Saturday, March 13, 2010
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Wednesday, March 10, 2010
Top Ten Questions
What are the top ten types of question women ask about boards of directors? Recent discussions with women who are taking the big step of getting information and education about what they need to know to get onto a corporate board reveal how much women need to learn about governance. At least they are asking good questions! What are the top ten concerns on their mind? Take a look:
1. What are the roles and responsibilities of a board member? Committees? Duties? Time requirements?
2. What qualifications, credentials and preparation are required for a public company board role?
3. How do you define, how do you become an effective board member?
4. What are the risks (and the rewards) faced by board members today?
5. How do boards select new directors? Skills matrices? Nominating criteria? Selection processes?
6. How does one position herself, in her career, for a board role? Where are possible board opportunities?
7. How do networking, connections and introductions work in board searches, if at all?
8. What due diligence considerations are there in finding and evaluating a possible board role?
9. How much finance and accounting should I know? Where can I learn more?
10. Questions about specific issues: Sarbanes-Oxley, performance evaluations, director training, director compensation, confidentiality, nonprofit experience?
The lesson from these questions is that women are asking "basic" questions -- suggesting that we need to begin delivering comprehensive, but fundamental information to women candidates if we want to improve the number of prepared women ready to serve on top corporate boards.
1. What are the roles and responsibilities of a board member? Committees? Duties? Time requirements?
2. What qualifications, credentials and preparation are required for a public company board role?
3. How do you define, how do you become an effective board member?
4. What are the risks (and the rewards) faced by board members today?
5. How do boards select new directors? Skills matrices? Nominating criteria? Selection processes?
6. How does one position herself, in her career, for a board role? Where are possible board opportunities?
7. How do networking, connections and introductions work in board searches, if at all?
8. What due diligence considerations are there in finding and evaluating a possible board role?
9. How much finance and accounting should I know? Where can I learn more?
10. Questions about specific issues: Sarbanes-Oxley, performance evaluations, director training, director compensation, confidentiality, nonprofit experience?
The lesson from these questions is that women are asking "basic" questions -- suggesting that we need to begin delivering comprehensive, but fundamental information to women candidates if we want to improve the number of prepared women ready to serve on top corporate boards.
Monday, March 01, 2010
A Supply AND Money Challenge
The Vancouver Winter Olympics are noteworthy because 40.51 percent of the participants are women. There were 1,066 women athletes out of a total of 2,631 according to the official Olympic site. In the first Winter Olympics (1924 in Chamonix, France), there were "only 4%" women. By 2006, in Turin, Italy, the number of women athletes rose to 38.28%. The record so far is the Beijing Summer Olympics, where women represented 42% (4,746 athletes out of a total of 11,196).
A first question we should be asking ourselves is how did these women achieve this notable and outstanding level of performance (without legislation or quotas)?
But, of course, the media is a-roar over the lawsuit women competitors filed with the Vancouver Olympic Organizing Committee, arguing they should include women’s ski jumping along with women’s ski cross. The International Olympic Organizing Committee opted only to include women's ski cross team which had half the number of elite women competitors. The International Ski Federation endorsed the IOC decision. The women, of course, claimed discrimination.
The reality is that the supply of top women ski jumpers needs to increase to attract support at the IOC level. At last year’s World Championships, only 36 women ski jumpers competed, but just a few top competitors led the pack by a 20-point margin. Fifty male competitors were all roughly at the same levels, producing very interesting matches.
Another key consideration is the ability and willingness of women ski jumpers’ to attract financial support. In these harsh budgetary times, both men and women’s ski jumping participants faced major cutbacks in support from the US Ski Team. Even if the women had won the lawsuit, they still would have faced the financial challenges. So, women ski jumpers need to get out there and hustle up commercial support for their sport in competition with the 1,066 other women in hockey, downhill slalom, biathalon and curling.
February 13, 2010:
http://www.olympic.org/en/content/Media/?articleNewsGroup=-1&articleId=77001
A first question we should be asking ourselves is how did these women achieve this notable and outstanding level of performance (without legislation or quotas)?
But, of course, the media is a-roar over the lawsuit women competitors filed with the Vancouver Olympic Organizing Committee, arguing they should include women’s ski jumping along with women’s ski cross. The International Olympic Organizing Committee opted only to include women's ski cross team which had half the number of elite women competitors. The International Ski Federation endorsed the IOC decision. The women, of course, claimed discrimination.
