strong control of a bankrupt nonprofit’s finances and operations.
Ask The CEO: Make certain the CEO is willing and able to accept full responsibility for operations. Not all CEOs, designated as Executive Directors, want the increased responsibilities attached to such a title and to become a board member. These managers only feel comfortable with having the board micromanage operations and often openly discuss their reservations.
The CEO Becomes A Communications Nexus: Under the CEO’s guidance, board-staff contact takes place on task forces, strategic planning projects, at board orientations and at organization celebrations. It openly discourages the staff making « end runs » to board members, not a small problem in community-focused nonprofits
Brand Image: As a board director, the CEO can be more active in fund development. The board position and the title can easily help the CEO to build the organization’s public brand image through the clear public perceptions of the board’s choice to lead the organization. This provides leverage to make greater use of the board-CEO relationship required to develop funds. It can allow the CEO to be the spokesperson for the organization’s mission.
Peer Not Powerhouse: Probably descending from early religious nonprofits, its personnel may be seen by part of the public as not being « worldly. » They must be over-viewed by a group of laypersons that encounters the real world daily. The CEO, as a voting member and a team peer, takes on increasing importance to reducing these attitudes. As long as the CEO works successfully as a peer not a powerhouse, there should be substantial benefits to the organization.
Voici, en reprise, un court texte publié par Bill Conroy* sur le site de OpenviewLabs qui présente quelques méthodes efficaces pour assurer la bonne conduite des réunions de conseils d’administration. La préparation et la gestion des réunions de C.A. sont certainement deux activités essentielles à la saine gouvernance des sociétés.
L’auteur insiste tout particulièrement sur l’adoption de deux méthodes :
(1) le livre de contrôle (control book) et
(2) le meeting de gestion précédent le C.A.
Je vous invite à prendre connaissance du site OpenviewLabs. Que pensez-vous de ces deux approches ? Vos commentaires sont les bienvenus.
« Bill Conroy, formerly CEO of Initiate Systems and currently a director at Kareo, Prognosis, and AtTask is a seasoned boardroom veteran who has often been “in companies where everybody is running up and down the hallways” hours before the board meeting is set to begin, frantically trying to finish preparations and reports. He has two remedies for manic board meeting preparation: 1) the control book; and 2) a management meeting prior to the board meeting ».
Conroy calls the control book “a source of truth,” and considers it the only reporting that really matters. “It is published monthly to the board, as well as to the management team,” he says, eliminating the scramble before the meeting and the numbers update during the meeting since “the directors have been getting the control book in the same format all of the time.”
Inside the control book, board members find performance metrics, a profit and loss breakdown, a cash statement, a retention report, growth drivers, and any other salient reports that you know the board is after. The key is to make sure that all of the numbers are included and presented in the same format month after month. That way, Conroy says, “there is no discussion about what the numbers are in the board meeting, which is a total waste of time,” and you can focus on “what the numbers mean.”
(2) The Management Meeting: “80% of the board meeting”
Conroy recommends holding your management meeting one or two days prior to the board meeting. The format and deliverables for the management meeting should be 80% of what’s needed in the board meeting, making it an excellent form of board meeting preparation.
All presenters in the management meeting should be limited to 2-3 slides but discussion time should not be limited. Kick off the meeting with “somebody who is capable of being very neutral talking about the market,” so that he or she can provide an honest assessment of whether your company is gaining or losing market share. Next, have your product lead present the product roadmap like a forecast. “What are we going to deliver and are we on schedule?”
RDECOM Board of Directors holds meeting (Photo credit: RDECOM)
After that, sales presents a simple breakdown of quarterly deals that have been closed, deals they are so confident in they can commit they will close, and upside deals. The sales leader also needs to take a stab at an end-of-year outlook regardless of what the current quarter is.
The CFO follows sales, and — instead of presenting what the numbers are — presents two slides discussing what the numbers mean, and what the causes for concern are. The CEO closes out the agenda by covering the company’s strategic initiatives and progress made on those fronts. The CEO needs to tell the board “what keeps me up at night” about the company.
Market overview
Product roadmap
Sales recap & forecast
CFO presentation
CEO presentation
“If you go through all of those things in a management meeting,” Conroy says, take time afterward to fine tune them, and then have “the exact same people give the exact same reports” at the board meeting, you’re setting yourself up for an efficient discussion with the board.
Between the control book and the management meeting, you create “a lot of extra time for people to be focused externally as opposed to internally.” In board meetings, most of the discussion is around the numbers, and Conroy sees that as the main reason why they get bogged down. But the monthly control book gives “the directors plenty of time to make calls to the CFO” to inquire about numbers, leaving board meetings for what the CEO should really be focused on: strategy.
Vous trouverez ci-dessous un checklist qui vous sera utile pour effectuer une révision de vos processus de gouvernance.
Bonne lecture. Vos commentaires sont les bienvenus.
Top Ten Steps to Improving Corporate Governance
1. Recognise that good governance is not just about compliance
Boards need to balance conformance (i.e. compliance with legislation, regulation and codes of practice) with performance aspects of the board’s work (i.e. improving the performance of the organisation through strategy formulation and policy making). As a part of this process, a board needs to elaborate its position and understanding of the major functions it performs as opposed to those performed by management. These specifics will vary from board to board. Knowing the role of the board and who does what in relation to governance goes a long way towards maintaining a good relationship between the board and management.
