Maryann Bruce - a Female Board Director to Watch by the flip side

DIRECTORS TO WATCH

Directors to Watch 2017 Governance insights and ideas from top women directors By Scott Chase

he year just past has seen some movement toward increased board diverDirectors & Boards’ 11th Annual Directors sity, perhaps more than some would expect and a lot less than advocates to Watch highlights accomplished women for a better gender mix would applaud.Wachtell Lipton Rosen & Katz board members, and is made possible partner David A. Katz and consulting attorney Laura A. McIntosh, in a in part by the support of Diversity in the paper dated January 25, notes that “momentum toward gender parity is building, Boardroom, a board diversity consulting firm, particularly in the top tier of public corporations.” The authors “recommend and WomenCorporateDirectors Foundation, that boards include this issue as part of an annual discussion on director succesa global organization dedicated to advancsion, similar to the annual discussion regarding CEO succession.” ing the careers and contributions of women Likewise, in June, the latest Equilar Gender Diversity Index — a quarterly directors. update of female directors in the Russell 3000 — found that approximately In our Fourth Quarter 2017 edition, to be pub24.3% of new director appointees in the first quarter of this year were women. lished later this year, we’ll feature Directors Although it seems so long ago, last summer a group of corporate leaders pubto Watch focused on ethnic diversity. lished its “Commonsense Principles of Corporate Governance,” a document If you would like to support “Directors to that — among other things — highlights diversity on boards and correlates that Watch” or nominate a “Director to Watch” for diversity with improved performance. In a widely published accompanying letter, inclusion in Directors & Boards, please send the signatories stated emphatically that “diverse boards make better decisions.” your candidate’s name, current primary corAt Directors & Boards we occasionally can divine a new concern among porate and board positions, contact details for women directors through a careful reading of the governance “passion stateyour choice, and a sentence or two on why you ments” that we ask of our Directors to Watch each year. Cybersecurity, of course, believe this person is a “Director to Watch” to continues to loom large in the worldview of these accomplished executives, but Scott Chase at scottchase@verizon.net. in 2017 that other potential villain (or ally, depending on the circumstances) of the digital age, social media, has taken a seat front and center in their concerns. The speed and the ubiquity of corporate missteps or comments that “go viral” continue to catch CEOs and their crisis communications teams flatfooted.When management is caught in a bind, inevitably the question, “Where was the board?” makes its appearance. That’s where diversity comes in: A recent study co-authored by the WomenCorporateDirectors Foundation found that female directors generally are more concerned about risks, and are more willing to address them, than are their male colleagues. Katz and McIntosh conclude their update by suggesting that 2017 “is likely to be a year in which progress toward greater board diversity significantly accelerates. Indeed, it is becoming clear that gender diversity — if not gender parity — one day will be a standard aspect of board composition. While the process of realizing that future should not be artificially or counterproductively hastened, it should be welcomed as a state of affairs that will be beneficial to all corporate constituents and, beyond, to the greater good of U.S. business and American culture.” Slow and steady wins the race. It just takes time. ANNUAL REPORT 2017

DIRECTORS TO WATCH

Mary A. Winston

Director, Dover Corporation, Domtar Corporation, Supervalu Inc., Acuity Brands

ary Winston is an experienced financial executive, strategic leader and corporate board member. She served as chief financial officer at Family Dollar Inc., Giant Eagle Inc., and Scholastic Inc. She holds an MBA in Finance, Marketing and International Business from Northwestern’s Kellogg graduate school. Winston leverages her C-suite experience, corporate governance knowledge and financial expertise on the boards of Dover Corporation, where she chairs the audit committee, Domtar Corporation, Supervalu Inc. and Acuity Brands. She is a member of the board and President of the NACD, Carolinas Chapter, and is an NACD Board Leadership Fellow.

Mary A. Winston: Strong directors are always thinking ahead, anticipating the unexpected, and challenging management to think BIG! Winston was named one of the “Most Influential Black Corporate Directors” (Savoy magazine, 2016), “Top Fortune 500 Women CFOs” (Fortune, 2015) and “Most Powerful Women in Business” (Black Enterprise magazine, 2006, 2010, 2012 and 2015). Directors must bring both a long-term strategic perspective and a focus on near-term priorities: “One of the most important roles for a board is to guide a company’s strategic direction. In order to enhance and preserve shareholder value, directors must focus on long-term strategy, giving consideration to market influences, overall business risks and potential disruptors. Strong directors are always thinking ahead, anticipating the unexpected and challenging management to think BIG! It requires the courage to ask tough questions and challenge conventional thinking. Still, it is also important for directors to understand near-term business priorities, current results and things that impact shorter-term performance. It’s a delicate balancing act but one that the strongest directors perform masterfully.” 46 DIRECTORS & BOARDS

Jocelyn Carter-Miller

Director, InterPublic Group, Netgear, Principal Financial Group

ocelyn Carter-Miller is president of TechEdVentures and SoulTranSync, which specialize in the development and marketing of high performance educational and empowerment programming. Formerly, Carter-Miller was EVP and chief marketing officer for Office Depot; Motorola Corporate Vice President and CMO;VP-Latin American and Caribbean Operations, and Director-European, Middle East and African Operations for the Motorola International Networks Division; and VP-Marketing and Product Development for Mattel. Jocelyn co-authored Networking: Building Relationships and Opportunities for Success. Carter-Miller, a CPA and University of Chicago MBA, serves on Principal Financial Group (finance committee chair, nominating and governance committee), InterPublic Group (nominating and governance chair, audit), and Netgear (audit, compensation) boards. She is a 2013 NACD 100 Honoree and 2016 Savoy “Most Influential Black Corporate Directors.” Doing the right things: “As stewards for corporate constituencies, including shareholders, investors, customers, partners and communities, directors must ensure that the highest standards of corporate governance and integrity are met. This means developing a ‘strategic asset board,’ and policies and practices that best serve the needs of our constituencies. It means ensuring a diverse board reflecting different races, cultures, genders, skills, perspectives and experiences that enable the company to better understand its markets and to successfully achieve its goals. It means setting a tone for doing the right things, even when the choices are difficult. It means ‘doing well and good’ at the same time.”

Jocelyn Carter-Miller: As stewards for corporate constituencies, including shareholders, investors, customers, partners and communities, directors must ensure that the highest standards of corporate governance and integrity are met.

ÂŠ Johnson & Johnson Services, Inc. 2017

The common denominator is talent.

At Johnson & Johnson, we believe in the opportunity for women to perform at the highest levels. Because that has a direct impact on our success. We are honored to recognize the talents of every woman on Directors & Boards 2017 Directors to Watch.

DIRECTORS TO WATCH

Mary Chris Gay

Director, MGM Resorts International, Inc.

ary Chris Gay is a director for MGM Resorts International, one of the world’s leading global hospitality companies. She serves on the board’s audit committee and compensation committee and she qualifies as an Audit Committee Financial Expert. Gay enjoyed a successful 25-year career in financial services serving as senior vice president and portfolio manager at Legg Mason, Inc. During her tenure, she managed funds registered in Australia, Canada, France, Hong Kong, Ireland, Italy, Luxembourg, Switzerland and the UK. In addition to her work as a public company board member, Gay is a consultant working with startup companies seeking early stage investors and guidance on financial strategy. She is also a member of WomenCorporateDirectors and NACD. What the investment business taught me: “Public company directors are ultimately accountable to capital providers. Good governance comes from a deep understanding of what public companies can do, who controls the capital allocation decisions, and a clear assessment of the risks and returns that result from those decisions. Just as investment managers allocate capital to generate the best risk-adjusted returns for their shareholders, the managements of public companies also strive to generate returns above their cost of capital and build long-term value for their shareholders. In a world of increasing short-termism and fast mobility of capital, good governance has never been more important.”