The reality is that the supply of top women ski jumpers needs to increase to attract support at the IOC level. At last year’s World Championships, only 36 women ski jumpers competed, but just a few top competitors led the pack by a 20-point margin. Fifty male competitors were all roughly at the same levels, producing very interesting matches.
Another key consideration is the ability and willingness of women ski jumpers’ to attract financial support. In these harsh budgetary times, both men and women’s ski jumping participants faced major cutbacks in support from the US Ski Team. Even if the women had won the lawsuit, they still would have faced the financial challenges. So, women ski jumpers need to get out there and hustle up commercial support for their sport in competition with the 1,066 other women in hockey, downhill slalom, biathalon and curling.
February 13, 2010:
http://www.olympic.org/en/content/Media/?articleNewsGroup=-1&articleId=77001
Monday, February 22, 2010
First Women Corporate Directors
While Patricia Roberts Harris is recognized as the first women (in the modern era) to be named to a public company board of directors (IBM-1971), I have learned more recently of two other outstanding women directors. See: the
Virtual Chase.
Lettie Pate Whitehead Evans
(1872-1953)
Lettie Pate Whitehead Evans served as chairwomen of the board of the Whitehead Holding Co., as well as head of other financial interests. She was a savvy business woman in the soft drink industry and was the first woman to serve as a director of a major American corporation when she was appointed in 1934 to the board of Coca Cola Co. where she served until 1953. (Source: Georgia Tech Alumni Association).
She married Joseph Brown Whitehead, an attorney, in 1895. Whitehead was instrumental in gaining exclusive rights to bottle Coca Cola nationwide. When he died in 1906, she took over the family business (the Whitehead Holding Company) and real estate interests (the Whitehead Realty Company).
Coca Cola confirmed that she served on their board from 1934 to 1953, but her information has yet to be included on the History portion of their web site.
Ms. Evans established a scholarship grant program through the Lettie Pace Whitehead Foundation and the Lettie Pace Evans Foundation to support charitable organizations.
Marjorie Merriweather Post
(1887 – 1973)
Marjorie Merriweather Post inherited family wealth and the Postum Cereal Company from her father, Charles William Post, the inventor of Postum (the coffee substitute), Post Toasties, and Grape-Nuts.
As she was an only child, her father taught her everything about his business. When he died in 1914, she inherited everything and became the company president. She married E.F. Hutton, the Wall Street broker/financier, in 1920. They transformed Postum Cereal Company Ltd. through aggressive acquisitions and took the company public in 1922. Hutton took over as president in 1923. The company became The General Foods Corporation in 1929.
In 1935, Marjorie Post divorced Hutton and married Joseph E. Davies, the American ambassador to the Soviet Union. In 1936, she became a director of The General Foods Corporation.
During their marriage and travels to Russia, she collected extensive works of art which later would be housed in Hillwood Estate, Museum & Gardens, established in 1955, as the premier collection of Russian imperial art outside of Russia.
They divorced in 1955 and, in 1958, she married Herbert A. May Jr., heir to the May Department Stores.
The Kraft Foods Corporation web site has no mention of Marjorie Post or her outstanding role in their history.
Biography of Marjorie Merriweather Post by Kenneth Lisenbee
See: http://www.paulbowles.org/marjoriemerriweatherpost.html
Virtual Chase.
Lettie Pate Whitehead Evans
(1872-1953)
Lettie Pate Whitehead Evans served as chairwomen of the board of the Whitehead Holding Co., as well as head of other financial interests. She was a savvy business woman in the soft drink industry and was the first woman to serve as a director of a major American corporation when she was appointed in 1934 to the board of Coca Cola Co. where she served until 1953. (Source: Georgia Tech Alumni Association).
She married Joseph Brown Whitehead, an attorney, in 1895. Whitehead was instrumental in gaining exclusive rights to bottle Coca Cola nationwide. When he died in 1906, she took over the family business (the Whitehead Holding Company) and real estate interests (the Whitehead Realty Company).
Coca Cola confirmed that she served on their board from 1934 to 1953, but her information has yet to be included on the History portion of their web site.
