On October 6, Mark Lonergan brought together a group of public company technology CEOs to discuss the little-studied topic of CEO/Board communication. The event was moderated by two statured leaders in the Silicon Valley—Ned Barnholt (Chairman, KLA-Tencor) and David House (Chairman, Brocade), both former public company CEOs themselves who were able to offer perspectives from all sides of the boardroom table.
This event was a networking and educational forum for CEOs to learn to make their boards a key competitive advantage.Mark Lonergan, Founder & Senior Partner, Lonergan Partners
The Event Was Intimate—and LivelyThe intimate discussion over dinner revolved around defining the most effective roles for the CEO, the Board Chair, and the other board members. The goal for the evening was to create new insight into how CEOs can improve their effectiveness by managing their relationship with the board of directors, and especially their relationship with their company’s independent board Chair.
Some key take-aways from the discussion:
- Boards have three major responsibilities: hiring the CEO and deciding when to terminate the CEO, authentication of operating results, and providing advice and counsel to the CEO.
- Chairmen are emerging as leading spokespeople for today’s Boards. The best Chairmen filter and focus input from various board members and pass it along to the CEO in a steady stream of input.
- Board membership is turning over much more often than in the past. As the SEC mandates shorter terms for board members, this trend is likely to accelerate.
- While CEOs have no official role in the selection of a board member, they need to closely work with their boards before new members are selected. Failure to do that can contribute to dysfunction and underperformance in key board functions.
- A new public company CEO needs advice and guidance, especially from the more experienced executives on the Board. The CEO role can be compared to an apprenticeship, where the ‘master craftsmen’ can contribute to the development of the CEO.
- The work of the compensation committee has become much more complex over the past five years, and their recommendations more contentious.
- Independent board rating services (like ISS) do not generate information of much value to investors with respect to company performance and board composition.
- The CEOs attending reported finding the evening a valuable forum for learning how they might work more effectively with their boards going forward. Partner Mark Lonergan plans to host other events like this in the future on those topics most important to leaders in technology.
Ned Barnholt Chairman, KLA-Tencor
David House Chairman, Brocade