Mary Chris Gay: Good governance comes from a deep understanding of what public companies can do, who controls the capital allocation decisions, and a clear assessment of the risks and returns that result from those decisions. 48 DIRECTORS & BOARDS

Maryann Bruce

Director, MBIA Inc., Independent Trustee, PNC Funds

aryann Bruce is an independent director, C-suite advisor and former senior operating executive for two Fortune 100 firms. An expert in the financial services industry, Maryann has more than 30 years of experience as a dynamic leader who created and executed market-leading strategic plans, developed high-performing teams, and implemented multi-channel sales and marketing programs supporting global brands through start-up, dramatic growth, turnaround, and transformation. Maryann serves on the compensation & governance and audit committees of the board of MBIA Inc. and is an independent trustee for PNC Funds. She is also an executive committee board member and nominating committee chair of NACD’s Carolinas Chapter and treasurer and investment committee chair for the C200 Foundation Board. Formerly she was compensation chair of Atlanta Life Financial Group and an Allianz Funds Trustee.

Maryann Bruce: Visionary boards think beyond CEO-succession planning to ensure the right people are in the key positions. Talent management is a critical full board role: “The responsibility for talent management does not just lie with the nominating committee.Visionary boards think beyond CEO-succession planning to ensure the right people are in all key positions. It’s important for boards to receive regular CEO debriefs on the identification and readiness of potential successors for C-suite executives, senior leaders and other high-performers. To uncover talented individuals at different levels, a best practice is for the full board to get to know as many of the senior leaders as possible in formal and informal gatherings. Interacting with senior management and their direct reports during board presentations and committee meetings and getting to know them over more casual settings will help board members gain a better perspective of the firm’s bench strength and talent pipeline. High-functioning boards proactively oversee leadership development to better ensure retention of key players and effective succession planning.”

DIRECTORS TO WATCH

Roberta Bowman

Director, Blue Cross and Blue Shield of North Carolina, Echo Health Ventures, LPGA

oberta Bowman retired as Duke Energy’s senior vice president and chief sustainability officer in 2012. In that role, she drove the development and execution of integrated response to environmental, economic and social issues such as climate change. Over her 25-year career at Duke Energy, she served in executive roles in corporate communications, government affairs, public policy, and environment, health and safety, where she built a reputation for driving industry leadership and change through times of ambiguity, disruption and crisis. Bowman has been a board member of Blue Cross and Blue Shield of North Carolina since 2005. She chairs the personnel & compensation committee and serves on

COMMITMENT. INSIGHT. LEADERSHIP.

the executive committee. She was named a director of Echo Health Ventures in 2016. She also currently serves as chairman of the board of the Ladies Professional Golf Association.

Roberta Bowman: Excellent boards regularly assess the health of their corporate culture. Culture trumps strategy: “Most boards invest significant time in the development and monitoring of corporate strategy. I think an area of increased focus for high-performing boards is recognizing the importance of corporate culture in a whole host of risks and opportunities. In this age of viral media, corporate reputations are damaged or enriched by the actions of their employees — particularly those at the front lines. Excellent boards regularly assess the health of their corporate culture. And, as helpful as surveys and other assessment tools are in monitoring culture, there’s no substitute for direct contact with employees and experiencing your company as your customers do.”

Your

LPGA Family

is so Proud Congratulations

Roberta! Congratulations Roberta B. Bowman

You continue to be a great role model for women around the world and we are grateful for your contributions and friendship to the LPGA as Chair of the Board of Directors.

2017 Directors to Watch Honoree Member, Board of Trustees Blue Cross and Blue Shield of North Carolina

® Marks of the Blue Cross and Blue Shield Association. U13329, 6/17

ANNUAL REPORT 2017

DIRECTORS TO WATCH

The power of all types of board diversity By Deborah DeHaas

hat makes a board of directors “diverse?” For many years, discussions about board diversity have focused primarily on issues of gender, race, and ethnicity. Studies show that there has been some improvement in gender and racial diversity on boards, especially for the largest Fortune 100 boards (for examples, see the “2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards,” a multi-year study published by the Alliance for Board Diversity in collaboration with Deloitte). (https://www2.deloitte.com/ us/en/pages/center-for-board-effectiveness/articles/board-diversity-census-missing-pieces.html) However, progress has been slow, and there is much more work to be done. Shifting demographics in the United States have brought diversity to the forefront of issues on the minds of executives and corporate boards. Conversations around board diversity are expanding to include the mix of skills, experiences, perspectives and other qualities needed to facilitate strong performance and to defend against new and emerging challenges. This expanding focus reflects that companies should address ever-increasing challenges in areas such as emerging technologies, global competition, regulatory changes, and business model disruption, among others. Know Your Board’s Skill Sets and Skill Gaps A key initial step to realizing the benefits of a “skills-diverse” board is evaluating the skillsets of current directors against where the board believes those skillsets should be, in other words, skills gaps. Among the public companies surveyed as part of Deloitte’s 2016 Board Practices Report, 91% conduct full board evaluations. (https://www2.deloitte.com/us/en/ pages/center-for-board-effectiveness/articles/ us-board-practices-report-transparent-look. html). The key components of a successful evaluation of the potential skills gaps commonly include the following: 50 DIRECTORS & BOARDS

• First and foremost, the evaluation should to be objective, an evaluation that reflects perceptions or even biases often provides little or no value. This is one factor that may lead a board to engage an independent third-party facilitator to conduct the evaluation, either on an ongoing basis or periodically, to refresh the evaluation process. • The evaluation should be comprehensive. It should consider “out of the box” capabilities, experiences and other attributes that might benefit the company, even if those attributes have not previously been factored into an evaluation process. For example, it may be important to assess whether a board has the appropriate perspectives for a company whose customer base may not be represented in the boardroom. It can also be helpful to consider the skillsets of peer company boards, to consider whether they have qualities desirable for others in the industry. • The exercise should take into account the skills of each director as well as the collective skills of the full board. Skills Matrices Skills matrices that provide an overview of the board’s skills and experience can be useful tools. Matrices can be prepared on an individual basis, to indicate each director’s principal skillsets (which can be helpful for board succession planning as well), or collectively. Some companies publish director skills matrices (either individual or collective) in their proxy statements, often in response to investor requests for greater transparency and to establish a baseline to measure future progress. Identifying the board skills needed in this future can sometimes be difficult, especially if the company is going through significant change or disruption. However, consideration of future board skills should be based upon an understanding of, and alignment with, the company’s industry, culture and strategic vision, as well as its risk profile. For example, if a company is considering global expansion, does its directors have experience and skills in that area? If the company seeks to expand

its customer base, is its board on top of generational or demographic trends involving new customers and employees? If the company’s performance has been affected by strategic or other risks, are its directors capable of getting management to better assess and mitigate mission-critical risks? The definition of critical skills and other attributes should be carefully thought through and specifically defined. For example, what does it mean to say that a key skill is “international” experience? Can a director be said to have that experience because she has been CEO of a company with operations in several countries, or is it necessary for her to have lived and worked overseas? Similar considerations apply to other terms that frequently appear on skills matrices, such as leadership skills, marketing experience and, increasingly, technical knowledge. Closing Thoughts There is more work to be done, even by companies that are successful in creating a skills-diverse board. Joining and fitting in with a board can be daunting in itself; that process can be even more challenging for a new director who is the first female or person of color, or one who brings a new skill set to the board with which other directors are not familiar, such as human resources, cloud, or digitization. Boards are increasing the use of mentoring or partnering programs to avoid isolation and help new directors to fit into the board culture and begin contributing. It is also critical to communicate to investors and other constituencies how refreshment practices, diversity, and newly added skillsets will help the organization to achieve strategic goals and defend against risks and other challenges. When successful, these communications demonstrate how the company’s directors, ideally diverse in skillsets, experiences, and demographics, provide unique contributions to growth and success. Deborah DeHaas is vice chairman, chief inclusion officer, and national managing partner of the Center for Board Effectiveness, Deloitte US.

