|Author||Ralph D. Ward|
Ward's book is certainly timely. It is also fairly comprehensive, without getting bogged down in unreadable details. Although he acknowledges an independent chair may be the dominant model many years down the road, Ward also addresses what many shareowner activists view as interim models involving "lead" and "presiding" directors. He even has a chapter for combined CEO/Chairs on how to cope with the new realities. No matter where your company falls on the spectrum from board "independence" to board "capture," you'll find your board's leadership needs addressed.
The book begins with a very short history of boards that takes us from when they were composed primarily of the largest shareowners, to an era of employee directors, and on through Sarbanes-Oxley, which "used the audit committee to bash its way into the boardroom." Sure, you already know this history but don't skip it. Ward keeps it brief and provides the reader with a good grounding to take the measure of our current trajectory.
The next several chapters cover the new legalities of directors, like meeting in "executive session." Ward's focus is not so much the requirements themselves but on how they are being met and what best practices leaders are struggling to develop in board evaluations, board logistics, acting as a liaison with the CEO, educating the board, etc.
Chocked full of interesting statistics, legal requirements, but most importantly you'll find opinions from experts who have faced the same problems your board is facing now. For example, how important is it to name a new independent chair from existing board members? Whatever you decide, you're very likely to benefit from the advice of others who have already done it. Plus, he provides a large number of valuable references and links to additional resources, like job descriptions for presiding directors, lead directors, and independent chairs. His discussion of how these roles differ and what skills are needed for each is the best I've seen.
At one point, Ward points to the irony that "by forcing independent boards to wrestle more with the regulatory nuts and bolts of the business, we may have actually weakened their powers in relation to management," presumably because they must depend on management for this information. Luckily, boards have risen to the challenge by developing specialized skills and processes.
How are governance, audit and compensation committees coping? Ward gives us an excellent picture of what is going on inside such committees, what problems they are grappling with, and how they are adapting to new demands. He sees the chairs of each of these committees and the board itself as moving in the direction of approaching these positions "as full-time, consulting-like jobs." Ward is probably right that better pay and professionalization are next steps.
Further along the trajectory, I couldn't put it any better than his final words. "Directors will support management, but not to a fault; they don't owe their position on the board to the CEO. Rather, the other outside board members and major shareholders elected them to their leadership position, and the latter will lay claim to their loyalty... These next generation board leaders may not have all the answers when it comes to independent board leadership. But they definitely won't be afraid to ask questions." Ward provides the best post-SOX guide into this new territory of leadership among independent directors.