2. Clarify the board’s role in strategy
It is generally accepted today that the board has a significant role to play in the formulation and adoption of the organisation’s strategic direction. The extent of the board’s contribution to strategy will range from approval at one end to development at the other. Each board must determine what role is appropriate for it to undertake and clarify this understanding with management.
3. Monitor organisational performance
Monitoring organisational performance is an essential board function and ensuring legal compliance is a major aspect of the board’s monitoring role. It ensures that corporate decision making is consistent with the strategy of the organisation and with owners’ expectations. This is best done by identifying the organisation’s key performance drivers and establishing appropriate measures for determining success. As a board, the directors should establish an agreed format for the reports they monitor to ensure that all matters that should be reported are in fact reported.
4. Understand that the board employs the CEO
In most cases, one of the major functions of the board is to appoint, review, work through, and replace (when necessary), the CEO. The board/CEO relationship is crucial to effective corporate governance because it is the link between the board’s role in determining the organisation’s strategic direction and management’s role in achieving corporate objectives.
5. Recognise that the governance of risk is a board responsibility
Establishing a sound system of risk oversight and management and internal control is another fundamental role of the board. Effective risk management supports better decision making because it develops a deeper insight into the risk-reward trade-offs that all organisations face.
6. Ensure the directors have the information they need
Better information means better decisions. Regular board papers will provide directors with information that the CEO or management team has decided they need. But directors do not all have the same informational requirements, since they differ in their knowledge, skills, and experience. Briefings, presentations, site visits, individual director development programs, and so on can all provide directors with additional information. Above all, directors need to be able to find answers to the questions they have, so an access to independent professional advice policy is recommended.
7. Build and maintain an effective governance infrastructure
Since the board is ultimately responsible for all the actions and decisions of an organisation, it will need to have in place specific policies to guide organisational behaviour. To ensure that the line of responsibility between board and management is clearly delineated, it is particularly important for the board to develop policies in relation to delegations. Also, under this topic are processes and procedures. Poor internal processes and procedures can lead to inadequate access to information, poor communication and uninformed decision making, resulting in a high level of dissatisfaction among directors. Enhancements to board meeting processes, meeting agendas, board papers and the board’s committee structure can often make the difference between a mediocre board and a high performing board.
8. Appoint a competent chairperson
Research has shown that board structure and formal governance regulations are less important in preventing governance breaches and corporate wrongdoing than the culture and trust created by the chairperson. As the “leader” of the board, the chairperson should demonstrate strong and acknowledged leadership ability, the ability to establish a sound relationship with the CEO, and have the capacity to conduct meetings and lead group decision-making processes.
9. Build a skills-based board
What is important for a board is that it has a good understanding of what skills it has and those skills it requires. Where possible, a board should seek to ensure that its members represent an appropriate balance between directors with experience and knowledge of the organisation and directors with specialist expertise or fresh perspective. Directors should also be considered on the additional qualities they possess, their “behavioural competencies”, as these qualities will influence the relationships around the boardroom table, between the board and management, and between directors and key stakeholders.
10. Evaluate board and director performance and pursue opportunities for improvement
Boards must be aware of their own strengths and weaknesses, if they are to govern effectively. Board effectiveness can only be gauged if the board regularly assesses its own performance and that of individual directors. Improvements to come from a board and director evaluation can include areas as diverse as board processes, director skills, competencies and motivation, or even boardroom relationships. It is critical that any agreed actions that come out of an evaluation are implemented and monitored. Boards should consider addressing weaknesses uncovered in board evaluations through director development programs and enhancing their governance processes.
Nous avons déjà abordé l’importance d’inscrire un item « huis clos » à l’ordre du jour des réunions du conseil d’administration. Celui-ci doit normalement être à la fin de la réunion et comporter une limite de temps afin d’éviter que la réunion ne s’éternise… et que les membres de la direction (qui souvent attendent la fin de la rencontre) soient mieux informés.
Ensuite, le président du conseil d’administration (PCA) devrait rencontrer le président et chef de la direction (PCD) en privé, et dans les meilleurs délais, afin de rendre compte des résultats et de la portée du huis clos. Cette responsabilité du PCA est déterminante, car les dirigeants ont de grandes attentes et un souci eu égard aux discussions du huis clos.
Plusieurs dirigeants et membres de conseil m’ont fait part de leurs préoccupations concernant la tenue des huis clos. Il y a des malaises dissimulés en ce qui a trait à cette activité ; il faut donc s’assurer de bien gérer la situation, car les huis clos peuvent souvent avoir des conséquences inattendues, voire contre-productives !
Ainsi, le huis clos :
(1) ne doit pas être une activité imprévue et occasionnelle inscrite à l’ordre du jour
(2) doit comporter une limite de temps
(3) doit être piloté par le PCA
(4) doit comporter un suivi systématique et
(5) doit se dérouler dans un lieu qui permet de préserver la confidentialité absolue des discussions.