Imagine the Possibilities! The Penn Mutual Life Insurance Company is proud to support Directors & Boards and their ongoing commitment to corporate governance and gender diversity in the workplace. Since 1847, we’ve continued to branch out, relying on our differences to make us stronger. Today, we’re proud that women leaders comprise over 40% of Penn Mutual’s Executive Team and Board of Trustees. As we embark on the next chapter of our growth story, we continue to create an organization driven by diversity of thought, age and gender. Imagine the possibilities! Learn more at www.pennmutual.com

DIRECTORS TO WATCH

Sheri H. Edison Director, AK Steel

her i Edison is senior vice president, chief legal officer and secretary of Bemis Company, Inc., a supplier of flexible packaging worldwide, focused on corporate governance, global risk management, compliance and legal operations. Edison came to Bemis Company from Hill-Rom, Inc., where she had been senior vice president and chief administrative officer since 2007. Prior to 2007, Edison held senior management and general counsel positions at Hill-Rom, Inc., Hillenbrand Industries and LTV Steel and was an attorney at Jones Day LLP.

Sheri H. Edison: The regulatory-oriented business environment in which companies operate today make the combination of the business and legal and analytical skills of the lawyer-director very valuable assets to any board. Edison currently serves on the boards of AK Steel (NYSE: AKS), the Fox Cities Performing Arts Center and the Fox Valley Community Foundation. She is a member and Fellow of the NACD and an alumna of the DirectWomen Board Institute. Board composition and diversity of experience: "Among the professional profiles benefitting from the expanded view of diversity on boards is that of the lawyer-director. The regulatory-oriented business environment in which companies operate today make the combination of the business and legal and analytical skills of the lawyer-director very valuable assets to any board. Lawyer-directors often play a vital role in risk analysis, an increasingly important and expanding area of board responsibility. Moreover, the lawyer-director is often quite skilled at asking the r ight questions, unpacking complex business issues and problem solving. 52 DIRECTORS & BOARDS

As boards continue to take a hard look at board talent and capabilities, the skills and abilities of the lawyerdirector will increasingly be sought."

Phyllis J. Campbell Director, Alaska Air Group

hyllis Campbell is chairman, Pacific Northwest, for JPMorgan Chase & Co. She is the firm’s top executive in Washington, Oregon and Idaho representing JPMC at the most senior level to clients. Campbell is an independent director for Alaska Air Group, a NYSE listed company. She served on Nordstrom’s board of directors and chaired the Audit Committee for seven years. She serves on the Diversity Advisory Board of Toyota. She is on the nonprofit boards of PATH, the US-Japan Council, and the global advisory board of WomenCorporateDirectors and is a member of the NACD Governance National Advisory Council. She is a frequently requested speaker on governance, audit and risk-related topics and has spoken at a number of global conferences. Tone at the middle also important: “It is the board’s role to monitor and model its own culture and ensure that it is consistent with that of the organization it governs. A strong culture, when carefully nurtured, has proven to be a sustainable competitive advantage over time. It is the board’s role to pay attention to the factors that make up the culture and to work with management to ensure that the tone at the top and the middle of the organization is consistent.”

Phyllis J. Campbell: It is the board’s role to pay attention to the factors that make up the culture and to work with management to ensure that the tone at the top and the middle of the organization is consistent.

Dover is proud to congratulate board member Mary A. Winston on being named one of the 2017 Directors to Watch by Directors & Boards.

Dover is a Fortune 500 diversified global manufacturer headquartered in the Chicagoland area. We drive innovation and growth not only for our customers, but also for our communities.

Learn more at dovercorporation.com

DIRECTORS TO WATCH

Kapila Anand

Director, Extended Stay America Inc., ESH Hospitality Inc.

apila Anand serves as the chair of the nominating and governance committee of the board of Extended Stay America, Inc., and the audit committee chair of ESH Hospitality Inc. She also serves as the lead director of the WomenCorporateDirectors Education & Development Foundation, a trustee of Rush University Medical Center and U.S. Fund for UNICEF. She has served on the board of KPMG LLP, as well as the chair of the KPMG Foundation.

Kapila Anand: In today’s volatile business climate — subject to geopolitics, technology and other disruptive forces — it is the board’s role to make sure that the company’s values, strategy, talent management and incentives remain in alignment and support a culture of innovation. Anand recently retired from KPMG where she served as KPMG’s leader for Travel, Leisure & Hospitality. She also served as Partner in charge of KPMG’s Public Policy Business Initiatives. She is a frequent speaker at industry/governance forums and was awarded the “Women to Watch” award by the Illinois CPA Society. She was also honored as an “Inspirational Leader” by ASCEND, the largest Pan Asian organization, and profiled as a “Voice of Experience” by the Glass Hammer focused on women executives. Align culture with leadership and reward strategies: “In today’s volatile business climate — subject to geopolitics, technology and other disruptive forces — it is the board’s role to make sure that the company’s values, strategy, talent management and incentives remain in alignment and support a culture of innovation. As boards refocus their agendas on these important topics, it is also a good time to reevaluate board composition and the representation 54 DIRECTORS & BOARDS

of necessary functional skills sets and diverse perspectives in the boardroom. A recent WomenCorporateDirectors whitepaper addresses ‘Developing a culture of leadership,’ calling out the board’s role in improving leadership strategies while recognizing that there is work to be done by many boards to meet their fiduciary obligations. Unfortunately, the headlines support the reality that for some boards the refocus on culture and leadership strategy follows crisis.”

Margaret Whelan Director, TopBuild

argaret Whelan has been CEO of Whelan Advisory, LLC since 2014. In this role she provides strategic and financial counsel to leaders of both public and private companies in the U.S. and globally. Whelan is a 23-year veteran of Wall Street and has had success in several pivotal roles, including being recognized as an All American Research Analyst, and serving as a senior coverage partner and Managing Director in JPMorgan’s investment banking group. Whelan is recognized as a financial expert by the SEC and she cur rently serves on the boards of two companies: TopBuild (NYSE: BLD) and privately-held John Burns Real Estate Consulting. Whelan leverages her commitment to board excellence by working with Trewstar to recruit exceptional female candidates for director openings.

Margaret Whelan: With uncertainly at alltime highs, boards need to leverage diverse perspectives to effectively see around the corner and protect the interests of all stakeholders. Uncertain times call for board refreshment: “Board structure and refreshment have never been more important. With uncertainly at all-time highs, boards need to leverage diverse perspectives to effectively see around the corner and protect the interests of all stakeholders.”

THERE ARE THOSE WHO LEAD. AND THOSE WHO LEAD BY EXAMPLE.

Thank you Mary Chris Gay for being among the latter. MGM Resorts shares your values and congratulates you for your commitment to our community.

