1. Articles in category: Partner Publications

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    1. Research: Could Machine Learning Help Companies Select Better Board Directors?

      Research: Could Machine Learning Help Companies Select Better Board Directors?

      Ever since Adam Smith published The Wealth of Nations in 1776, observers have bemoaned boards of directors as being ineffective as both monitors and advisors of management. Because a CEO often effectively controls the director selection process, he will tend to choose directors who are unlikely to oppose him, and who are unlikely to provide the diverse perspectives necessary to maximize firm value. Institutional investors often are critical of CEOs’ influence over boards and have made efforts to help companies improve their governance. Nonetheless, boards remain highly imperfect.

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    2. How Family Business Owners Should Bring the Next Generation into the Company

      How Family Business Owners Should Bring the Next Generation into the Company

      “Go find your passion,’’ Henry directed his children when they reached their late teens and early twenties. “Find your interests outside our family business and pursue them.’’ As inspiring as those words may have been, Henry, the patriarch of a successful automotive parts business, wasn’t simply freeing his children to follow their dreams. He was requiring it.

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    3. The Structure of Board Committees

      The Structure of Board Committees

      Despite the central role of boards in corporate governance, there has been relatively little understanding of their internal organization, specifically the structure of board committees. Using a dataset of over 6,000 firms, the authors find that committee activity, especially the number of committees, has been stable over time. Most of the familiar non-required board committees are rarely used. The majority of directors sit on multiple committees. The benefits and costs of a committee depend on its type. Overall, committees need to be more integrated into our understanding of corporate governance.

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    4. If the CEO’s High Salary Isn't Justified to Employees, Firm Performance May Suffer

      If the CEO’s High Salary Isn't Justified to Employees, Firm Performance May Suffer

      It’s no surprise that business executives make more money than lower-level employees. But when that pay disparity between a CEO and the average worker is perceived as unfair, the result may be more than unhappy workers: A firm’s performance can deteriorate.

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    5. How to Be a Good Board Chair

      How to Be a Good Board Chair

      Most board chairs are experienced leaders. Half the chairs of the S&P 500 double as their companies’ chief executives, and the vast majority of the rest are former CEOs. But the close association of the two positions creates problems. It’s difficult for a board led by the CEO to serve as a check on that CEO—which is precisely why, after the corporate scandals of the 1990s and early 2000s, more companies began separating the roles. However, that division can create another problem: When the chair is not the CEO, there’s a real danger that he or ...

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    6. How Boards Can Reduce Corporate Misbehavior

      How Boards Can Reduce Corporate Misbehavior

      One defining feature of 2017 has been seeing corporate directors and officers being held personally responsible for illegal behavior at their companies. For example, after Wells Fargo Bank paid more than $300 million in penalties for creating over 3 million sham customer accounts, Judge Jon Tigar of the U.S. District Court in San Francisco refused to dismiss claims against the fifteen members of the Wells Fargo board. And Oliver Schmidt, the highest ranking Volkswagen officer residing in the United States, was sentenced to seven years in prison and ordered to pay $400,000 for his role in the VW ...

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    7. Corporate Governance Should Combine the Best of Private Equity and Family Firms

      Corporate Governance Should Combine the Best of Private Equity and Family Firms

      The public corporation is typically bedeviled by the gap between managers’ and shareholders’ interests. Over the years, governance has attempted to close that gap by aligning incentives with measures of performance. These attempts have often failed. But where they have succeeded, they have left public corporations increasingly swayed by short-term results (which are easy to measure) at the expense of future success.

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    8. Sustainability & Disclosure: New demands on corporate boards

      Sustainability & Disclosure: New demands on corporate boards

      It’s a new era of environmental, social and governance (ESG) disclosure and directors need to take notice.

      Many investors are voicing concerns about the limited nonfinancial disclosure in companies’ annual reports and proxy disclosures, even for areas like material climate-related risks that have been the subject of Securities & Exchange Commission (SEC) guidance. And although most public companies produce sustainability reports for consumers and other corporate stakeholders, these reports often lack the quality, reliability and comparability investors need for financial analysis.