J’insiste sur cette dernière condition parce que l’on a trop souvent tendance à la négliger ou à l’oublier, carrément. Dans de nombreux cas, la rencontre du conseil a lieu dans un local inapproprié, et les dirigeants peuvent entendre les conversations, surtout lorsqu’elles sont très animées…
Au début de la séance, les membres sont souvent insoucieux ; avec le temps, certains peuvent s’exprimer très (trop) directement, impulsivement et de manière inconvenante. Si, par mégarde, les membres de la direction entendent les propos énoncés, l’exercice peut prendre l’allure d’une véritable calamité et avoir des conséquences non anticipées sur le plan des relations interpersonnelles entre les membres de la direction et avec les membres du conseil.
L’ajout d’un huis clos à l’ordre du jour témoigne d’une volonté de saine gouvernance, mais, on le comprend, il y a un certain nombre de règles à respecter si on ne veut pas provoquer la discorde. Les OBNL, qui ont généralement peu de moyens, sont particulièrement vulnérables aux manquements à la confidentialité ! Je crois que dans les OBNL, les dommages collatéraux peuvent avoir des incidences graves sur les relations entre employés, et même sur la pérennité de l’organisation.
J’ai à l’esprit plusieurs cas de mauvaise gestion des facteurs susmentionnés et je crois qu’il vaut mieux ne pas tenir le bien-fondé du huis clos pour acquis.
Ayant déjà traité des bienfaits des huis clos lors d’un billet antérieur, je profite de l’occasion pour vous souligner, à nouveau, un article intéressant de Matthew Scott sur le site de Corporate Secretary qui aborde un sujet qui préoccupe beaucoup de hauts dirigeants : lehuis clos lors des sessions du conseil d’administration ou de certains comités.
L’auteur explique très bien la nature et la nécessité de cette activité à inscrire à l’ordre du jour du conseil. Voici les commentaires que j’exprimais à cette occasion.
«Compte tenu de la “réticence” de plusieurs hauts dirigeants à la tenue de cette activité, il est généralement reconnu que cet item devrait toujours être présent à l’ordre du jour afin d’éliminer certaines susceptibilités.
Le huis clos est un temps privilégié que les administrateurs indépendants se donnent pour se questionner sur l’efficacité du conseil et la possibilité d’améliorer la dynamique interne; mais c’est surtout une occasion pour les membres de discuter librement, sans la présence des gestionnaires, de sujets délicats tels que la planification de la relève, la performance des dirigeants, la rémunération globale de la direction, les poursuites judiciaires, les situations de conflits d’intérêts, les arrangements confidentiels, etc. On ne rédige généralement pas de procès-verbal à la suite de cette activité, sauf lorsque les membres croient qu’une résolution doit absolument apparaître au P.V.
La mise en place d’une période de huis clos est une pratique relativement récente, depuis que les conseils d’administration ont réaffirmé leur souveraineté sur la gouvernance des entreprises. Cette activité est maintenant considérée comme une pratique exemplaire de gouvernance et presque toutes les sociétés l’ont adoptée.
Notons que le rôle du président du conseil, en tant que premier responsable de l’établissement de l’agenda, est primordial à cet égard. C’est lui qui doit informer le PCD de la position des membres indépendants à la suite du huis clos, un exercice qui demande du tact!
Je vous invite à lire l’article ci-dessous. Vos commentaires sont les bienvenus».
Il est indéniable qu’un PCD (CEO) doit avoir une personnalité marquante, un caractère fort et un leadership manifeste. Ces caractéristiques tant recherchées chez les premiers dirigeants peuvent, dans certains cas, s’accompagner de traits de personnalité dysfonctionnels tels que le narcissisme.
C’est ce que Tomas Chamorro-Premuzic soutien dans son article publié sur le blogue du HuffPost du 2 janvier 2014. Il cite deux études qui confirment que le comportement narcissique de certains dirigeants (1) peut avoir des effets néfastes sur le moral des employés, (2) éloigner les employés potentiels talentueux et (3) contribuer à un déficit de valeurs d’intégrité à l’échelle de toute l’organisation.
L’auteur avance que les membres des conseils d’administration, notamment ceux qui constituent les comités de Ressources humaines, doivent être conscients des conséquences potentiellement dommageables des leaders flamboyants et « charismatiques ». En fait, les études montrent que les vertus d’humilité, plutôt que les traits d’arrogance, sont de bien meilleures prédicteurs du succès d’une organisation.
La première étude citée montre que les organisations dirigées par des PCD prétentieux et tout-puissants ont tendances à avoir de moins bons résultats, tout en étant plus sujettes à des fraudes.
La seconde étude indique que les valeurs d’humilité incarnées par un leader ont des conséquences positives sur l’engagement des employés.
Voici en quelques paragraphes les conclusions de ces deux études. Bonne lecture !
In the first study, Antoinette Rijsenbilt and Harry Commandeur assessed the narcissism levels of 953 CEOs from a wide range of industries, as well as examining objective performance indicators of their companies during their tenure. Unsurprisingly, organizations led by arrogant, self-centered, and entitled CEOs tended to perform worse, and their CEOs were significantly more likely to be convicted for corporate fraud (e.g., fake financial reports, rigged accounts, insider trading, etc.). Interestingly, the detrimental effects of narcissism appear to be exacerbated when CEOs are charismatic, which is consistent with the idea that charisma is toxic because it increases employees’ blind trust and irrational confidence in the leader. If you hire a charismatic leader, be prepared to put up with a narcissist.