D I V E R S I T Y A N D I N C LU S I O N • CO M M U N I T Y E N GAG E M E N T • E N V I R O N M E N TA L S U S TA I N A B I L I T Y

DIRECTORS TO WATCH

Cathey Lowe

Director, The New Home Company

athey Lowe has served as the audit committee chair on the board of The New Home Company, a publicly traded homebuilder, for three years. She has over 30 years’ finance experience as a senior executive in the construction and oil and gas industries, including seven years as the investor relations officer for Ryland.

Cathey Lowe: When women gain management experience in a maledominated industry, such as construction or oil and gas, they can leverage that background to build synergy with board members in those industries. Her experience in working with investors and creditors gives her an insight into their perspectives and concerns. Lowe’s experience in the oil and gas industry provided global opportunities to understand what it’s like to do business in other cultures and to operate in an industry with many challenges, including severe pricing swings, government regulations and highly technical operations. Bridging the Gender Gap: “One of the barriers to diversity in the boardroom is that board members naturally tend to select other board members similar to themselves. How to find common ground? When women gain management experience in a male-dominated industry, such as construction or oil and gas, they can leverage that background to build synergy with board members in those industries. By focusing on gender-neutral skills, such as financial expertise, women can communicate through shared objectives and goals. Women need to find ways to bridge the gender gap in order to contribute at the board level.” 56 DIRECTORS & BOARDS

Penny Herscher

Director, Rambus Inc., Lumentum Holdings Inc., Verint Systems Inc.

enny Herscher is an experienced Silicon Valley technology CEO, executive, entrepreneur and public company board director. She sits on three public company boards, Rambus Inc., Lumentum Holdings Inc., and Verint Systems Inc., chairs compensation and strategy committees and coaches entrepreneurs as much as she can. She took her first company, Simplex, public in 2001 and sold it to Cadence (CDNS) in 2002 where she served as CMO and GM. She is chairman at Savonix, a digital health startup, and from 2005 to 2015 was CEO of FirstRain, a SaaS analytics company. Herscher was one of the early executives at Synopsys, helping it grow from zero to over $400 million in revenue. She has a BA Hons, MA in Mathematics from Cambridge and wrote software for the first four years of her career.

Penny Herscher: Compensation is the area where a board can have the most impact on creating alignment between the CEO, leadership and shareholders. It drives behaviors, good and bad, can motivate or demotivate, and can create significant shareholder value if done well. Creating alignment between management and shareholders: “Compensation is the area where a board can have the most impact on creating alignment between the CEO, leadership and shareholders. It drives behaviors, good and bad, can motivate or demotivate, and can create significant shareholder value if done well. When compensation design is combined with strategy, I find the work challenging and fascinating, and a way I can help the CEO achieve his or her vision.”

DIRECTORS TO WATCH

A key disconnect: Women directors and key committee assignments

board roles? There are several potential reasons. First, the more women on the board, the greater the likelihood that they ascend to key positions. For example, when boards are 30% or more female, the chair of the board is more likely to be female (14% rather resources, sustainability, technology, patient safethan less than 4% for boards that are less than 30% By Kimberly A. Whitler and ty, investment and so on. Women tend to be more female). Second, the roles that women play on boards Deb Henretta likely to chair these more specialized committees should be determined, in part, by the skill set they n the past decade, the state of women on boards than the core committees. bring. If more boards appoint specialist females (i.e., has improved. With significant interest and attenThere are a couple of caveats with this analhuman resources, public policy, corporate responsition focused on the number of women who sit on ysis. Not all boards have the same name for the bility), it follows that these women are more likely to boards, there has been a shift in the Fortune 500 committees and some combine committees. Many ascend to specialist committee leadership positions. with the percentage of boards that are now more don’t have the non-core committees. For example, Third, the non-core committees may be considered than 32% female having almost quadrupled in that the sample for corporate responsibility and public more training and growth opportunities and therefore time. While some will look at the trend positively, policy was small so we combined them. serve as a stepping stone to the more central comothers will point to the fact that there was only mittees. Fourth, there is often a preference that one board in both 2006 and 2016 with more a former/sitting CEO chair committees. If there FORTUNE 500 COMPANIES than 50% of its members being female. are fewer CEO-experienced women serving on Females as a Percent of the Total Board 2016 2006 boards, it may make it more difficult for them to Boards with 0 females 5% 10% Moving Beyond Inclusion ascend to a chair position. Boards with <15% female 29% 51% Boards with >32% female 11% 3% While the debate continues regarding the While boards are continuing to make progBoards with >50% female <1% <1% pace at which progress should occur, we ress in terms of the number of women on boards, have begun researching a different but relatfuture measures will go beyond presence to Committee Chaired by a ed topic — the roles of the women who are on consider the roles that women play on boards, and Woman (%) boards. While being admitted to a board is a sigconsequently, their ability to influence outcomes. Corporate Responsibility/Public Policy 36% nificant event, not all roles on boards are created The value of bringing greater demographic diversity HR 23% equal, and therefore aren’t endowed with equal onto boards is that it serves as a proxy for diversity Nominating/Corporate Governance 22% influence. Those individuals who serve as the board of experience, which can lead to a wider breadth of Audit 17% chair, lead independent director, audit committee considerations and problem solving approaches that Risk Management/Compliance 15% chair, nominating/governance chair, and/or comshould help to improve the quality of decisions made, Strategy/Financial 13% Compensation 12% pensation committee chair tend to have significant and their impact on firm outcomes. If this is the case, Executive Committee 4% sway. This is because they serve in key leadership then women ascending to key leadership board posipositions that can have influence over important tions are worth measuring and understanding. board decisions such CEO selection, who is on the The findings are interesting, however, because slate of future board members, how executive comwith roughly 20% female board members, women Kimberly A. Whitler, Ph.D., is an assistant profespensation is structured to align management pracare beginning to ascend to key roles. However, leadsor of business at the University of Virginia’s Darden tices with shareholder interests, and so on. ership on core committees lags the more specialSchool of Business, advisory board member of Harte To better understand the status of female board ized committees, where a woman chairs more than Hanks, and Forbes contributor following a nearly members and the potential influence they wield, one-third of corporate responsibility/public policy 20-year career as general manager and chief marketwe investigated the roles of the women who sat on committees, for example. In contrast, only 5% of ing officer in the CPG and retailing industries. Deb the 2016 Fortune 500 companies. (Note: We pulled boards have a female chair, and almost half those Henretta is an independent board director on four the names of the companies from the 2016 Fortune are also the CEO. This suggests that the best path for public boards, Corning, Meritage Homes, NiSource 500 list, but the data were pulled from proxies filed a female to become chair is by being the firm’s CEO. and Staples, board advisor to Godiva and senior adviin 2015 and 2016 because of the timing of the Of the core committees, women are most likely to sor to two private companies (G100 and General analysis.) Beyond the core committees mentioned chair the nominating/corporate governance commitAssembly), following a successful 30-year career at above, there are several additional committees that tee and least likely to chair the executive committee. Procter & Gamble where she served as group presisome boards include such as public policy, human Why are there not more women in key leadership dent of several multi-billion dollar businesses.

