Sensitive Types
While management software for boards has been getting most of the attention lately, providers have also begun to roll out programs that evaluate the work of directors. For example, The Board Institute, which offers a Web-based solution to assess and improve boards, has introduced a suite of programs for benchmarking the performance and effectiveness of the audit, compensation, and governance committees of the board.
"It's essentially an online survey benchmarking tool," says Cheryl de Mesa Graziano, director of research for the Financial Executives Research Foundation, in Florham Park, N.J., which assisted The Board Institute in putting together the suite. "Based on answers to key questions, boards can assess the effectiveness of their committees."
Michael Hartzmark, a director at Seattle-based clinical-laboratory specialist Pacific Biometrics, believes the suite will lower attorney and accounting costs. How? Says Hartzmark, who is currently beta-testing The Board Institute's Web-based tool: "[The programs] point out issues where you can make some straightforward and obvious improvements without paying large amounts of money to accountants and lawyers."
The tools also provide benchmarks — often a sore subject in executive suites. Hartzmark believes the tools will help directors figure out what they have been doing — "and what [they] should truly be doing."
Tough love doesn't come cheap, however. The Board Institute charges an annual licensing fee of $20,000 for public- company clients and $10,000 for private companies.
Minow doesn't see the value proposition. "You can buy all the tools and tricks and accessories in the world," she argues, "but at the end of the day, what is required [in evaluating boards] is vigorous, genuinely independent experts and energetic thinking." The longtime advocate of governance reform pauses, then adds: "There is no software that will do that for you."
John P. Mello Jr. is a technology writer based in Woonsocket, R.I.
Upping the Ante
Changing compensation for board members.
Most companies (88%) have made or are planning to make changes to compensation for regular board, committee, or leadership service. Many companies (72%) made changes in 2003; far fewer (40%) are planning changes for 2004.
For those companies making changes (or planning to), the increase in total cash compensation (TCC) was (or could be) significant. In 2003, for those companies that made changes, TCC increased by an average 24%. For 2004, for those companies that anticipate making changes, the increase in TCC will average 17%.
The most substantial change is to committee-chair retainers: 53% of the companies made or are planning to make changes, and those companies making changes essentially doubled the size of their retainers, from $3,700 in 2002 to more than $7,000 projected for 2004.
Source: Sibson Consulting
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