In the second study, Bradley Owens and colleagues examined the effects of leader humility on employee morale and turnover. Their results showed that « in contrast to rousing employees through charismatic, energetic, and idealistic leadership approaches (…) a ‘quieter’ leadership approach, with listening, being transparent about limitations, and appreciating follower strengths and contributions [is the most] effective way to engage employees. » This suggests that narcissistic CEOs may be good at attracting talent, but they are probably better at repelling it. Prospective job candidates, especially high potentials, should therefore think twice before being seduced by the meteoric career opportunities outlined by charismatic executives. Greed is not only contagious, but competitive and jealous, too…
If we can educate organizations, in particular board members, on the virtues of humility and the destructive consequences of narcissistic and charismatic leadership, we may see a smaller proportion of entitled, arrogant, and fraudulent CEOs — to everyone’s benefit. Instead of worshiping and celebrating the flamboyant habits of corporate bosses, let us revisit the wise words of Peter Drucker, who knew a thing or two about management:
The leaders who work most effectively, it seems to me, never say ‘I’. And that’s not because they have trained themselves not to say ‘I’. They don’t think ‘I’. They think ‘we’; they think ‘team’. They understand their job to be to make the team function. They accept responsibility and don’t sidestep it, but ‘we’ gets the credit.
Si la gouvernance des entreprises a fait beaucoup de chemin depuis quelques années, son évolution se poursuit. Afin d’imaginer la direction qu’elle prendra au cours des prochaines années, nous avons consulté l’expert Jacques Grisé, ancien directeur des programmes du Collège des administrateurs de sociétés, de l’Université Laval. Toujours affilié au Collège, M. Grisé publie depuis plusieurs années le blogue www.jacquesgrisegouvernance.com, un site incontournable pour rester à l’affût des bonnes pratiques et tendances en gouvernance.
Voici les 12 tendances dont il faut suivre l’évolution, selon Jacques Grisé :
1. Les conseils d’administration réaffirmeront leur autorité.
« Auparavant, la gouvernance était une affaire qui concernait davantage le management », explique M. Grisé. La professionnalisation de la fonction d’administrateur amène une modification et un élargissement du rôle et des responsabilités des conseils. Les CA sont de plus en plus sollicités et questionnés au sujet de leurs décisions et de l’entreprise.
2. La formation des administrateurs prendra de l’importance.
À l’avenir, on exigera toujours plus des administrateurs. C’est pourquoi la formation est essentielle et devient même une exigence pour certains organismes. De plus, la formation continue se généralise ; elle devient plus formelle.
3. L’affirmation du droit des actionnaires et celle du rôle du conseil s’imposeront.
Le débat autour du droit des actionnaires par rapport à celui des conseils d’administration devra mener à une compréhension de ces droits conflictuels. Aujourd’hui, les conseils doivent tenir compte des parties prenantes en tout temps.
4. La montée des investisseurs activistes se poursuivra.
L’arrivée de l’activisme apporte une nouvelle dimension au travail des administrateurs. Les investisseurs activistes s’adressent directement aux actionnaires, ce qui mine l’autorité des conseils d’administration. Est-ce bon ou mauvais ? La vision à court terme des activistes peut être néfaste, mais toutes leurs actions ne sont pas négatives, notamment parce qu’ils s’intéressent souvent à des entreprises qui ont besoin d’un redressement sous une forme ou une autre. Pour bien des gens, les fonds activistes sont une façon d’améliorer la gouvernance. Le débat demeure ouvert.
5. La recherche de compétences clés deviendra la norme.
De plus en plus, les organisations chercheront à augmenter la qualité de leur conseil en recrutant des administrateurs aux expertises précises, qui sont des atouts dans certains domaines ou secteurs névralgiques.
6. Les règles de bonne gouvernance vont s’étendre à plus d’entreprises.
Les grands principes de la gouvernance sont les mêmes, peu importe le type d’organisation, de la PME à la société ouverte (ou cotée), en passant par les sociétés d’État, les organismes à but non lucratif et les entreprises familiales.
7. Le rôle du président du conseil sera davantage valorisé.
La tendance veut que deux personnes distinctes occupent les postes de président du conseil et de PDG, au lieu qu’une seule personne cumule les deux, comme c’est encore trop souvent le cas. Un bon conseil a besoin d’un solide leader, indépendant du PDG.
8. La diversité deviendra incontournable.
Même s’il y a un plus grand nombre de femmes au sein des conseils, le déficit est encore énorme. Pourtant, certaines études montrent que les entreprises qui font une place aux femmes au sein de leur conseil sont plus rentables. Et la diversité doit s’étendre à d’autres origines culturelles, à des gens de tous âges et d’horizons divers.
9. Le rôle stratégique du conseil dans l’entreprise s’imposera.
Le temps où les CA ne faisaient qu’approuver les orientations stratégiques définies par la direction est révolu. Désormais, l’élaboration du plan stratégique de l’entreprise doit se faire en collaboration avec le conseil, en profitant de son expertise.
10. La réglementation continuera de se raffermir.
Le resserrement des règles qui encadrent la gouvernance ne fait que commencer. Selon Jacques Grisé, il faut s’attendre à ce que les autorités réglementaires exercent une surveillance accrue partout dans le monde, y compris au Québec, avec l’Autorité des marchés financiers. En conséquence, les conseils doivent se plier aux règles, notamment en ce qui concerne la rémunération et la divulgation. Les responsabilités des comités au sein du conseil prendront de l’importance. Les conseils doivent mettre en place des politiques claires en ce qui concerne la gouvernance.
