How Boards Should Evaluate Their Own Performance

The New York Stock Exchange requires that the boards of all publicly traded corporations conduct a self-evaluation at least annually to determine whether they are functioning effectively. Our research suggests that many board evaluations are inadequate. How can boards better evaluate the performance of directors? Any thorough evaluation should assess the following.

How the Best CEOs Differ from Average Ones

We all know the stereotypes: Great CEOs are extroverted. They’re self-promoting. They’re risk takers. But are these stereotypes true? Which traits actually differentiate CEOs from other executives? And, most important, which attributes separate successful CEOs from other CEOs? Russell Reynolds Associates, in partnership with Hogan Assessment Systems, has led a research effort to separate myth from reality, identifying key indicators of leadership that have a … [ Read more ]

Agreeable vs. Disagreeable CEO: Who Do You Want at the Helm?

An executive’s character traits are linked to certain patterns in a firm’s investments, strategy decisions, and overall performance, a new study finds.

The Ballooning Executive Team

Executive teams replete with functional experts (CFOs, CHROs, etc.) are so common today one forgets they were not always the norm. By some accounts, the average team size for large firms is now 10, double what it was 30 years ago. Although larger teams theoretically bring benefits, such as a diversity of perspectives, practical downsides have grown with team size. So what can a CEO … [ Read more ]

How to Gauge a C.E.O.’s Value? Hint: It’s Not the Share Price

Everybody knows that chief executives receive bounteous pay as a matter of course. Less discernible, though, is who actually earned their pay the most by increasing the value of the companies they run by a commensurate amount. Such performers are not to be confused with executives who work to propel their company’s stock price.

The most common performance metrics used by companies can be problematic. … [ Read more ]

Stop Paying Executives for Performance

For chief executives and other senior leaders, it is not unusual for 60-80% of their pay to be tied to performance – whether performance is measured by quarterly earnings, stock prices, or something else. And yet from a review of the research on incentives and motivation, it is wholly unclear why such a large proportion of these executives’ compensation packages would need to be variable. … [ Read more ]

Are Successful CEOs Just Lucky?

It’s safe to say that CEOs are, overall, a talented bunch, but that’s not what separates them from other professionals, nor is it the main reason their firms succeed or fail. Certainly it doesn’t come close to explaining why they’re so well paid. Put another way, CEOs matter, just less than many people think. Instead, luck, and yes, bias, play a far larger role in … [ Read more ]

Seven Myths of Boards of Directors

Should the chairman always be independent? Do CEOs actually make good directors?

Building a Forward-Looking Board

Directors should spend a greater share of their time shaping an agenda for the future.

Securing the Helm

Watch out for these five warning signs that you’re in danger of being thrown overboard.

Who Really Determines CEO Salary Packages?

Every CEO is different, as is every company. So why does one executive compensation package tend to look just like another? The answer lies in the prevalence of interlocking directorates and the use of compensation consultants, according to research by Susanna Gallani.

Dealing with Dysfunctional Directors

What to do when a bad apple is spoiling your board.

Editor’s Note: a useful topic for consideration, though I don’t think especially practical advice was presented.

Keys to Success: Nurturing Effective Boardroom Culture

With the corporate governance crisis at the turn of the century that shattered firms like Enron and WorldCom, academics and consultants turned their attention to enhancing corporate governance. What the 2008 financial crisis revealed is that the post-Enron governance advice has been insufficient in helping develop successful boards of directors: more work is needed to help us understand what makes a board effective or not. … [ Read more ]

Are CEOs Overpaid? The Case Against

Steven Neil Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at Chicago Booth, is making a sometimes–unpopular but data–driven case in defense of high–earning CEOs. Kaplan has written a string of papers challenging the common views that executive pay isn’t tied to performance, that boards rarely punish underperforming CEOs, and that average CEO pay keeps going up.

Instead, he argues, the market for … [ Read more ]

The Great Governance Debate: Towards a Good Governance Index for Listed Companies

“The Great Governance Debate: Towards a good governance index for listed companies,” launched at the Institute of Directors, sets out a new framework for assessing corporate governance, moving away from a focus on compliance and towards a more complex measurement which combines public perceptions with a range of objective factors. Ken Olisa, chairman of the advisory panel for the report, warned that the current system … [ Read more ]

Getting What You Pay for with Stock Options

Companies now have an opportunity to rethink their use of stock options so that they serve shareholders as well as executives.

Designing the Corporate Center: How to Turn Strategy into Structure

Complex global corporations are under unrelenting pressure to create value. But no corporate center can add value without an effective parenting strategy, and no strategy can succeed without an organizational design that translates strategy into operational reality. Learn how to turn your corporate center into a value-creation engine.

Value-Focused Corporate Governance: How to Engage Boards and Enhance Decision Making

Good corporate governance isn’t just about compliance: it spurs value creation. BCG has identified several often-overlooked factors that can help boards become more engaged, make better decisions, and govern more effectively. Boards can thus act as true partners to CEOs in steering companies toward sustained success.