58 DIRECTORS & BOARDS

How do you provide long term vision? You view possibilities through a diverse set of eyes. Today’s boards face an array of complex issues, when preparing for the future. The best way to understand these issues—and provide proper oversight—is to take advantage of a broader range of perspectives. As global lead sponsor of the WomenCorporateDirectors Foundation, and a supporter of many other diverse organizations, KPMG LLP is an advocate for the growth of diversity in corporate boardrooms. We’re proud to salute all of the directors who are being honored as a Director to Watch, especially those who are WCD members. All of whom can be considered directors with vision.

kpmg.com

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 536142

DIRECTORS TO WATCH

Dolores A. Kunda

Director, Lenox Group Inc., Finish Line Inc.

olores is a cor porate board director with exper ience from Lenox Group, Inc. (for merly NYSE: LNX), and Finish Line, Inc. (NASDAQ: FINL). Dolores’s board committee work spans audit, compensation, and nominating/governance committees. In addition to committee assignments, Kunda has a passion for surfacing qualified minorities and women in their quest for a seat at the boardroom table. Kunda is a Hispanic marketing expert. She founded Lápiz Advertising in 1999 while president of Leo Burnett Puerto Rico. Kunda retired from the advertising industry in 2013. In 2015, Kunda became the first executive director of the Latino Corporate Directors Association (LCDA, 2015/2016). She is on the board of directors of the LCDA. Kunda is a graduate of the Kellogg School of Management at Northwestern University and Smith College.

Dolores A. Kunda: More and more, quantitative data proves that ethnic and gender diversity leads to more rigorous debate and thus, better, more carefully considered decisions. Diversity is about the science of teams: “Diverse boards make better decisions leading to increased shareholder value. Diversity is not about social justice, but about the science of teams. More and more, quantitative data proves that ethnic and gender diversity leads to more rigorous debate and thus, better, more carefully considered decisions. Additionally, as the American population becomes more diverse, it is a business imperative to have the consumer experience at the board table in directors who bring a wealth of senior level business experience and the added understanding of population groups that may be a company’s strongest customer base.” 60 DIRECTORS & BOARDS

Cynthia R. Plouché

Independent Trustee, AXA Premier VIP Trust

ynthia Plouché is an experienced board trustee for more than 15 years and with 25 years of experience as a senior investment portfolio manager. She has a BA from Harvard University and a Wharton MBA. Plouché started her board career in 2001 with AXA Premier VIP Trust. Currently, she is the lead independent trustee and past audit committee chair, overseeing portfolio assets that exceed $20 billion.

Cynthia R. Plouché: Bringing board, management, and shareholder perspectives into alignment from the proverbial 35,000-foot view is an act of dynamic problem solving. In 2014 she was selected to be an independent trustee for the Northern Institutional Funds/Northern Funds, a $140 billion complex. She is the governance committee chair. Plouché’s community leadership is extensive, showing her commitment to using her financial acumen and management strengths to improve the community. Balancing the dual obligations of director service: “Throughout our tenure, directors work with management while simultaneously working for shareholders. Balancing these dual obligations and how they constitute board oversight is a key governance challenge. At a minimum we are group of leaders, including management, who are accomplished in our own right bringing expertise to bear but each with a different perspective. Bringing board, management, and shareholder perspectives into alignment from the proverbial 35,000-foot view is an act of dynamic problem solving. The challenges become most noticeable at strategic junctures where the risk tolerance and measurement of reward varies for each party.”

Congratulations, Congratulations, Congratulations, Phyllis Campbell! Phyllis PhyllisCampbell! Campbell! Alaska Air Group Alaska Air Group isisis Alaska Air Group proud that you have proud that you have proud that you have been named asas been named as aaa been named Director toto Watch. Director to Watch. Director Watch. We’re grateful for We’re grateful for We’re grateful for your commitment toto your commitment to your commitment excellence and for your excellence and for your excellence and for your many contributions that many contributions that many contributions that continuously drive high continuously drive high continuously drive high performance, helping performance, helping performance, helping usus creating an airline us ininin creating an airline creating an airline people love. people love. people love.

DIRECTORS TO WATCH

Linda C. Coughlin Director, The China Fund Inc.

n e x p e r i e n c e d b o a rd member and chair of public and private boards, Lin Coughlin is a former global operating executive and general manager with an extensive track record at envisioning and leading the implementation of disruptive strategies in the electronic payments, banking, asset management, travel, hospitality, vehicle rental, real estate services, healthcare and healthcare technology industries.

Linda C. Coughlin: A critically important quality of board leadership is courageous course correction of corporate strategy in times of disruptive change. She serves on the audit and the nominating committees of the board of The China Fund, Inc. (NYSE:CHN). She was formerly chief administrative officer and member of the executive committee of Cendant Corporation, president and vice chair of Linkage, Inc., a managing director and member of the board of Scudder Stevens and Clark, and president of the Americas Mutual Funds Group. She also chaired the boards of Scudder’s three large mutual funds organizations overseeing more than $220 billion in assets under management. Courageous course corrections in times of disruptive change: “The need for ‘change at core,’ prompted by seismic shifts such as game-changing technology enablers, industry consolidation or disruptive competitive entrants, is the most challenging to plan for and execute — always accompanied by strain on human capital and operating norms, and the consequent risk of destabilization and loss of business momentum. A critically important quality of board leadership is courageous course correction of corporate strategy in times of disruptive change, calling for high levels of agility, and often the willingness and ability to masterfully coach and mentor operating leaders without crossing the line beyond which fiduciary responsibility does not extend.” 62 DIRECTORS & BOARDS

Tanuja Dehne

Director, Advanced Disposal Services

anuja Dehne is a public company director and former C-level executive who brings perspective and experience from her cross-discipline roles to the C-suite and the boardroom. She is on the board of Advanced Disposal Services (NYSE: ADSW) and served on the board of Silver Bay Realty Trust Corporation (NYSE: SBY) from 2012-2017. She was also the former chief administrative officer, chief of staff and corporate secretary of NRG Energy, Inc., a Fortune 250 power company. Dehne is an award-winning corporate attorney, human resources professional and an active member of her community, serving on four nonprofit boards including the Geraldine R. Dodge Foundation. She is a senior advisor to an NGO,The B Team, focusing on the critical role of corporate governance and climate action. She recently authored an article on board culture and composition in The Legal Intelligencer, “Creating Long-Term Value by Changing the Supply and Demand.”

Tanuja Dehne: To balance expertise with longterm business needs, boardroom ecosystems must continuously review the existing talent and business context, and anticipate what is next. Board culture and composition go hand in hand: “A board that fosters a culture that is candid about its composition and open to welcoming new members will be better equipped to take advantage of business opportunities. Collegiality, consensus building and knowledge retention are important qualities of effective board culture, but can also stifle tough decisions about a board’s composition. To balance expertise with long-term business needs, boardroom ecosystems must continuously review the existing talent and business context, and anticipate what is next. Board evaluations, succession planning and tenure limiting mechanisms allow boards to refresh their composition in a thoughtful and strategic manner that creates demand for a broad array of experiences and perspectives.”

LET’s RAISE A GLASS TO Jocelyn Carter-Miller. IPG and its Board of Directors congratulate Jocelyn Carter-Miller on being named a Director to Watch. Jocelyn’s leadership and dedication have helped ensure that IPG’s board operates at the highest standards of corporate governance and accountability and she has helped instill a culture of diversity and inclusion throughout our organization.