11. La composition des conseils d’administration s’adaptera aux nouvelles exigences et se transformera.
Les CA seront plus petits, ce qui réduira le rôle prépondérant du comité exécutif, en donnant plus de pouvoir à tous les administrateurs. Ceux-ci seront mieux choisis et formés, plus indépendants, mieux rémunérés et plus redevables de leur gestion aux diverses parties prenantes. Les administrateurs auront davantage de responsabilités et seront plus engagés dans les comités aux fonctions plus stratégiques. Leur responsabilité légale s’élargira en même temps que leurs tâches gagnent en importance. Il faudra donc des membres plus engagés, un conseil plus diversifié, dirigé par un leader plus fort.
12. L’évaluation de la performance des conseils d’administration deviendra la norme.
La tendance est déjà bien ancrée aux États-Unis, où les entreprises engagent souvent des firmes externes pour mener cette évaluation. Certaines choisissent l’autoévaluation. Dans tous les cas, le processus est ouvert et si les résultats restent confidentiels, ils contribuent à l’amélioration de l’efficacité des conseils d’administration.
Le guide Responsabilités des administrateurs au Canada, issu de la collaboration entre Osler et l’Institut des administrateurs de sociétés, est un outil de référence de choix dont tous les administrateurs ont besoin pour comprendre les pratiques exemplaires en matière de gouvernance et pour s’acquitter de leurs responsabilités, dans le contexte actuel des tendances commerciales en constante évolution et des changements dans le marché.
Le guide couvre :
les devoirs et l’obligation de rendre compte des administrateurs, et le rôle des actionnaires
les questions de gouvernance, y compris les conflits d’intérêts des administrateurs, les lois sur les valeurs mobilières et les exigences des marchés boursiers
les obligations d’information des sociétés ouvertes
les questions de financement, de marchés des capitaux et d’offres publiques d’achat
les responsabilités imposées par la loi, y compris les opérations d’initiés, la législation sur l’environnement et les questions d’ordre fiscal
la responsabilité pour les infractions en vertu des lois sur les sociétés
la gestion du risque
Inscrivez-vous pour obtenir un exemplaire en cliquant sur le lien ci-dessous. Il vous sera envoyé par courriel dès sa publication.
Voici un document très complet sur les avis de Glass Lewis pour 2015. On y aborde les plus importantes recommandations concernant la gouvernance des organisations : l’élection des administrateurs, la déclassification, la durée des mandats, les limites d’âge, l’accès aux documents de votation, le vote majoritaire pour l’élection.
Également, on émet des recommandations sur l’approbation des auditeurs, les questions de fonds de pension, le Say-on-Pay, les arrangements de « Golden parachute », les plans de rémunération des hauts dirigeants et des administrateurs, les plans d’achat d’actions par les employés, les questions fiscales, les mesures de protection contre les offres d’achat non-sollicitées, la structure de votation, les exigences de la divulgation d’informations, l’actionnariat activiste, etc.
C’est l’un des documents les plus explicites en matière de politique de gouvernance. La firme de conseil Glass Lewis y présente son approche et ses recommandations eues égard au vote des actionnaires en 2015.
Ce matin, je vous propose une réflexion basée sur une discussion parue dans le groupe Board of Directors Society de LinkedIn.
Les propos sont publiés par Kimiharu (Kim) Chatani, Directeur-Conseil chez KPMG; ils mettent en lumière l’importance, pour le conseil d’administration et le management, de se doter d’un plan d’affaires qui prend en compte les activités reliées au développement durable.
Les commentaires font ressortir le caractère irréversible des activités de surveillance amorcées par les CA ainsi que la sensibilité accrue des grandes entreprises américaines à l’égard de la gouvernance à long terme, laquelle est beaucoup plus axée sur les besoins des diverses parties prenantes et sur l’analyse en profondeur des grands changements sociaux.
L’auteur souligne que 95 % des 250 plus grandes entreprises mondiales divulguent des rapports de développement durable (sustainability reports).
Bonne lecture !
Oversight of Corporate Sustainability Activities
Value creation, long-term business resiliency, strategic risk management, and stewardship represent the essence of the board’s role in overseeing corporate sustainability activities. Sustainability oversight is increasingly becoming a board-level issue for several reasons.
First and most fundamentally, boards are meant to safeguard the assets of the companies they serve, and one of the trickiest “assets” to understand, let alone protect, is the company’s social license to operate.
Second, the ways in which a company affects, and is affected by, global mega-trends such as population growth, an expanding urban middle class in emerging markets, demographic change, resource scarcity, climate change, and transformative technologies —all of which fall under the rubric of sustainability issues — are often at the core of board-management discussions about strategy, risk, and performance.
Thus, understanding how a company executes its business model within a changing operating context, and with an eye toward long-term profitability, is squarely a board issue and a director’s responsibility.
The Current State of Sustainability Governance
Many companies still see sustainability as a set of “softer” issues that can be relegated to marketing or public relations departments. The links between environmental and social issues, core business operations, and corporate reputation are becoming increasingly material, however.
On one recent survey, the number of companies reporting that their sustainability activities contributed to profits rose by 23 percent year over year, and nearly half of the respondents reported changing their business models in response to sustainability-related opportunities.
