How changing board oversight of talent, strategy and risk can lead to long-term value

The EY Center for Board Matters held a webcast on May 17 designed to provide directors with insights and questions to consider as they engage with management on a variety of complex boardroom issues.

During this webcast, Bill McNabb, former Chairman and CEO of Vanguard and co-author of Talent, Strategy, Risk: How Investors and Boards are Redefining TSR, shared his views on how boards can redefine corporate governance for the long term — including how committees can evolve to address a broader view of corporate performance. We also heard from two lead independent directors who shared their views about some of the themes highlighted in the book. The key takeaways included: 

• Redefining the old TSR (total shareholder return) as Talent, Strategy and Risk can help boards avoid short-termism and reorient for the long term. The new TSR will deliver the old TSR and go beyond market gains to benefit both shareholders and society at large.
• Talent drives strategy, enables execution and ultimately determines a company’s success or failure. The board’s role in succession planning provides a crucial opportunity to deepen its understanding of the company’s talent pool and find the right leader for managing for the long-term. The board must also understand talent trends in the company’s industry and the skills and culture the company will need for the future.
• Strategy setting must be an ongoing process that is discussed at every board meeting. The board plays a key role in focusing management on the path to the future and considering the needs of all stakeholders as a way to build shareholder return for the long term.
• Boards can help their companies practice risk management, instead of risk avoidance, to shift the perspective to long-term gains.
• Boards can adopt a new value playbook to upgrade capabilities, redesign committees, diversity information and engage investors, all in the pursuit of the new TSR.
• A fundamental part of the new value playbook is redesigning the boards’ committees, which can optimize directors’ ability to use their expertise and achieve the depth of knowledge they need to be effective in pursuing the new TSR.

Panelists: 

• Bill McNabb - Former Chairman and CEO, The Vanguard Group, Co-author, Talent, Strategy, Risk: How Investors and Boards are Redefining TSR

• Michele Hooper - Board Director, UnitedHealth Group and United Airlines Holdings

• Liz Lempres - Board Director, Axalta Coating Systems Ltd and General Mills