DIRECTORS TO WATCH

For diversity, progress is glacial By Michele J. Hooper

orporate boards are entering a perfect storm with more boards adopting majority voting as well as annual elections, which puts the entire board up for re-election each year. Shareholders are questioning boards on how their composition addresses the skills and experiences needed to develop the long-term strategies of the corporation. Add to this the number of sitting directors who are nearing retirement, and boards are experiencing an environment that is unusual for them — a growing number of exceptional CEO and other director candidates who are declining to serve. Directors are investing over 240 hours annually for each board on which they serve, and this is before the call for directors to increase their engagement in this rapidly evolving business environment of technology and strategy disruption. This provides an opportunity to expand the pool of candidates beyond the traditional categories to a group of senior executives below the CEO which includes a growing cadre of women and minorities who are experienced, qualified and interested in serving as board members. Nominating committees are seeing that adding members from this expanded pool can help boards better reflect the makeup and experiential background of their customers, employees and shareholder bases. Yet progress is glacial. Artificial methods like term limits or age limits may open up slots but do not guarantee that they will be filled by diverse candidates. Unlike some European countries, we are a nation that is reluctant to impose diversity quotas in the boardroom. But we can no longer afford to marginalize women, who still occupy only 21% of board seats. Minority women lag even further behind, holding roughly 4% of board seats although demographics clearly show the shift in the United States toward minorities with the accelerating growth of Hispanics, Asians and African-Americans leading to a cultural gap in a younger, more racially diverse population. This transition is not about political correctness; it is about the responsibilities of boards and longterm shareholder value. Boards need to tackle the fundamentals: 64 DIRECTORS & BOARDS

1) Understand the company’s long-term strategies and drivers of value along with the skills and experiences needed on the board to support them. A lot of boards are using skill matrices to identify gaps in areas such as technology, public policy, building businesses in China, or in age, gender or ethnic diversity. This helps to shift the nominating discussions away from “who do you know” to “these are the characteristics needed in our next candidate.” 2) If needed, board leadership must change board culture to make the very tough call to tell a director that he or she will not be asked to stand for re-election to make room for a candidate who brings more current or different but critically needed, skills and/or experiences to the table. 3) Adopt a “Rooney Rule” used in the hiring of NFL leaders, requiring board candidate slates be diverse. 4) Adopt a type of “blind audition” concept in What the academics say: Racial diversity has a positive impact on sales revenue, customer base, market share and profits relative to competitors. Gender diversity has a positive impact on sales revenue, customer base, and profits relative to competitors. The median return on assets (ROA) and return on equity (ROE) of companies with a strong diversity culture are higher than firms that don’t have a focus on diversity. There is a positive correlation between the number of women on the board or in executive positions and the return on investment (ROI) and ROE. Diversity on the board of directors is linked to improved ROI and ROA and more gender diverse boards have higher profitability. A reputation for diversity increases the value of the company. — Hilary Hawley, student paper. Hilary Hawley is special projects coordinator at Windway Capital Corporation. She is a graduate of St. John’s College with a B.A. in Liberal Arts, and is currently earning her MBA from Marquette University’s Graduate School of Management

candidate evaluation that has been used in orchestras to add diversity. By focusing more on the skills, experiences and track record of the candidates, boards have a better chance at “allowing the music to be heard” free of unconscious bias. 5) Perform annual or periodic individual director evaluations to continuously assess and improve a director’s board contribution. Potential candidates need to: 1) Check your company’s permission to serve on outside boards. Do you have the flexibility and control of your calendar to put in the time required? 2) Hone your skills through your “day job” and, if possible, not-for-profit leadership roles. Define how you can add value to a board. 3) Enhance your visibility. Are you known as an expert or “go-to” person in some specialized area? Do you share your expertise by participating in speaking engagements or outside committee work? 4) Know what others will say about your abilities and character. Are you honest and ethical? Are you willing to defend your opinions and lead others to consensus? Are you comfortable making tough decisions? 5) Recast your bio to focus on your qualifications and success from a governance perspective, and get it out to board search professionals, directors and your network’s director registries. Boards need to know your skills and experiences in order for you to get put on their slate. And shareholders need to continue reinforcing the importance of board composition in the oversight of long-term strategic value to the company. Sunshine is indeed the best disinfectant. Michele J. Hooper currently serves as president and CEO of The Directors’ Council, a firm that specializes in corporate board advisory services and board recruitment and focuses primarily on diversity candidates. She has served as senior independent director as well as chaired key governance committees on the boards of directors of a number of public companies. Hooper currently serves on the boards of PPG Industries and UnitedHealth Group and previously served on the boards of AstraZeneca, Warner Music Group, Target, Seagram Company and DaVita Corporation.

High-functioning boards proactively oversee leadership development to better ensure retention of key players and effective succession planning. —Maryann Bruce

Congratulations Maryann! MBIA Inc. and its Board of Directors congratulate our valued board member, Maryann Bruce, on being named to this year’s class of “Directors to Watch” by Directors & Boards.

www.mbia.com

DIRECTORS TO WATCH

Ellen Taaffe

Director, John B. Sanfilippo & Son Inc., Hooker Furniture Corporation

llen Taaffe was a senior brand management executive at a Fortune 50 company, as well as company president of an award-winning consulting and research firm. Her corporate career included marketing, operating, and strategy roles at PepsiCo, Royal Caribbean and Whirlpool Corporation. Currently, Taaffe is an independent board director and member of the Aaudit, compensation, and nominating/governance committees for both John B. Sanfilippo & Son Inc. and Hooker Furniture Corporation, where she chairs the nominating/governance committee. She is on the faculty at the Kellogg School of Management of Northwestern University, where she oversees women’s leadership programming. She is also an executive coach. Taaffe holds a B.S. from the University of Florida, an M.B.A. from Kellogg School of Management, and is an NACD Board Leadership Fellow.

Ellen Taaffe: As markets experience disruption and consumer preferences change rapidly, experienced marketers can bring valuable perspective to the boardroom. Marketers bring diverse thinking to boards: “While most companies have elevated their top marketing executives into the C-suite, their boards have not followed suit. Seasoned marketers bring strategic acumen and operating experience to board discussions, but their real value is in guiding growth in the face of market changes. Marketing leaders have seen their roles disrupted with the advent of the internet. Their traditional model has been upended, forcing marketers to adapt and strengthen their strategic agility, consumer centricity and trend anticipation. As markets experience disruption and consumer preferences change rapidly, experienced marketers can bring valuable perspective to the boardroom.” 66 DIRECTORS & BOARDS

Gina Boswell

Director, Manpower Inc., Wolverine

ina Boswell leads the business delivery of $10 billion in revenue across all Unilever categories in the United States. Formerly, she led the UK and Ireland business, the fourth-largest market for Unilever. Prior to that, Boswell was responsible for the multi-billion-dollar personal care portfolio for Unilever North America. Boswell joined Unilever in 2011 when it acquired Alberto Culver, where she was president, Global Brands, and overseeing brands, such as TRESemmé, NeXXus,VO5 and St. Ives. In 2004, she was COO of Avon North America, and previously held senior positions at Ford Motor Company and Estee Lauder Companies.

Gina Boswell: A modern ERM program requires a holistic, end-to-end look at the risks a business faces Boswell serves on the boards of Manpower Inc. (NYSE: MAN) and Wolverine (NYSE: WWW). She is a Henry Crown Fellow of the Aspen Institute and president of the Yale University Council. A holistic, end-to-end look at risk: “A board's primary responsibility is protecting the interests of shareholders which puts the company's enterprise risk management (ERM) program in key focus. A modern ERM program requires a holistic, end-to-end look at the risks a business faces. Recent headlines illustrate how far-ranging corporate risk can be. For example, we don’t typically think of customer service and sales practices as hotbeds of corporate risk, but a few well-publicized incidents drive home how damaging a misstep can be, especially when it goes viral. To approach ERM thoughtfully, a director needs to build a keen sense of the company’s operations and industry practices — the entirety of the enterprise — and then ensure management is thinking broadly about the range of potential risks without being too risk averse — which is a risk in and of itself.”

Four ways to start your subscription FAST!

UH OH — WE’RE DOING TOO MUCH

1 Call us! Please dial (800) 637-4464, ext. 6072 to begin your subscription today. 2 Subscribe online. Visit www.directorsandboards.com and click on the

The danger of board overreach

New Subscription link.

