A Call to Action for Board Strategic Leadership - Innovation and long-term value creation needs to be the focus of Boards and C-Suite executives - CFA conference, Chicago, 24 April 2014
Seventy-five percent of the 1,000 largest USA companies do not have the management structure, performance metrics and long-term incentives for balanced growth, innovation and long-term value creation for shareholders. The short-term and mostly compliance focus of many boards is a barrier to creating future value.
It is time to rethink the strategic planning horizon, operational performance metrics and longest accountable performance period for named officers (most companies have a 3-year or less incentive plan). Current long-term incentive design and Say on Pay and proxy voting must be realigned with long-term value creation for shareholders and society. Recent research by McKinsey / Canada Pension Plan Investment Board and Incentive Lab confirms the strategic governance disconnect and improvement opportunity for Directors and Named Officers.
We will discuss:
- What should be the role of the Board in long-term value creation for customers, shareholders and broader society?
- How should the Board and named officers ensure the balance between growth (innovation) and Return on Invested Capital (ROIC), which in turn drives long-term cash flows and sustainable long-term shareholder wealth?
- How should the Board ensure the integrated alignment of business strategy, value drivers, management structure, name officer accountability design, performance targets and long-term incentive design?
- How should Board and the C-Suite ensure that the right disclosures tell the strategy story, performance metric and incentive alignment for long horizon investors?
- What should be the Board's role in CEO succession planning, CEO selection and Organizational Capital Management?
- What should active and engaged shareholders do when the Board fails to live up to their fiduciary duty for long-horizon investors?
Please find some context comments by the moderator by following this link
Mark Van Clieaf - Partner, Organizational Capital Partners
Tim Koller - Global Director, McKinsey Corporate Performance Center
Michelle Edkins - Global Managing Director, Corporate Governance, Blackrock
Meredith Miller - Chief Governance Officer, UAW Benefits Trust
Glen Welling - CEO, Engaged Capital, former Relational Investors
For more information please follow this link
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