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Last week marked the one-year anniversary of the enactment of the Dodd-Frank Act, often referred to as the most far-reaching reform of the financial services industry since the Great Depression. While this legislation has indeed profoundly impacted the financial services industry, its impact on our nation’s corporations and corporate boards has received considerably less attention, though it is equally important.
Kenneth Daly
Over the past year, much has been said about the impact that Dodd-Frank will have on banks and other financial institutions, but the legislation goes far beyond Wall Street, bringing us mandates for say on pay, bounties for whistleblowers, and the likely advent of proxy access.
This commentary was originally published as an op-ed in The Hill.
While reasonable minds may debate the value of these rules, there is no debate about the importance of learning what they mean for boards. Dodd-Frank has put director education in the spotlight more than ever. NACD is ready for the challenge, having focused on building the strongest boards and strongest companies for more than thirty years. Every successful director education program, regardless of the company’s type, size or industry, should have a single goal in mind: to develop highly engaged, well-prepared corporate directors who can fulfill their responsibilities to the company, its investors, and its employees and other stakeholders.
As board members, we want to promote stronger directors. As company leaders, we want to promote stronger companies. And as taxpayers with a vested interest in America’s economic growth, we want to promote a strong economy. We believe that these three groups are inextricably linked. NACD has led the way in promoting high-quality director education to make this vision a reality.
To achieve this, we believe that director education programs should meet specific criteria:
- Independence. First, the administrator of the program must be credible and independent, free from bias and self-interest. As directors are expected to be an independent counterweight to the company’s management, so too should be the program that trains them.
- Relevance. Second, the program should be relevant. To be effective, a program should ensure directors maximize awareness of the current environment, implications for boards and trends in leading boardroom practices. These programs should, first and foremost, seek to produce trained, qualified, knowledgeable directors, capable of being informed advocates for the company’s best interests.
- Authority. Finally, the program, whether or not it issues a credit or certificate, should be authoritative. Program quality is only as valuable as its issuer. Directors who undergo NACD’s director education programs, for example, benefit from our 30-plus years of experience, and in return, the credentials they receive carry the weight of our organization.
All of our educational resources are developed with the goal of producing leading, well-prepared directors of the highest quality, and everyone who comes out of our programs is a testament to the materials we offer. We take pride in our ability to produce and implement programs that bring real value to board members, in turn bringing value to everyone involved with the company.
As a result of the critical role that directors play in their companies and in the larger economy, director education programs can and should play a key role on every board. NACD has been providing these services to directors, board members, and investors throughout our history, and especially given this new post-Dodd-Frank environment, well-educated and highly trained directors are crucial to maintain stability and growth in these tenuous economic times.
As the dust from this legislation continues to settle, and as both sides of the aisle continue the debate in Washington, one thing is guaranteed to remain constant: NACD will continue to provide the true gold standard in director education.
Ken Daly is the president and CEO of the National Association of Corporate Directors (NACD).
This is well said. NACD’s leadership role in director education is beyond reproach; indeed, it’s hard to imagine the rationale for any corporate director not being a member of NACD, and fully taking advantage of all it offers. That said, one comment regarding the second iterated criteria – relevance. While an appreciable amount of NACD content and continuing education is expressly relevant to directors of all sized companies, there is a compelling amount of content that is, in a sense, irrelevant by omission. Approximately 70% of U.S. public companies have a $500M market capitalization or less, and those directors often face myriad issues which rarely arise in large-cap settings. Accordingly, and in much the same way that state bar associations have incremental, differentiated continuing education content for small law firms (who, similarly, dwarf the number of large firm attorneys), NACD should perhaps consider creating more content that is equally relevant to small-cap directors.