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April/May 2008

Boardroom All-Stars 2008; a look at what qualities put boards in the top echelon; Ram Charan in his own words; the true cost of going global; an interview with AllState's departing CEO Edward Liddy; why aren't there more women on boards?; how cross-border government investments are shaking up Western economies; and more.

In this Issue:

Cover Story

Boardroom All-Stars

Top recruiters say that one size does not fit all when it comes to filling seats on the board. An individual who would be a perfect match for one board might be a disaster on another. Yet there are qualities that make for great corporate directors. We single out a few that possess them. Full Story

Building an Exceptional Board

What does a great board look like? Is it a group of star business personalities, or one that lives up to the highest standards of good corporate governance? Is it the board of a company that consistently beats analysts’ estimates, or one that has deftly handled adversity and CEO succession? The answer is that there are no answers. Full Story

Leaving Allstate in Good Hands

At the end of April, Edward M. Liddy will step down from his role as chairman of insurance giant Allstate, leaving the publicly traded insurance company on solid footing and—forgive the phrase—in good hands. Liddy’s retirement and the plan for Thomas J. Wilson to succeed him as chief executive is a textbook case of orderliness. Full Story

Uncommon Women

Companies with more female board members outperform their peers. Yet there remains a striking disconnect between this financial imperative and the actual numbers of women sitting in seats of influence. Across the country and throughout industry after industry, the numbers at the top are dispiriting. Full Story

SWFs to the Rescue

Over the past six to nine months, it has seemed as if many major American and European financial institutions have been getting government bailouts. Only the governments haven’t been in Washington or Paris. Full Story

Board Meetings in Pajamas

No assembly required for these board meetings. Using what have been dubbed “board portals,” either created in-house or by outside providers, some directors are virtually moving the board process online. Full Story

Ram Charan: Bettering the Board

Fortune magazine described Ram Charan as the most influential consultant alive. Here he covers 10 issues—five external and five internal—impacting today’s boards. Full Story

Fraud's Red Flags

If the massive $7-billion alleged fraud at French bank Societe Generale teaches us anything, it is that fraud is always a possibility. It can be perpetrated at almost any level, from the corner office to a rogue mid-level employee. Full Story

Revving Up Performance Pay

Large institutional investors are pushing public companies to take a page from the private-equity playbook. Full Story

The Leader Within

One constant associated with companies that can sustain high performance is that they manage succession well. And more often than not, these long-term high performers pick insiders to succeed incumbents. Full Story

Postings: April / May 2008

Recent board appointments: Zelnick, Breeden, Sheehan, more. Full Story

The True Cost of Going Global

A new tool, called the “Opacity Index,” helps to make known that which is hard to know: the true cost of doing business abroad. What does it really cost to tap China’s massive market? Is that a better value than setting up shop in India or Brazil? Full Story

Preparing for the Unknowable

The ongoing crisis in worldwide credit markets points, in part, to a colossal failure in risk assessment at a stunning number of companies. The questions on the minds of directors today are, “How can any board adequately anticipate and prepare for the unknown?" Full Story

No Lame-Duck Status for SEC

The Securities and Exchange Commission might be down to only three commissioners of its normal panel of five, but that doesn’t mean it isn’t busy. Recent actions will affect this season’s proxies and naked short sellers. But it is an old rule, Reg FD, that is getting the attention of directors. Full Story

Directorship Profile: George L. Davis

George L. Davis jointly leads the Board Consulting Practice at executive search firm Egon Zehnder International, and is a founding member and managing director of its Boston office. He cites a growing trend toward succession planning at the board level and sees it as a way to equip the board to better manage the shrinking director candidate pool. Full Story

Editor's Letter: In Search of Excellence

One of my favorite rites of spring is the start of baseball season. All of the off-season dealing is done and now the players take the field, and we see who has stepped up their game and who looks a little slower this year. Full Story

Executive Pay: What Really Makes Sense

The drive by regulators, institutional shareholders, activists, and the media to reduce perceived executive-pay abuse is following a path that could have serious unintended consequences, limiting the exercise of business judgment by directors in their determinations. Full Story

Recruitment: Building the Right Board for the Times

Assembling the perfect board requires that directors undertake a periodic look at whether their composition is indeed in balance. Full Story

Adapting to New Economic Realities

With the prospect of continued economic slowdown in 2008, audit committees are paying particular attention to the recessionrelated risks that are facing their companies. At the same time, they are taking a hard look at their company’s risk-management processes—understanding the quality of the company’s risk intelligence—and many are focusing on the tone at the top and culture of the organization as critical to effective risk management. Full Story

Coda - April / May 2008

“The principal reason for strategic failure [is] the inability to interpret weak signals. Great growth opportunities and dangerous threats are rarely obvious at the beginning…[Managers must] determine which developments on the periphery of their corporate vision they can safely ignore, and which ones pack the disruptive potential.” – Paul Schoemaker, Wharton professor, author of Profiting from Uncertainty and Peripheral Vision. Full Story