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    9. Some Thoughts for Boards of Directors in 2018

      Some Thoughts for Boards of Directors in 2018

      As 2017 draws to a conclusion and we reflect on the evolution of corporate governance since the turn of the millennium, a recurring question percolating in boardrooms and among shareholders and other stakeholders, academics and politicians is: what’s next on the horizon for corporate governance? In many respects, we seem to have reached a point of relative stasis. The governance and takeover defense profiles of U.S. public companies have been transformed by the widespread adoption of virtually all of the “best practices” advocated to enhance the rights of shareholders and weaken takeover defenses.

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    10. Global and Regional Trends in Corporate Governance for 2018

      Global and Regional Trends in Corporate Governance for 2018

      At the end of each year, Russell Reynolds Associates interviews over 30 institutional and activist investors, pension fund managers, public company directors, proxy advisors, and other corporate governance professionals in five key markets regarding the trends and challenges that public company boards will face in the following year.

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    11. How CEOs Can Work with an Active Board

      How CEOs Can Work with an Active Board

      At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.

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    12. Too Much Charisma Can Make Leaders Look Less Effective

      Too Much Charisma Can Make Leaders Look Less Effective

      Conventional wisdom suggests that the most charismatic leaders are also the best leaders. Charismatic leaders have, for instance, the ability to inspire otherstoward higher levels of performance and to instill deep levels of commitment, trust, and satisfaction. As a result, they are generally perceived by their subordinates to be more effective, compared with less charismatic leaders.

       

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      Mentions: Leadership
    13. How CEOs Can Work with an Active Board

      How CEOs Can Work with an Active Board

      At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.

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    14. Research: Board Directors Are More Likely to Leave When a Firm Is Getting Criticized

      Research: Board Directors Are More Likely to Leave When a Firm Is Getting Criticized

      In 2013 an activist investor criticized the board at ConMed for a “culture of nepotism, patronage, and dystopian corporate governance.” Director Stephen Mandia, who had served on the board for 12 years, departed shortly after. Two other directors stayed on the board but picked up additional board seats at other firms within the year. When Baker Hughes and Halliburton were both downgraded by equity analysts following an Obama administration oil drilling ban in 2010, several of their long-serving directors decamped to take up seats at other firms. What these examples suggest is that directors will leave firms that experience negative ...

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    15. How Boards Prepare for an Unpredictable Crisis

      How Boards Prepare for an Unpredictable Crisis

      As Tropical Storm Harvey, formerly a Category 4 hurricane that brought a deadly amount of rain to East Texas, makes its final landfall, and as North Korea's most recent missile launch over Japan may serve as prelude to more military operations directed at the U.S. territory of Guam, corporate boards are finding it difficult to prepare for a disaster that by its nature is unpredictable, executive search firm consultants said.

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    16. How Boards Should Evaluate Their Own Performance

      How Boards Should Evaluate Their Own Performance

      The New York Stock Exchange requires that the boards of all publicly traded corporations conduct a self-evaluation at least annually to determine whether they are functioning effectively. The purpose of the exercise is to ensure that boards are staffed and led appropriately, that board members are effective in fulfilling their obligations, and that reliable processes are in place to satisfy important oversight requirements.

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    17. What Sets Successful CEOs Apart

      What Sets Successful CEOs Apart

      The chief executive role is a tough one to fill. From 2000 to 2013, about a quarter of the CEO departures in the Fortune 500 were involuntary, according to the Conference Board. The fallout from these dismissals can be staggering: Forced turnover at the top costs shareholders an estimated $112 billion in lost market value annually, a 2014 PwC study of the world’s 2,500 largest companies showed.

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    18. The Board Directors You Need for a Digital Transformation

      The Board Directors You Need for a Digital Transformation

      When the term digital transformation was first bandied about by consultants and business publications, its implications were more about keeping up and catching up than true transformation. Additionally, at first it was only applied to large, traditional organizations struggling, or experimenting, in an increasingly digital economy. But true digital transformation requires so much more. As evidenced by the recent Amazon acquisition of Whole Foods, we’re living in a new world.

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    19. Corporate Law & Governance Update: June 2017

      Corporate Law & Governance Update: June 2017

      An important new study concludes that CEO terminations for ethical lapses (as a percentage of overall CEO successions) has dramatically increased over the last five years. The study also reflects the willingness of boards to reclaim compensation from so called "unethical CEOs.” The survey results are suggestive of a growing climate of accountability in corporate boardrooms across the globe...

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