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Deborah E. Wallace
Principal
Wallace Consulting
Board Advisory Services
Phone:
781.259.0550
Cell: 617.875.7069
Fax: 781.459.7999
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Board Assessment
Wallace Consulting and Board Advisory Services specializes in Board
Assessment
Board assessment is no longer a discretionary activity. The NYSE now
requires each issuer to conduct an annual assessment of its board and of its
mandated committees: Governance, Audit and Compensation. Beginning in
January, 2006, the SEC will also require mutual funds to assess their boards
and committees. Beyond these legal requirements, boards are being rewarded
for conducting assessments. D&O liability insurance companies are at the
forefront of this trend, offering boards that conduct assessments preferred
client status, and in 2004 Morningstar introduced a Fiduciary Grade to its
system for rating Mutual Funds. Two of the 5 components that make up the
overall Fiduciary Grade are Board Quality (Has the board taken action in
cases where the fund clearly hasn’t served inventors well?) and Corporate
Culture (How strong are the firm’s shareholder communications? Has it done a
good job of retaining key personnel?)
Although corporate boards no longer have a choice about whether or not to
conduct assessments, they do have discretion over how they conduct them.
Wallace Consulting and Board Advisory Services provides an objective and
practical approach to assessments. The process is time efficient and the
instruments straightforward. Wallace Consulting encourages boards to
actively participate in customizing whichever instruments they choose in
order to ensure that unique or thorny issues are covered. While the process
is straightforward and structured, boards are again encouraged to
participate in refining it to suit their objectives and their particular
culture.
Focusing on compliance and short-term financial interests is necessary but
not sufficient for assessing a board’s overall performance. The most useful
assessments should also explicitly address the question, What are the
fundamental traits that board members should demonstrate? They are
remarkably basic and easy to observe but rarely highlighted in traditional
performance assessments:
COMMON SENSE to ask the right
questions about proposals and business decisions that don’t set right with
them
GOOD INSTINCT to sniff out hidden agendas or obscured
intentions
UNBENDING COMMITMENT TO PROTECT
SHAREHOLDER INTERESTS
BACKBONE AND STAMINA to question, raise sensitive issues and
disagree regardless of how unpopular
UNBENDING COMMITMENT TO ETHICAL BEHAVIOR
Wallace Consulting and Board Advisory Services specializes in Board
Assessment and is prepared to work with you to develop and implement an
assessment process geared to your needs. |
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