Ms. Evans established a scholarship grant program through the Lettie Pace Whitehead Foundation and the Lettie Pace Evans Foundation to support charitable organizations.
Marjorie Merriweather Post
(1887 – 1973)
Marjorie Merriweather Post inherited family wealth and the Postum Cereal Company from her father, Charles William Post, the inventor of Postum (the coffee substitute), Post Toasties, and Grape-Nuts.
As she was an only child, her father taught her everything about his business. When he died in 1914, she inherited everything and became the company president. She married E.F. Hutton, the Wall Street broker/financier, in 1920. They transformed Postum Cereal Company Ltd. through aggressive acquisitions and took the company public in 1922. Hutton took over as president in 1923. The company became The General Foods Corporation in 1929.
In 1935, Marjorie Post divorced Hutton and married Joseph E. Davies, the American ambassador to the Soviet Union. In 1936, she became a director of The General Foods Corporation.
During their marriage and travels to Russia, she collected extensive works of art which later would be housed in Hillwood Estate, Museum & Gardens, established in 1955, as the premier collection of Russian imperial art outside of Russia.
They divorced in 1955 and, in 1958, she married Herbert A. May Jr., heir to the May Department Stores.
The Kraft Foods Corporation web site has no mention of Marjorie Post or her outstanding role in their history.
Biography of Marjorie Merriweather Post by Kenneth Lisenbee
See: http://www.paulbowles.org/marjoriemerriweatherpost.html
Thursday, February 18, 2010
tgc
At a recent practice interview session for students at a nearby college, volunteer alumni/ae were talking around the dinner table, introducing each other and their backgrounds. At my turn, I mentioned that I had written a book about "women in leadership at corporate boards of directors at Fortune 1000 firms based in California." The woman sitting opposite me, about my age, said,
"Oh, yes. The Glass Ceiling."
I felt as if someone had just picked up some huge carcass of road kill and dropped it in the middle of the table.
Trying to be diplomatic, I said how very proud I was that I’d managed to write a book of over 260 pages, studying 114 women in leadership, and writing up the biographies of 15 very talented women, and never once used the expression "the glass ceiling." Nor did any of the women whom I interviewed ever use the phrase.
Also at the dinner table were two younger, more recent graduates of the college. One was a male with a Latino background and experience in IT education. The other was a woman professional from an Arabic background with extensive recent experience in the law. The first said that, throughout all of his undergraduate and professional background, he had always seen and experienced the benefits of diverse teams. And, he added, those teams were tested and measured by the mettle of their performance and ability to deliver results. He’s seen imbalanced teams -– 80% women and 20% men –- where the leader (a woman) decided the team would be better and more effective when it could benefit from a more balanced combination of skills and perspectives.
The other younger professional described how she was part of a team of 25% women, one of whom was recently promoted to partner. She said her new boss was not limiting anyone’s potential, but rather was giving all of them new and challenging assignments to ensure they developed their own talents.
This is today’s experience: making progress on merit, being measure by performance and results delivered. Today, we are far closer to the goal of an equal playing field that we are to "tgc." Those who fail to recognize that progress are stuck in a era long gone.
It is time that we stopped allowing yesterday’s problems to define how we address the challenges of today. Most certainly, it is time that we dug a very big hole and buried that limiting expression ("tgc") that is as derogatory and limiting as the n* world is to the African American community.
What is the purpose of using that expression as a simplistic knee jerk reaction to any comment or research on the subject of women or other professionals? Does it have any relevance to this 21st century economy or are we simply using it as a token excuse for our own failure? Has the phrase become a lame excuse because "wink wink," we all know that it is futile for women or others because they will only come up against "tgc?"
TGC is gender-profiling at its worst. It is demeaning, insulting, limiting and wrong-headed. It’s time to stop using it in any form.
"Oh, yes. The Glass Ceiling."
I felt as if someone had just picked up some huge carcass of road kill and dropped it in the middle of the table.
Trying to be diplomatic, I said how very proud I was that I’d managed to write a book of over 260 pages, studying 114 women in leadership, and writing up the biographies of 15 very talented women, and never once used the expression "the glass ceiling." Nor did any of the women whom I interviewed ever use the phrase.
