The Directors' Consortium is a joint offering by the Stanford Graduate School of Business, the Stanford Law School, the University of Chicago Booth School of Business, and the Tuck School of Business at Dartmouth.
Corporate board members have faced new challenges and have had an increased recognition of their responsibilities since the wave of governance reform swept in. The Directors' Consortium goes beyond compliance to explore how directors can best represent shareholders and other stakeholders in their advising and oversight roles. The program gives participants the frameworks and strategies to understand the current governance environment and to carry out their responsibilities. Directed by distinguished faculty members, this program provides frameworks, strategies, and best practices for structuring decisions in the key policy areas that directors face.
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James Irvin Miller Professor of Accounting; Director of the Corporate Governance Research Program; Senior Faculty of the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford; Codirector of the Directors' Consortium Executive Program; Lacob Family Faculty Fellow for 2011-2012
David Larcker's research focuses on executive compensation, corporate governance, and managerial accounting. His work examines the choice of performance measures and compensation contracts in organizations. His current research projects include the valuation implications of corporate governance, the role of the business press in the debate on executive compensation, and modeling the cost of executive stock options.
Nancy and Charles Munger Professor of Business and Law, Stanford School of Law, Stanford University
Professor Klausner specializes in the areas of corporate law and corporate governance. He has conducted in-depth empirical studies of outside director liability and takeover defenses in firms at their initial public offering. He also has done theoretical work on the overall structure and function of corporate law and on various topics in nonprofit law. He teaches and writes in the areas of corporate and banking law, anti-takeover protection provided to spin-offs, and anti-takeover defenses in IPOs. His recent scholarship has focused on securities litigation, directors' and officers' liability insurance, and the liability risk of outside directors. Previously, Professor Klausner served as a White House Fellow in the Office of Policy Development. He is currently engaged in a study of outside director liability in the United States and abroad with Bernard Black of Stanford University and Brian Cheffins of Cambridge University.
Steven Roth Professor of Management, Tuck School of Business at Dartmouth
Neubauer Family Professor of Entrepreneurship and Finance, the University of Chicago Booth School of Business
V. Duane Rath Professor Emeritus of Accounting, the University of Chicago Booth School of Business
Financial Reporting Issues for Corporate Board Members
This session focuses on the roles and responsibilities of directors in the context of corporate governance and compliance in light of the Sarbanes-Oxley Act of 2002, new required disclosures about executive compensation, and increased regulatory oversight and enforcement. Boards increasingly are taking a proactive stance to spot risks before they become incidents that will be the focus of enforcement or litigation. Boards also are actively managing a company's social contract to reflect a broader set of stakeholders, changing expectations, and new risk and business opportunities from social and political forces.
Board Oversight and Spotting the Warning Signs for Management Failure
Boards of directors provide oversight of corporate strategy and of the business leaders responsible for that strategy. Boards need to know what to look out for, and especially what warning signs to pay attention to, if they are to effectively spot brewing failures. This session will help directors spot the strategic, cultural, organizational, and leadership actions and signals that call for probing and discussion as part of their oversight work. Directors alert to what might go wrong at companies on whose boards they sit reduce the risk of unhappy surprises.
CEO Succession: Selection and Evaluation
Surveys of corporate boards indicate that only about one-third of all boards have developed a detailed CEO succession process, yet directors uniformly acknowledge that managing CEO succession is a fundamental duty. In this session, we analyze just what a CEO succession process should look like, what the role of the board is relative to the CEO, what research tells us about the most important attributes of new CEOs, the board's role in ensuring that their companies are developing a robust talent pool, and the types of questions boards need to ask to effectively manage this process.
Executive Compensation and Incentives
This session focuses on the motivation behind, and the process of, aligning incentives via compensation. Participants examine the incentive properties of executive pay, the changes in compensation over the past two decades, and current trends in the features of compensation packages.
Current Topics in CEO Compensation
Boards must choose compensation plans for the corporation's executives. Directors will learn how the incentives produced by these choices impact the economic performance of the firm. This session will review the typical executive compensation plans and discuss the factors that the compensation committee should consider before approving remuneration arrangements. It will examine innovations in the design of compensation contracts, role of compensation consultants, and how shareholder activists and other stakeholders assess executive compensation and equity ownership.
Audit Committee -- Qualifications, Responsibilities, and Content
What should audit committee members know? This session will explore the levels of independence, financial literacy, and financial expertise required for service on the committee. Mechanisms for achieving those levels, as well as their certification, will also be discussed. What duties fall to members of the audit committee? What accounting issues do they need to understand? This session will consider revenue recognition, off-balance sheet financing, and other critical issues.
Finance
This session will explore the various aspects of corporate finance that board members should know. It will cover three primary areas: (1) evaluating financial statements and financing decisions, including questions a board member should ask in trying to understand the company's true economic position; (2) understanding the capital markets, including issues regarding how the markets evaluate a company and how a board should—and should not—respond; and (3) evaluating M&A; transactions, including questions that a board member should ask of any transaction.
The Board's Legal Duties and Liability Risks
This session will cover the legal duties of the board of directors. Directors' duties have long included the fiduciary duties of care and loyalty, the origin of which is state common law. In 2002, Congress enacted the Sarbanes-Oxley Act, which imposes new obligations on boards, and the stock exchanges adopted corporate governance rules, which create yet additional responsibilities. In this session, we will discuss what these legal rules mean for board structures and processes, and what they mean for the risk of director liability. In both areas, the goal will be to embed these inquiries in real-world situations boards face in confronting difficult problems.
An optional full-day session at the beginning of the program provides an excellent foundation in finance and accounting basics for those with limited financial backgrounds or for those who would like a concentrated refresher from a board-level perspective. Those who are unfamiliar with basic accounting principles, such as the relationships among the balance sheet, the income statement, and the statement of cash flows, should consider attending.