3 Fax us! Fax this form to (215) 405-6078.

www.directorsandboards.com

DB1Q17_Cover.indd 991

2/1/17 5:03 PM

4 Mail us this subscription form.

Yes! Please begin my subscription to Directors & BoarDs. ❑ I understand that I will receive a free copy of “The Art of Corporate Governance” (a $150 value) with my paid order. I may cancel my subscription at any time and receive a full refund for all unmailed issues. ❑ Please charge my credit card for the annual subscription price of $325. ($350 in US funds for non-US residents)

❑ AMEX

❑ VISA

Annual Report 2016

THE YEAR IN GOVERNANCE ®

Thought Leadership in Governance Since 1976

Second Quarter 2016

Special roundup on what’s new and noteworthy in the boardroom www.directorsandboards.com

DBAR16_Cover.indd 991

❑ MasterCard

Card Number Exp. Date

What’s going on that no board can ignore? Corporate director LAURIE ANN GOLDMAN identifies an historic development.

RESUSCITATING AND REENGAGING:

7/15/16 2:01 PM

How To Make a Director Great Again

CCV code Signature

Thought Leadership in Governance Since 1976

❑ My check for $325 (US Dollars only) is enclosed. ($350 in US funds for non-US residents)

Fourth Quarter 2016

SPECIAL

Name (please print)

40 th ANNIVERSARY www.directorsandboards.com

Company Name

DB2Q16_Cover.indd 991

Mailing Address City

State

Phone

Fax

E-Mail Address

❑ Please contact me to discuss a bulk subscription for my entire board and relevant corporate governance executives.

1845 Walnut Street, Suite 900 • Philadelphia, PA 19103

EDITION

Zip

Please provide your email address, and we’ll send you our monthly Directors & BoarDs eBriefing, a special email newsletter for subscribers. (We’ll never rent or sell your email address.)

5/5/16 1:55 PM

An historic legacy of great governance advice

www.directorsandboards.com

DB4Q16_Cover.indd 991

11/21/16 8:24 AM

DIRECTORS TO WATCH

Sowing new seeds of thought By Beth Stewart

t is summer, late in the planting season. Yet there is still time for new seeds of thought to grow. Let’s start with this little-known — but critical — fact: fewer women joined S&P 500 boards in 2016 than in 2014 or 2015. Who knew reality was so different from perception? The push for gender diversity on corporate boards is ostensibly top of mind in many quarters. But without board refreshment, meaningful representation for women will never become a reality. And, the irony is that gender diversity, while a laudable goal on the merits, is also a byproduct of good corporate governance. Many of America’s boards are not fit for the rapidly changing issues faced by corporate America. Technology, cyber competency, best international practices, new-age marketing, and human resources are all critical areas of board competency. Nonetheless, the findings of a recent study by the London Business School’s Leadership Institute suggest that most companies are failing to create succession plans that will meet the needs of our new dynamic corporate environment.

There are several developments that should accelerate board turnover. On March 7, State Street Global Advisors threw down the gauntlet by announcing they will vote against directors who do not create diverse boards. This is galvanizing other institutional advisors to be as bold.

Many of America’s boards are not fit for the rapidly changing issues faced by corporate America. Technology, cyber competency, best international practices, new age marketing and human resources are all critical areas of board competency. It turns out that activists are increasingly in contact with qualified female candidates — the activists have heard the rumblings from the institutional investor community, a community whose votes they often need to accomplish their goals. And women candidates are responding positively. They are willing to consider an activist board, a shift from even a year or two ago. Ideally, however, turnover will be mandated from within. Women lawyers are discovering that they

The push for gender diversity on corporate boards is ostensibly top of mind in many quarters. But without board refreshment, meaningful representation for women will never become a reality. Challenge number one is to convince corporations to focus on succession, to make room at the table for innovative, forward-thinking candidates. Challenge number two is to convince board leaders to start with exceptional women candidates. No board can claim to have the most talented people when C-suite level women who match their specifications are not considered. But 2017 and 2018 promise to be different. 68 DIRECTORS & BOARDS

scorecard at the end of a two-year term. This is a potentially game-changing example for corporate boards. Were each of these data points to become a trend, there would be enhanced opportunities for great women candidates. This then is where I challenge board leaders

are crucial to the process. They have a seat at the table; they are in the room where it happens. And, more and more, they are speaking up, driving companies to bring women on their boards. From a completely different angle, one of the largest private equity firms has determined that it will not only bring in outside board members for its portfolio companies, but also will evaluate them on a mutually agreed upon

to adopt the Trewstar method. That is: interview women first. In my work as CEO and founder of Trewstar Corporate Board Services, I meet a cross section of outstanding, accomplished, high-quality women who belong in the board-talent pipeline. From this pool of candidates we consistently place women who were neither CEOs nor known to anyone on the board, and more than half have had no prior board experience before their engagement with us. They are all successful board members who are continually renominated. Maybe we need to reseed our thoughts on traditional board criteria? Beth Stewart is founder and CEO of Trewstar Corporate Board Services.

Women lawyers are discovering that they are crucial to the process. They have a seat at the table; they are in the room where it happens.

DIRECTORS TO WATCH

Anita Sands

Director, Symantec Corporation, Service Now, Pure Storage

nita Sands serves as a director for three public technology companies: Symantec Corporation, Service Now and Pure Storage, and as an advisor to Grand Central Tech, a leading NYC technology incubator. She is also a member of the digital advisory board at Box, an active angel investor, and a senior advisor at Sands Point Consulting where she works with companies on digital disruption. Sands holds a Ph.D. in Atomic and Molecular Physics from QUB, and a master's in Public Policy and Management from Carnegie Mellon University where she was a Fulbright Scholar. Previously she was COO of UBS Wealth Management, Americas. She has a diploma in piano, has travelled to all seven continents and was a national public speaking champion.

Anita Sands: Digital disruptors are not startups, they are upstarts; they do business in a fundamentally different way. Boards need to understand the opportunities and threats this presents, be willing to challenge our own assumptions and, when necessary, to act as our own activist. Act as your own activist: â&#x20AC;&#x153;Boards today have to be equipped to deal with the transformative, disruptive era in which they operate and nowhere is this more evident than in the areas of digital disruption and cyber security. Digital disruptors are not startups, they are upstarts; they do business in a fundamentally different way. Boards need to understand the opportunities and threats this presents, be willing to challenge our own assumptions and, when necessary, to act as our own activist. For this, we need true cognitive diversity in the boardroom, which is not a supply-side problem, and therefore can only be achieved with an alternative, innovative approach to recruiting.â&#x20AC;?

Proudly Congratulates

SHERI EDISON Directors & Boards Magazine 2017 Directors To Watch

It is our honor to congratulate Sheri for this recognition of the expertise, leadership and insight she brings to drive innovation at AK Steel.

www.aksteel.com

ANNUAL REPORT 2017

DIRECTORS TO WATCH

Caroline Tsay

Director, Rosetta Stone, Morningstar

aroline Tsay is CEO of Compute Software, an enterprise cloud infrastructure software company. Prior to Compute Software, Tsay was vice president and general manager of Software at Hewlett Packard Enterprise from 2013 to 2016. She previously held product leadership positions at Yahoo! Inc. across its consumer search, e-commerce and advertising businesses. Before Yahoo!, she spent three years at IBM Global Services as a senior consultant. Tsay is a board member of Morningstar and Rosetta Stone, and formerly served on the board of Travelzoo. She has been recognized as The National Diversity Council’s Top 50 Most Powerful Women in Technology and Silicon Valley Business Journal’s 40 Under 40.

