Boards Push for Independence and Focus Shifts to CEO Succession
There is an “ongoing push” for independent leadership at the Board level, according to findings in Ferguson Partners Ltd.’s (http://www.fpladvisorygroup.com) Corporate Governance Outlook 2013 survey.
The annual survey found that 52% of the respondents agreed that the Chairman and Chief Executive roles should be separate, while 74% feel that companies should have an Independent Lead Director. An additional indication of a push for Board independence was that 72% of respondents who believe that Directors should meet quarterly without management.
Both CEO succession and CEO performance evaluation are considered more critical issues among the 2013 respondents. William J. Ferguson, Chairman and CEO of Ferguson Partners, Ltd. says this shift is due to the inevitability of generational change. “Also Boards are more willing to take a risk and change leadership in the wake of suboptimal corporate performance, as the economy has stabilized. Furthermore, we’ve seen executive compensation emerge as a more important topic with economic improvement, as there is increased pressure on paying out more significant compensation levels.”
While risk management continues to be an important priority of the Board, it’s importance diminished slightly from respondents in the 2012 survey. “This shift too is likely due to the fact that the US economy continues to strengthen,” said Ferguson. “As US markets stabilize, there is greater focus on strategy and growth.”
The Ferguson Partners Ltd. Corporate Governance Outlook 2013 survey report is based on survey responses from over 80 Chief Executive Officers, Corporate Directors, and Chairmen of Corporate Governance committees from publicly traded REITs, hospitality companies, and homebuilders. Of the participants, 67% were equity REITs. Property types were well represented across multi-family, retail, office, industrial, health care, and self-storage. Note: Ferguson Partners Ltd. Corporate Governance Outlook survey was not conducted in 2011. Therefore, year-over-year comparisons within the report are to surveys conducted in 2010 and/or 2012.← Combatting the “Age Gap”: How to Address REIMs Changing Demographics. NAREIM CEO on CBC’s Lang & O’Leary Exchange →