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The trendsetter: as president and CEO of the National Association of Corporate Directors, Ken Daly is one of the top leaders in corporate governance America. Sharing his visions with Latino Leaders, Daly elaborated on the NACD, hot trends and topics in governance, and on board diversity.


Latino Leaders: What is NACD and what's its role?

Ken Daly: NACD is a membership not-for-profit organization. We have 10,000 members, which is our primary source of revenue. We are dedicated to essentially three propositions. Primary and most important is making the directors as knowledgeable and as effective as possible in their roles as stewards of corporate America. Secondly, to assist in the development thought leadership and the sharing of leading practices. Thirdly, through a variety of venues, to provide communications and knowledge among all the various constituents of corporate America.

LL: How are those 10,000 directors distributed between corporate, private, and non-profit?

KD: A great percentage are public company directors. We have good representation of the larger not-for-profits companies as well. At last count, we even have about 600 members who are on family councils or board-like structures of family-owned businesses.

LL: What's the latest in terms of your Agreed Governance Principles, Blue-Ribbon Commission, and current initiatives?

KD: Right now, our main driver is the NACD initiative to restore public and investor confidence in the governance and oversight of US corporations. We have had over 1 billion media impressions about the challenge. These impressions were in the Wall Street Journal, the New York Times, CNN, CNBC, and ratio stations across the country, and even in Europe. We've had more than eleven hundred downloads of the challenge and the tools to be used by directors and executives. This is primarily the Agreed Governance Principles as well as the white papers. We have had three hundred and ninety-two non-members engaged with the NACD as a result of those downloads asking for additional information. Already we have had three large companies, Home Depot, Aetna, and United Health, adopt the principles, and their directors are serving as ambassadors for the campaign. We understand that there are several other very large Fortune 500 companies who are currently discussing them and will have it on their agendas shortly.

The big Blue Ribbon Commission we're working on right now, which shouldn't come as a surprise to anybody, is risk oversight. We have about thirty commissioners working on that, and I think it's going to really blaze some new territory. We expect it will be out in October, just in time for the NACD Annual Conference. It is being co-chaired by Reatha King (a Corporate Director of ExxonMobil).

LL: What are the current hot topics, issues, and trends in governance? KD: I think that one of the big areas is the whole idea of the shift in power to the shareholders and to Washington. There are couple things I can tell you about Washington that I think people will find interesting. We believe there will be no Sarbanes-Oxley like legislation coming from Congress. Also, there is a series of recommendations that came out under the so called "shareholder bill of rights" ... How far it will get, no one knows. But it deals with many matters of proxy access and compensation. It even goes so far as to require risk committees and requires a separate chairman of the board, separate from the CEO.

The number one and two issues, compensation and risk oversight, are the bellwether issues right now. I think what would be particularly interesting to your readership is the thinking, not only of ourselves bur many observers, that you could see substantial board turnover in the next 24 months. We believe that the combination of access to the proxy, the fact that the demands on directors are ever escalating, the fact that a number of boards, because they have fallen on hard times, are thinking about making changes to their boards, as well as a number of cases where the director is getting older, we could see turn-over maybe as high as forty percent. Now if that's the case this could be a terrific opportunity to add more diversity to the boards.

LL: How do you see such a large turnover impacting board diversity? Will it provide an opportunity for growth in diversity?

KD: I think it's a huge opportunity. I think that our view is shared by many, and that view is that a diverse board has a much higher likelihood of reaching conclusions which are superior to more homogeneous boards because of the different life experiences and different points of view of diversified directors. We think that all of this will result in a greater opportunity and a better appreciation of diversity.

LL: What's exactly your idea of diversity?

KD: When we think of diversity, we think about a very broad brush approach to this. We see ethnicity as an important matter. We see gender as an important matter. We see age as an important matter. We see life experiences and where your life experience background has been. We're talking everything from soup to nuts on this one. You need old hands, you need people who are thinking about things in completely different ways, and clearly we need people with unique skill sets which are not currently well represented on boards.

LL: How do you think Hispanic skill sets could be valuable from the standpoint of diversity and their relevance to a large and growing population?

KD: I think there are a couple different ways of going at that. One, I guess I'll describe it in the most simple form, is that boards, or companies rather, are interesting in selling to growing robust populations, and doesn't it make sense to take folks who are very knowledgeable in their communities? In this case you're talking about a very large community, but doesn't it make sense to take persons who are knowledgeable in that community to best understand how one markets but also ... the ways in which companies can market and sell to that community? That is critically important in terms of culture and in terms of things as discrete as vocabulary.

LL: So, should we be promoting people interested in Board Service?

KD: I think that this is the best time to be in the area of corporate governance. I think it's the best time to be in corporate America, because things are happening right now. Changes are happening right now, the likes of which have not been seen since maybe the 30's. The old rulebook are being re-written and now is the time for people who are looking for opportunities in corporate America, participating in developing those opportunities, and in taking their place in the new America. This is the time to do that. Never has the time been better than it is right now.
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Title Annotation:I The Key Players/Governance Leaders Perspective
Author:Schneider, Kristin; Schneider, Pablo
Publication:Latino Leaders
Article Type:Interview
Date:Jul 1, 2009
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