Also at the dinner table were two younger, more recent graduates of the college. One was a male with a Latino background and experience in IT education. The other was a woman professional from an Arabic background with extensive recent experience in the law. The first said that, throughout all of his undergraduate and professional background, he had always seen and experienced the benefits of diverse teams. And, he added, those teams were tested and measured by the mettle of their performance and ability to deliver results. He’s seen imbalanced teams -– 80% women and 20% men –- where the leader (a woman) decided the team would be better and more effective when it could benefit from a more balanced combination of skills and perspectives.
The other younger professional described how she was part of a team of 25% women, one of whom was recently promoted to partner. She said her new boss was not limiting anyone’s potential, but rather was giving all of them new and challenging assignments to ensure they developed their own talents.
This is today’s experience: making progress on merit, being measure by performance and results delivered. Today, we are far closer to the goal of an equal playing field that we are to "tgc." Those who fail to recognize that progress are stuck in a era long gone.
It is time that we stopped allowing yesterday’s problems to define how we address the challenges of today. Most certainly, it is time that we dug a very big hole and buried that limiting expression ("tgc") that is as derogatory and limiting as the n* world is to the African American community.
What is the purpose of using that expression as a simplistic knee jerk reaction to any comment or research on the subject of women or other professionals? Does it have any relevance to this 21st century economy or are we simply using it as a token excuse for our own failure? Has the phrase become a lame excuse because "wink wink," we all know that it is futile for women or others because they will only come up against "tgc?"
TGC is gender-profiling at its worst. It is demeaning, insulting, limiting and wrong-headed. It’s time to stop using it in any form.
Tuesday, February 09, 2010
At Least She’s Speaking Up
Elizabeth Warren has written in the Wall Street Journal, February 8, 2010, a challenge to JP Morgan Chase Chairman and CEO Jamie Dimon, among the other denizens of Wall Street:
Wall Street's Race to the Bottom: Jamie Dimon is wrong. We shouldn't expect a crisis 'every five to seven years’.
Ms. Warren is the Leo Gottlieb Professor of Law at Harvard Law School -- where she teaches contract law, bankruptcy, and commercial law. She also is the chair of the TARP Congressional Oversight Panel. In her WSJ commentary, she advocates for the creation of a cleaner consumer financial protection agency than currently exists (actually nothing really exists) among the seven or eight federal departments, commissions, and oversight entities responsible for the financial fiasco.
Basically, Ms. Warren argues that Wall Street has to "earn back" the trust of the American public. The "or else" part of the challenge is that a Consumer Financial Protection Agency will become the big cop on the block to re-establish order in the Wild West that we call the financial community.
As I read the mornings’ headlines, I’m swept up in the media frenzy favoring a children’s obesity task force. Wow and golly gee!
So, it is with great relief that I turn to Ms. Warren’s much more substantive commentary: finally, someone at least has an argument on the subject of these regulatory proposals and the courage to stand up and speak out. Finally, there is someone (and it just happens to be an impressive woman at that) who is willing to address one of the regulatory proposals on the merits.
How many other organizations are there out there giving lip service to consumer protections, to financial controls, to fiscal oversight? My hat’s off to Elizabeth Warren for standing up, speaking up, and keeping the fire burning for some intelligent measures to re-establish the lost credibility that pervades Wall Street.
Wall Street's Race to the Bottom: Jamie Dimon is wrong. We shouldn't expect a crisis 'every five to seven years’.
Ms. Warren is the Leo Gottlieb Professor of Law at Harvard Law School -- where she teaches contract law, bankruptcy, and commercial law. She also is the chair of the TARP Congressional Oversight Panel. In her WSJ commentary, she advocates for the creation of a cleaner consumer financial protection agency than currently exists (actually nothing really exists) among the seven or eight federal departments, commissions, and oversight entities responsible for the financial fiasco.
Basically, Ms. Warren argues that Wall Street has to "earn back" the trust of the American public. The "or else" part of the challenge is that a Consumer Financial Protection Agency will become the big cop on the block to re-establish order in the Wild West that we call the financial community.
As I read the mornings’ headlines, I’m swept up in the media frenzy favoring a children’s obesity task force. Wow and golly gee!
So, it is with great relief that I turn to Ms. Warren’s much more substantive commentary: finally, someone at least has an argument on the subject of these regulatory proposals and the courage to stand up and speak out. Finally, there is someone (and it just happens to be an impressive woman at that) who is willing to address one of the regulatory proposals on the merits.
