Director Professionalism

Definition
A Board room culture that relies on directors consistently guided by a moral compass in fulfilling their fiduciary responsibilities are.

Current Context

• Due to unprecedented corporate scandal and upheaval in US capital markets, board responsibilities have dramatically expanded, requiring a new level of commitment, integrity, and experience of its individual members
• In the current environment of distrust and unfulfilled expectations of self-improvement, boards are scrutinized and monitored by regulatory agencies, shareholders, and the media more closely than ever before.
• Results of the NACD 2006 Public Company Governance Survey, only 4.2% of boards selected Board Effectiveness as a leading issue, and fewer than 1% see Board and Director Evaluation as a major issue
• Only 37.3% of boards rated themselves as “highly effective” in Board/CEO relations and a mere 5.5% rated themselves as “highly effective” in Director Education and Development

Recommendations
Introduce and maintain an evaluation process for the board, its committees, and individual members. Include:

• Conduct inside and outside the boardroom
• Ability to maintain a balanced view
• Decision-making style
• Ability to assess information and strategies from management
• Ability to recognize and repair inappropriate micromanagement
• Identify constituencies, their perceptions of the board and whether they pose a threat or an opportunity in the new corporate environment