Directors Source News - May 2010

• 20 Questions Directors of Not-for-Profit Organizations Should Ask about Board Recruitment, Development and
  Assessment
• Proposed Changes to Accounting
  Standards for Not-for-Profit Organizations

• Post Your Directorship Opportunity
  

• International Corporate Governance
  Network Annual Conference
  
• CSCS Annual Corporate Governance Conference
  
• Managing Risk and Business Performance Forum
  

• The Board Book: An Insider's Guide for Directors and Trustees

• Progress Slow for Women Representation
  on Boards
• On Hiring a New CEO: Once an Outsider, Always an Outsider?
• Investors Identify 7 Top Concerns Related to Succession Planning

• Add your profile to the Where to Find Directors printed directory

Not-for-profit boards need to have an effective system of director recruitment, development and assessment. Directors must collectively have the knowledge, skills and experience necessary to oversee and advise the management of the organization. They must be led effectively and work well together.

20 Questions Directors of Not-for-profit Organizations Should Ask about Board Recruitment, Development and Assessment explores the challenges faced by NPOs in recruiting the right people to serve on their boards, as well as the importance of director education and development and regular assessment of the board and its members.

Summarized answers to two questions are included below:

1. How should prospective directors be approached?

Typically, the first approach is by phone followed by an informal meeting. This should progress to meetings and interviews with directors, the governance committee or the whole board. Many organizations also encourage potential directors to attend a board meeting as an observer.

Before approaching potential directors, it is important to be prepared. This includes learning about the individuals, assessing why they might be interested and appropriate, and being prepared to answer their questions. Candidates who wish to be considered for board membership may also be requested to submit a candidate profile and declaration, including any potential conflicts of interest.

2. What should be evaluated when the effectiveness of the board and its committees is assessed?

At a minimum, the effectiveness of the board or committee should be assessed and measured against its mandate to confirm that responsibilities are addressed and that board process is effective.

Board process refers to how the group makes decisions. Committee process refers to how members review and recommend. Boards and committees are composed of diverse individuals who have different attributes and behavioural patterns. Process should be an important consideration of any board or committee assessment.

Exposure drafts outlining proposed changes to accounting standards for not-for-profit organizations were released by the Accounting Standards Board and the Public Sector Accounting Board on March 3, 2010. The comment period is open until July 15, 2010.

The Accounting Standards Board proposes to give most not-for-profit organizations the choice of adopting International Financial Reporting Standards or following new standards applicable specifically to not-for-profit organizations, which include the 4400 series.

The Public Sector Accounting Board proposes that government not-for-profit organizations apply the accounting standards applicable to the public sector with the addition of the 4400 series. They will not have the option of adopting International Financial Reporting Standards.

Link to Exposure Drafts and more information on Canadian Standards in Transition

International Corporate Governance Network Annual Conference

Date: June 7-9, 2010
Location: Toronto – Royal York Fairmont Hotel
Cost: £550 for ICGN Members; £715 for Partners, Academics and Group Discounts; £990 for Non-Members

The International Corporate Governance Network (ICGN) Annual Conference will take place in Toronto, bringing together over 500 participants from around the world. CICA has partnered with the ICGN to give CAs a special partner registration rate.

Hosted by the Ontario Teachers' Pension Plan and the Canada Pension Plan Investment Board, the theme of the conference is "The Changing Global Balances." Attendees will include institutional investors from the US, Europe, Asia, as well as regulators, policy makers and leading commentators.

Some confirmed speakers on the roster include: Jim Flaherty, Minister of Finance for Canada, Antonio Borges, Former Partner, Goldman Sachs, Portugal, Chairman of the Hedge Fund Working Group and the European Corporate Governance Institute, Rajat Gupta, Former Managing Director, McKinsey & Company, Henry Hu, Risk Director, Securities and Exchange Commission, USA, Paul Cherry, FCA, Chairman, Standards Advisory Council, Canada and Shyam Sunder, James L. Frank Professor of Accounting, Economics and Finance, Yale School of Management.

View the video of conference co-chair David Beatty and planning committee member Carol Hansell discussing the event.

The ICGN is a global membership organization of leaders in corporate governance, with institutional investors representing assets under management of around US$10trillion. The ICGN's mission is to raise standards of corporate governance worldwide.