Tsay holds an M.S. in Management Science and Engineering and a B.S. in Computer Science, both from Stanford University.

Caroline Tsay: A company’s long-term strategic plan includes everything from growth opportunities and product innovation to digital marketing. The impact of evolving customer preferences: "As customer preferences and purchase behaviors rapidly evolve, boards must more frequently review and evaluate a company’s long-term strategic plan along with the CEO and management team. A company’s long-term strategic plan includes everything from growth opportunities and product innovation to digital marketing. It is important to ask tough questions routinely about the market, competitors, and customer satisfaction to glean insights and inform a company’s long-term strategy. A good place to start is to conduct an unbiased and unaided market analysis, ideally, through an independent party."

CONGRATULATIONS CATHEY LOWE All of your friends at The New Home Company wish to express our sincere appreciation for your decades of dedicated work to better our industry and grow the role of women in homebuilding. Our noble profession has been honored to have your passion leading us into the future. NWHM.com

70 DIRECTORS & BOARDS

DIRECTORS TO WATCH

Denise Warren Director, Electronic Arts

enise War ren is a dynamic CEO/president/ advisor/board member with a three-decade track record growing and operating profitable businesses in the consumer and media sector, and driving transformational digital performance. She is an independent board member for Electronic Arts and on the board of advisors of the startup Flont, Inc. Warren is the CEO and founder of Netlyst LLC, a consulting practice focused on digital business growth. She is active in BoardNext, an organization for qualified women seeking their first role in public company boardrooms. War ren is an expert in a range of dig ital matter s, e-commerce, marketing, sales, corporate and financial strategy, new product development, and data analytics. Her work creating and overseeing The New York Times digital consumer subscription business launched the subscription economy for the publishing sector.

tablishing appropriate tone at the top, linking culture to company strategy, selecting the right CEO, aligning incentives, and measuring and monitoring can allow boards to effectively shape culture.”

Denise Warren: Boards cannot afford to wait for crises to hit before focusing on culture.

Congratulations, Jocelyn Carter-Miller

Value creation through culture: “If ‘culture eats strategy for breakfast’ as the saying goes, then a healthy corporate culture is the basis for value creation and a deterrent to value destruction. Several recent high profile incidents and the loss of hundreds of millions of dollars in shareholder value demonstrate the need for culture’s rightful place on the board agenda. Boards cannot afford to wait for crises to hit before focusing on culture. Es-

Accomplished business executive. Author. Community leader. And a member of our board for the past eighteen years. We’re thrilled Jocelyn Carter-Miller was selected as an honoree for Directors to Watch. A well-deserved recognition. Together, we share a commitment to diversity and inclusion and helping people live their best lives.

ANNUAL REPORT 2017

DIRECTORS TO WATCH

Why today’s board has to examine issues of culture By Susan Stautberg and Melissa Means

c ompany’s culture exerts undeniable influence on corporate performance across every measure. A positive culture has the power to drive innovation and growth, weather disruption, and attract and engage customers and employees, while a negative culture can stifle constructive dissent, exacerbate problematic issues, and could drive some of your best people out of the company. Many recent high-profile corporate scandals show that once a culture is compromised, the impact is rarely limited to the executive ranks. However, it’s not just reaction to the few head-

lines that should drive a board’s closer look at culture. The very real interplay between culture, leadership strategy and business strategy is the proactive call to action. Factors like globalization and the pace of technological change, innovation and disruption are fundamentally changing the way companies operate. To be successful, it’s imperative that corporate culture aligns with and support the business strategy. It’s in this climate that we explored the idea of leadership and the role a board plays in fostering a healthy, productive and strategy-aligned corporate culture. We conducted in-depth interviews with more than two dozen global directors and conducted a survey of board members from U.S. and mul-

tinational companies. This information and our experience working with hundreds of boards collectively informed our recent report, The Visionary Board at Work: Developing a Culture of Leadership. Most boards, in the course of their normal oversight and governance, focus on C-suite succession planning to some degree and spend considerable time working with management to understand the company’s business strategy. They are presented with the processes and people that are put in place to support this strategy and are likely presented with tools like talent profiles and skills matrices to use in determining whether the leadership team can ultimately deliver the desired results. Unfortunately,

Margaret Whelan

Congratulations Margaret! TopBuild and its Board of Directors applaud your being named one of the Directors to Watch. TopBuild, the largest purchaser, installer and distributor of insulation in the United States, is committed to diversity in the workplace. www.topbuild.com

72 DIRECTORS & BOARDS directors to watch ad.indd 1

7/6/2017 4:51:02 PM

DIRECTORS TO WATCH

these talent profiles and skills matrices rarely explore whether the management team has the cultural traits that align with the realization of the business strategy. A challenge for boards is that culture is difficult to define, and how it plays into the success or failure of a team or a business strategy can also be nebulous. One scenario is a company at a crossroads between the old and the new: its traditional “cash cow” product lines are in the early stages of decline, but its new products have yet to generate substantial revenue. A management team with the appropriate balance of risk tolerance and adaptability, which is a function of that team’s culture, is most likely to plot the right course. A team that has shown tendencies to be inflexible, which can be appropriate at times, may not be the best team to lead during a time of significant change. Certainly, the

board’s oversight role can help with execution at times and when absolutely required, but that’s not a sustainable organizational structure. The boards with an understanding of the cultural composition of the management team will have deeper insight into the viability of a given business strategy. Our discussions revealed that visionary boards are volunteering to “partner” with members of the management team to finetune strategy and plans. While the idea is not to have directors draft business strategy, in the course of working with individual executives and asking probing questions that help properly vet the program, directors can at the same time gain insights to the executive’s thinking and approach. This not only provides the board with a more intimate understanding of the strategy planning process but also affords better personal understanding of the management team

and can provide a basis for assessing and guiding the culture. Boards are refreshing their approach to guiding strategy and making changes to their own composition and team culture. As new directors come on board, we believe one of their most important tasks is this kind of “partnering” — working toward a parallel understanding of strategy and culture, and how these interplay in the people who are charged with making the strategy happen. If the entire board is engaged in this exercise, the group will have much greater insight into future performance capacity, and what changes may be needed to increase this capacity. ■ Susan Stautberg is CEO and chairman, WomenCorporateDirectors Foundation, and Melissa Means is a managing director at Pearl Meyer.

IT’S TIME TO INTERVIEW THE WOMEN FIRST The next major

RISK MANAG challenge

The longesta serving CEO of publicly traded Silicon Valley s company review his recruiting

www.dire ctor

EMENT

It’s secure

enterprise

warns Black

Berry CEO

mobility,

John Chen

sandboar

criteria

ds.com

What’s going on that no board can ignore? Corporate director LAURIE ANN GOLDMAN identifies an historic development.

RDS FOR SELECTING BOA

NG TEw RfroM THE LO m Silicon Valley Ray Zinn's vie

Annual Report 2016

THE YEAR IN GOVERNANCE Special roundup on what’s new

boards.co

ctorsand www.dire

NEW.indd

and noteworthy in the boardroom ards.com

www.directorsandbo

DB3Q15_Cover-

991

9/23/15 1:57 PM

™

Directors & BoarDs is the thought leader in corporate governance, written by and for board members. Individual subscriptions: $325 annually • Full board subscriptions: $2500 annually

Subscribe by phone at (800) 637-4464, ext. 6072 or online at www.directorsandboards.com

ANNUAL REPORT 2017