Companies are highlighting their place on global sustainability indices including the Dow Jones Sustainability Index, FTSE4Good, and Corporate Knights’ Global 100, which saw 31 new honorees in 2014.
Ninety-five percent of the world’s 250 largest companies, and 86 percent of the largest U.S. companies, produce sustainability reports.
Shareholder interest is growing: nearly half of shareholder proposal submissions in 2014 related to environmental and social matters.
According to one report, companies that fail to connect their sustainability activities to financial and operational performance are missing out on potential opportunities to better understand how sustainability can identify and reduce risk and boost returns. As David Kiron, executive editor of MIT Sloan Management Review, put it, leading-edge companies “don’t dwell on [sustainability] as a cost issue. They focus on how their efforts can increase market share, boost energy efficiency, and build competitive advantage.”
Despite these trends, the extent of board-level oversight of sustainability issues varies considerably. Studies from organizations such as the Investor Responsibility Research Center Institute (IRRCi) and Ceres show that a notable and growing proportion of large, publicly traded companies have explicit, board-level oversight of sustainability and corporate responsibility activities: indeed, they are three times more likely than smaller companies to have board oversight of environmental and/or social issues.
But the overarching message of the IRRCi and Ceres reports, as well as similar studies, is that there is considerable room for improvement. At many companies, the level of board-level oversight of environmental and social sustainability activities is not consistent with the link between these activities and the firm’s strategic imperatives, or with the attention that key stakeholders are placing on the underlying issues.
Voici une discussion très intéressante paru sur le groupe de discussion LinkedIn Board of Directors Society, et initiée par Jean-François Denault, concernant la nécessité de faire appel à un comité exécutif.
Je vous invite à lire les commentaires présentés sur le fil de discussion du groupe afin de vous former une opinion.
Personnellement, je crois que le comité exécutif est beaucoup trop souvent impliqué dans des activités de nature managériale.
Dans plusieurs cas, le CA pourrait s’en passer et reprendre l’initiative !
I’m looking for feedback for a situation I encountered.I am a board member for a non-profit. Some of us learned of an issue, and we brought it up at the last meeting for an update.We were told that it was being handled by the Executive Committee, and would not be brought up in board meetings.It is my understanding that the executive committee’s role is not to take issues upon themselves, but to act in interim of board meetings. It should not be discussing issues independently from the board.Am I correct in thinking this? Should all issues be brought up to the board, or can the executive committee handle situations that it qualifies as « sensitive »?
Depends whether it’s an operational matter I guess – e.g. a staffing issue below CEO/Director level. If it’s a matter of policy or strategy, or impacts on them, then the Board is entitled to be kept informed, surely, and to consider the matter itself.
Helping boards improve their performance and contributionI’ll respond a bit more broadly, Jean-François. While I am not opposed to the use of executive committees, a red flag often goes up when I conduct a governance review for clients and review their EC mandate and practices. There is a slippery slope where such committees find themselves assuming more accountability for the board’s work over time. Two classes of directors often form unintentionally as a result. Your situation is an example where the executive committee has usurped the board’s final authority. While I don’t recommend one approach, my inclination is to suggest that boards try to function without an executive committee because of the frequency that situations similar to the one you describe arise at boards where such committees play an active role. There are pros and cons, of course, for having these committees, but I believe the associated risk often warrants reconsideration of their real value and need.
I currently sit on the EC and have been in that role with other boards. Although I can see the EC working on projects as a subset of the board we Always go back to the full board and disclose those projects and will take items to the full board for approval. The board as a whole is accountable for decisions! There has to be transparency on the board! I found this article for you. http://www.help4nonprofits.com/BrainTeaser/BrainTeaser-Role_of_Executive_Committee.htm , which concurs to John’s comment. If used correctly the EC or a subset of the board can work on board issues more efficiently then venting through the full board, but they should always go back to the Full board for consideration or approval.
I have experienced couple of EB’s and unless the company is in deep financial or legal trouble for the most part the took away from the main board and in the whole worked ok but not great. If the board has over 10 to 15 board members it is almost a requirement but the board them is there for optics more than or effective and efficient decision making
Experienced CEO & Board member of Domestic and European companies.
I think Mr. Dinner, Mr. Molina, and Mr. Chapman summed it up beautifully:
– You cannot have two classes of Directors
– You have to have transparency and every Board member is entitled to the same information
– A Board of 10-15 members is inefficient and may need committees, but that does not change the fact that all Board members are entitled to have input into anything that the Board decides as a body.
– An Executive Committee is a sub-committee of the entire Board, not an independent body with extraordinary powers.
I agree with John, executive committees tend to be a slippery slope to bad governance. The board of directors has the responsibility of direction and oversight of the business or organization. If anything goes substantially wrong, the board of directors will also be accountable, legally. The rules of thumb for any and all committees is
– Committees must always be accountable to the board of directors, not the other way around.
– Committees must always have limits defined by the board of directors on authority and responsibility, and should have limits on duration.
– Committees should always have a specific reason to exist and that reason should be to support the board of directors in addressing it’s responsibilities.
Judging from the responses, we need to clearly define the context of what an Executive Committee is. Every organization can have it’s own function/view of what an Executive Committee is.