CSCS Annual Corporate Governance Conference

Date: August 22-25, 2010
Location: Lake Louise, Alberta

The Canadian Society of Corporate Secretaries' 12th Annual Conference will feature expert panelists and speakers discussing top of mind issues on the evolving corporate governance landscape. The event brings together participants from all across Canada and provides opportunities to exchange ideas, to discuss current challenges and to share best practices. Participants will be provided relevant up-to-date information about the changing face of corporate governance both nationally and internationally.

Managing Risk and Business Performance Forum

Date: May 19, 2010
Location: Toronto

A one-day Schulich School of Business forum for senior leaders in Canadian business and government. Overview of how the intersections of risk management and business performance impact the way you develop strategies, plans, make decisions and execute operationally. Take-aways include survey results of executive perceptions of risk and higher business performance; insights into integrating risk thinking at the front-end of your strategic decision-making process; the key roles of leadership and culture in achieving successful risk management and performance results; the building blocks for evolving risk management; what to do to get started now.

The Board Book: An Insider's Guide for Directors and Trustees

Author William G. Bowen has served on the boards of some of the United States' largest corporations and nonprofits. In The Board Book he brings his immense experience, along with the recollections and insights of numerous colleagues, to bear on the most pressing questions facing boards of directors and trustees today. His topics include the issues of the relationship between CEOs and board members, "perks," executive compensation, and CEO transitions. In addition, Bowen offers advice on the "machinery" required to run a board effectively, including the uses of committees and executive sessions, the handling of leaks, and the recruitment of new board members. Throughout, Bowen relates, with anecdotes and hard data, strategies that result in the collegiality and sense of purpose that make any board more effective.

Link for more information

The publication 2009 Catalyst Census: Financial Post 500 Women Board Directors examines women’s representation on corporate boards at the most profitable companies in Canada, assessing women’s advancement and highlighting the gender diversity gap among corporate board directorships. To allow for comparisons over time, Catalyst tracks:

• Women’s share of all board seats and share of board leadership positions;
• Women’s board representation in public, private, crown, and cooperative companies and by Industry;
• The percentage of companies having zero to three or more women directors.

Findings: In 2009, women held 14.0 percent of board seats at Financial Post 500 companies, an increase of one percentage point since 2007. In both 2007 and 2009, more than 40 percent of companies had no women directors. Similar to 2007, women held just 3.2 percent of board chair seats in 2009. Finally, while women's representation on private company boards increased 4 percentage points from 2007, crown companies continue to have the highest representation of women on their boards compared to other types of companies.

When a company wants to appoint a new CEO for strategic changes, they would be better off in the long term promoting someone from inside the company rather than hiring someone from the outside, according to a new study from Rice University’s Jones Graduate School of Business.

The U.S. study looked at the tenure and performance history of 193 CEOs in the industrial sector between 1993 and 1998. The researchers found that in the first few years of tenure, there is very little difference between the performances of CEOs promoted from within a company and CEOs hired from the outside. However, in later years, internally promoted CEOs outperformed externally hired CEOs.

Integral Advisors, LLC and Board Advisor, LLC released a white paper in the first quarter of 2010 identifying top concerns of investors relating to CEO succession planning. The research included both Canadian and U.S. companies and was based on interviews with investment analysts, institutional investors, investment banks, activist investment funds, private equity investors and rating agencies.

Seven key areas of succession concerns (i.e., Succession planning process, Senior team tenure, Key executive exposure, Bench depth, Board engagement in succession planning, Management development, Cultural factors) were identified that impact valuation and credit ratings.

Add your profile to the Where to Find Directors printed directory

Are you a CA serving on the board of a for-profit, not-for-profit or public sector organization? Are you interested in other board of director opportunities? Later this year the CICA will be publishing Where to Find Directors, a who's who of CAs for board positions. We are seeking members with board experience to be profiled in this prestigious publication that will be promoted to companies looking to find CAs to serve on their board of directors.

Click here to go to Directors Source and then click Manage Profile and log in or register to submit your profile for the directory. If you have any questions regarding Where to Find Directors, please e-mail directorssource@cica.ca.

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