How many other organizations are there out there giving lip service to consumer protections, to financial controls, to fiscal oversight? My hat’s off to Elizabeth Warren for standing up, speaking up, and keeping the fire burning for some intelligent measures to re-establish the lost credibility that pervades Wall Street.
Sunday, February 07, 2010
Truth and Reconciliation
Nelson Mandela had the idea for a Truth and Reconciliation Commission in an effort to discover and reveal past wrongdoing by government and individuals during South Africa’s apartheid era in the hope of resolving conflict left over from the past. Maybe we need the same thing to understand and accept all the wrong-doings we experienced during the "financial crisis." The blame for the financial failure of the past two years falls on pretty much everyone’s shoulders. Mistakes were made by just about everyone.
John Lanchester’s book, I.O.U: Why Everyone Owes Everyone and No One Can Pay (Simon & Schuster: January 2010) accurately summarizes where the blame can be levied:
1. banks took on excessive risk: Royal Bank of Scotland’s balance sheet exceeded the U.K.’s national income; Iceland’s largest banks took on foreign debt that was 12 times the size of the economy; the SEC’s April 2004 exemption of brokerage units from taking on excessive debt resulted in companies like Bear Stearns leverage ratio (borrowings to assets) rising to 33:1;
2. "financial innovation" allowed loans to be passed on with no individual entity retaining responsibility for the underlying asset’s recovery or repayment; so-called "innovations" included credit default swaps, off-balance-sheet special investment vehicles/special purpose entities, and a complex array of derivatives. According to Prof. Henry Hu, this was a massive "debt-decoupling" where all the risk was dumped onto naive investors, while all the fees were retained by the financial entities;
3. risk assessment was based on mathematical models that were little-understood and which separated investment from true underlying asset valuations;
4. boards of directors and management had little if any comprehension of the underlying models or the risks, therefore provide little oversight or internal controls;
5. mathematical models were based on fundamental flaws of judgment and lacked essential risk-weighing information;
6. models were used to maximize short-term fee-based revenues at financial institutions;
7. business schools and other educational entities took up the glamorous business of teaching financial engineering and model-building without any consideration for the ethical consequences of the downside of their for-fee training;
8. financial institutions and pension, mutual, and private funds participated in "collective wishful thinking," marching in lemming-like lock-step; the clique of social networking favored the followers; skeptics were ignored;
9. the Federal Reserve System failed to respond to indicators that argued for increasing excessively low interest rates for a protracted period of time even in the face of the housing bubble;
10. regulators fell prey to politics: failed to provide oversight, enforcement, or mandate transparency anywhere: accountants/audtors, banks, insurance firms, pension firms, securities firms, appraisal firms, real estate mortgage, sales and brokerage firms, hedge funds; or ratings agencies;
11. credit ratings agencies failed their due diligence mandate and became the pawns of the financial investment sector;
12. economists as well as academicians became enamored of the wizardry of financial engineering and failed their charter of neutral, third party objective analysis;
13. the media propagated paradigms of efficient markets, rational expectations, and a belief in the capitalist system which suckered the investment community into making decisions that exceeded the investors’ financial literacy
14. politicians allowed financial industry lobbyists to write their legislation for them, abdicating ownership and control over the content, and abandoning the financial consumer to the jibberish of the marketplace
15. legislators, advocates, and developers pushed the GSEs (Fannie Mae and Freddie Mac) to levels of subprime lending that exceeded the capacity of the financial community to manage the underlying risk
16. predatory lending was allowed to reach epidemic levels even though a horde of regulatory entities, all responsible for oversight and control (including the FBI), collectively ignored all apparent indicators of out-and-out fraud
17. all sectors of the economy worshiped credit regardless of the capacity of individuals or institutions to manage debt effectively
18. excessive compensation was fueled by short-term, fee-based levies, while average incomes were allowed to stagnate for decades
19. housing construction (AGAIN! How many times have we allowed the construction industry to drive us into economic oblivion?) was allowed to accelerate beyond what could be considered a reasonable level of investment compared to population growth, migration, or incomes
20. the consumer became financially illiterate, not only playing in the financial marketplace beyond logical limits, but in many instances doing so fraudulently on a massive scale.