From my experience, an Executive Committee is under the CEO and reflects a group of trusted C-level executives that influence his decisions. I have had NO experience with Executive Boards other than the usual specific Board Committees dealing with specific realms of the organization.
So coming from this perspective, the Executive Committee is two steps down from the organizational pecking order and should be treated or viewed in that context..
President & CEO at Prevention Pharmaceuticals Inc.
I concur with Mr. James Clouser (above).
They should be avoided except in matters involving a performance question regarding C-Level Executive Board member, where a replacement may be sought.
James hit the nail on the head. Executive committees are a throwback to times when we didn’t have the communication tools we do now. They no longer have a reason for their existence. All directors, weather on a not for profit or a corporate board have equal responsibilities and legal exposures. There is no room or reason for a board within a board in today’s world.
My experience is; Board members have the last say in all policy issues- especially when it concerns operational matter. But in this case, where there is Executive Committee, what it sounds like is that, the organization in question has not clearly identified, nor delineated the roles of each body- which seem to have brought up the issue of ‘conflict’ in final decision- making. Often Executive Committees are created to act as a buffer or interim to the Board, this may sometime cause some over-lapping in executive decision-making.
My suggestion is for the organization to assess and evaluate its current hierarchy- clearly identify & define roles-benefits for creating and having both bodies, and how specific policies/ protocol would benefit the organization. In other words, the CEO needs to define the goals or benefits of having just a Board or having both bodies, and to avoid role conflict or over-lap, which may lead to confusion, as it seems to have been the case here.
CEO / PRESIDENT/BOARD OF DIRECTORS /PRIVATE EQUITY OPERATING PARTNER known for returning growth to stagnant businesses
The critical consideration for all board members is ‘ fiduciary accountability’ of all bod members. With that exposure , all bod members should be aware of key issues .
I think for large organizations, that executive committees still have an important role as many board members have a great deal going on and operational matters may come up from time to time that need to be handled in a judicial manner. While I think that the Executive committee has an important, at times critical role for a BOD, it is also critical that trust is built between the executive Committee and the BOD. This is only done when the executive committee is transparent, and pushes as many decisions that it can to the full board. If the committee does not have time to bring a matter to the full BOD, then they must convey to the BOD the circumstances why and reasoning for their decision. It is the executive committees responsibility to build that trust with the BOD and work hard to maintain it. All strategic decisions must be made by the full BOD. It sounds like you either have a communication failure, governance issue, or need work with your policies and procedures or a combination of issues.
Récemment, le Collège des administrateurs de sociétés (CAS) a répondu à la demande de l’organisme « ecoDa » (The European Confederation of Directors Associations) de produire une capsule vidéo de formation sur les tendances en matière de gouvernance de sociétés au Canada et aux États-Unis. Cette vidéo sera présentée par ecoDa à chaque offre de son cours « New Governance Challenges for Board Members in Europe » présentée en classe à Bruxelles en Belgique, siège social de l’ecoDa.
Ce mandat a été réalisé avec succès grâce à la contribution de Gilles Bernier, directeur des programmes du CAS, qui a réuni Mme Alexandra Lajoux, Chief Knowledge Officer de la National Association of Corporate Directors (NACD) aux États-Unis et M. Chris Bart, Founder and Lead Faculty du Directors College en Ontario.
Intitulé « Where is Corporate Governance Going : The View from Canada and the USA », cette vidéo de formation vise à sensibiliser les participants à l’évolution des pratiques de gouvernance à l’extérieur de l’Europe.
D’une durée de 20 minutes, les experts invités discutent des sujets suivants :
(1) le rôle du CA à l’égard de la stratégie et du risque
(2) la réglementation et les enjeux touchant les investisseurs
(3) les nouvelles tendances en matière de gouvernance des TI et celles touchant la gouvernance des principales sociétés œuvrant dans le secteur technologique
(4) l’importance du talent et de la diversité sur les conseils, ainsi que l’importance de la formation des administrateurs de sociétés.
Voici un court article de Mark Pastin publié dans Chief Executive magazine qui présente cinq erreurs en éthique, souvent commises par le président et chef de la direction de nos entreprises.
Il est très important de bien comprendre la portée de ces erreurs parce que, comme dit l’auteur, celles-ci peuvent être évitées. Je crois que les énoncés qui suivent sont assez évidents !
Je vous souhaite une bonne lecture et je souhaiterais recevoir vos commentaires.
Mistake #1: Assuming that a business practice is acceptable because it’s common practice in the industry
This depends on which companies in an industry you compare yourself to. For example, Enron was the most admired company in the energy industry—until it wasn’t. If you are the first one in an industry caught doing something wrong, you often pay the price for the entire industry correcting its practices. There is a scene in the movie Tin Men in which two aluminum siding salesmen sit outside a congressional hearing saying to one another, “We only did what everyone was doing.” If this sounds a bit lame, avoid putting yourself in the same position.
Mistake #2: Confusing legal advice with ethical advice
The job of legal counsel is to tell you the legal consequences of various courses of action—not whether you should take those actions. It is the job of the CEO to decide which risks to take and which to avoid. An action can be legal but still be unethical. Many of the investment activities that led to the 2008 recession were perfectly legal—and also perfectly unethical. It is a mistake to use your legal counsel as your conscience just because you are used to disclosing confidential information to your lawyers. Once you step outside of the domain of legal advice, legal counsel is no more able to give good ethical advice than any of your other advisors.
Mistake #3: Trusting the managers potentially implicated in an ethical issue to investigate the issue
While it is important to show managers that you trust them, it is more important to protect the reputation of your company. It is hard for managers to admit they made an ethical mistake or that an ethical mistake was made on their watch. The CEO should have resources, such as a compliance officer or director of internal audit, outside the line of command to investigate potential legal and ethical breaches. When these resources are regularly used to investigate serious matters, line managers will not be surprised when they are called upon to investigate an ethical issue. They will not conclude that you don’t trust them if they know that this is how serious issues are always addressed.
Mistake #4: Fixing a problem going forward without owning the problem’s history
This would be like GM fixing its ignition problem going forward without owning the problem in cars currently on the road. This never works, but it is very tempting to CEOs who don’t want a past problem dragging their organization down. How often have you heard a CEO or company say, “As soon as we learned of the problem, we fixed it.” That is simply not good enough. You need to show that the organization recognizes the harm caused by an unethical practice and is taking steps to rectify past harm, while avoiding repeating the same action again. Everyone will be asking, “What about everything leading up to the present?” So you have to be ready to answer this question.
Mistake #5: Judging the information you receive by the person from whom you receive it
I know of no ethical fiasco that did not present clearer warning signs. Somehow these signs were ignored—and not without reason. The information that enables you to prevent an ethical crisis often comes from individuals who are afraid of taking any risks, whine about everything, and have a chip on their shoulder. I have just described one type of whistleblower. Whistleblowers are more protected and rewarded under current law than many CEOs realize. This is especially true of the defense, financial services, and healthcare sectors where whistleblowers are not only protected, but can sometimes even receive bounties in the tens of millions of dollars. Sharp CEOs ignore the source of troubling information and evaluate the information without bias. An ethical leader is always asking, “What if this information, although from a questionable source, is true? Would I gamble the future of my organization on it not being true?”
All of these ethical mistakes can be avoided if you are on the lookout for them. The most important way to avoid ethical mistakes is by paying attention to information you would rather ignore or believe to be untrue. Ethical mistakes tend not to go away. The longer you know of an unethical action without reacting to it, the worse the consequences of eventually admitting the mistake for the organization—and its leader. CEOs know that such mistakes, even if not involving illegal activities, can destroy the reputation of an organization. And they know that ignoring or covering up such a mistake simply compounds the consequences of mistakes.
Ethical leadership is not just about having and acting on sound values; it is about confronting the facts no matter how uncomfortable it may be to do so.
Quels sont les critères retenus par la firme Institutional Shareholder Services Inc. (ISS) pour recommander une déviation à la règle d’indépendance du président du conseil d’administration ?
On sait qu’aux États-Unis environ 50 % des entreprises ont des situations de combinaison des rôles de président du conseil et de président et chef de la direction. J’ai souvent écrit dans ce blogue que l’indépendance du président du conseil était très difficile à réaliser aux É.U. et que la gouvernance pouvait en souffrir.
Cependant, on fait face à une résistance féroce dans ce pays et ce n’est que très graduellement que les grandes sociétés américaines se « convertissent ». Même une entreprise comme ISS, qui fait des recommandations aux actionnaires sur les questions de gouvernance, a dû repenser sa politique d’indépendance du président du CA afin de prévoir certaines exceptions.
Carol Bowie, l’auteure de cet article paru dans le Harvard Law School Forum on Corporate Governance, est la directrice des recherches à ISS. Elle nous présente les changements apportés aux recommandations de votation aux assemblées annuelles.
En général, ISS recommande l’indépendance absolue de la présidence du conseil d’administration, sauf si l’entreprise rencontre toutesles conditions suivantes :
L’entreprise désigne un administrateur principal (Lead Director) qui est élu par les administrateurs indépendants et qui est soumis à des tâches et des devoirs clairement définis;
Le conseil est au moins aux deux-tiers indépendant;
Les principaux comités du conseil sont complètement indépendants;
L’entreprise a divulgué ses règles de gouvernance;
L’entreprise ne présente pas une faible performance soutenue par rapport aux autres entreprises de son secteur d’activité;
L’entreprise n’a pas de failles problématiques en matière de gouvernance.
Pour une compréhension plus fine des nouvelles règles de votation proposées aux actionnaires, je vous invite à lire ce court billet. Bonne lecture !
Calls for independent board chairs were the most prevalent type of shareholder proposal offered for consideration at U.S. companies’ annual meetings in 2014. As of June 30, 62 of these proposals have come to a shareholder vote, up from 55 resolutions over the same time period in 2013. Notably, the number of proposals calling for independent board chairs has more than doubled over the past five years. Under the current policy formulation, ISS recommended against 32 of these 62 proposals in 2014. In line with results from recent seasons, independent chair proposals received average support of 31.2 percent of votes cast at 2014 meetings. Only four of these proposals received the support of a majority of votes cast.
Essential Elements of an Effective CEO-Board Relationship builds on the ongoing work of our global CEO and Board Services practice in assessing critical board composition, governance and performance issues. This discussion is meant to help boards led by non-executive chairmen understand the defining activities and attributes of the best CEO-board relationships— relationships that consistently contribute to organizational performance and superior results.
Gouvernance | Jacques Grisé 