Given the pervasiveness of these incompetencies, throughout the financial marketplace, we might expect that any proposals made (whether by the financial community, legislators, the regulators, or the high and mighty men and women of the administration) might possibly attempt to link the alleged solutions to the specific problems identified.
Making that linkage a reality should be the first step in addressing some of these problems. Addressing the solutions assumes taking ownership of the problems -- it assumes a little truth before we can reconcile.
John Lanchester’s book, I.O.U: Why Everyone Owes Everyone and No One Can Pay (Simon & Schuster: January 2010) accurately summarizes where the blame can be levied:
1. banks took on excessive risk: Royal Bank of Scotland’s balance sheet exceeded the U.K.’s national income; Iceland’s largest banks took on foreign debt that was 12 times the size of the economy; the SEC’s April 2004 exemption of brokerage units from taking on excessive debt resulted in companies like Bear Stearns leverage ratio (borrowings to assets) rising to 33:1;
2. "financial innovation" allowed loans to be passed on with no individual entity retaining responsibility for the underlying asset’s recovery or repayment; so-called "innovations" included credit default swaps, off-balance-sheet special investment vehicles/special purpose entities, and a complex array of derivatives. According to Prof. Henry Hu, this was a massive "debt-decoupling" where all the risk was dumped onto naive investors, while all the fees were retained by the financial entities;
3. risk assessment was based on mathematical models that were little-understood and which separated investment from true underlying asset valuations;
4. boards of directors and management had little if any comprehension of the underlying models or the risks, therefore provide little oversight or internal controls;
5. mathematical models were based on fundamental flaws of judgment and lacked essential risk-weighing information;
6. models were used to maximize short-term fee-based revenues at financial institutions;
7. business schools and other educational entities took up the glamorous business of teaching financial engineering and model-building without any consideration for the ethical consequences of the downside of their for-fee training;
8. financial institutions and pension, mutual, and private funds participated in "collective wishful thinking," marching in lemming-like lock-step; the clique of social networking favored the followers; skeptics were ignored;
9. the Federal Reserve System failed to respond to indicators that argued for increasing excessively low interest rates for a protracted period of time even in the face of the housing bubble;
10. regulators fell prey to politics: failed to provide oversight, enforcement, or mandate transparency anywhere: accountants/audtors, banks, insurance firms, pension firms, securities firms, appraisal firms, real estate mortgage, sales and brokerage firms, hedge funds; or ratings agencies;
11. credit ratings agencies failed their due diligence mandate and became the pawns of the financial investment sector;
12. economists as well as academicians became enamored of the wizardry of financial engineering and failed their charter of neutral, third party objective analysis;
13. the media propagated paradigms of efficient markets, rational expectations, and a belief in the capitalist system which suckered the investment community into making decisions that exceeded the investors’ financial literacy
14. politicians allowed financial industry lobbyists to write their legislation for them, abdicating ownership and control over the content, and abandoning the financial consumer to the jibberish of the marketplace
15. legislators, advocates, and developers pushed the GSEs (Fannie Mae and Freddie Mac) to levels of subprime lending that exceeded the capacity of the financial community to manage the underlying risk
16. predatory lending was allowed to reach epidemic levels even though a horde of regulatory entities, all responsible for oversight and control (including the FBI), collectively ignored all apparent indicators of out-and-out fraud
17. all sectors of the economy worshiped credit regardless of the capacity of individuals or institutions to manage debt effectively
18. excessive compensation was fueled by short-term, fee-based levies, while average incomes were allowed to stagnate for decades
19. housing construction (AGAIN! How many times have we allowed the construction industry to drive us into economic oblivion?) was allowed to accelerate beyond what could be considered a reasonable level of investment compared to population growth, migration, or incomes
20. the consumer became financially illiterate, not only playing in the financial marketplace beyond logical limits, but in many instances doing so fraudulently on a massive scale.
Given the pervasiveness of these incompetencies, throughout the financial marketplace, we might expect that any proposals made (whether by the financial community, legislators, the regulators, or the high and mighty men and women of the administration) might possibly attempt to link the alleged solutions to the specific problems identified.
Making that linkage a reality should be the first step in addressing some of these problems. Addressing the solutions assumes taking ownership of the problems -- it assumes a little truth before we can reconcile.
