In a first-of-its-kind initiative, CBM and AlixPartners are partnering to use an approach that relies on the total shareholder return (TSR) of the companies that board members help guide. , identified the top 20 value-creating directors in the United States. . (See diagram below.)
It's one thing to use quantitative measures to select the best independent board members in the United States, but it's quite another to figure out what qualities lead to their superior results. Why are these 20 elite performers capable of functioning at such a high level? Is it possible to derive appropriate indicators?
Good question. However, the observable characteristics analyzed using AI and machine learning were: “The best directors are all with financial experience,” “The best directors are the ones with the longest tenure,” and “The best directors are the ones with the longest tenure.” It does not provide definitive clues such as “Everyone is.” Has deep industry experience. ”
“When we started this exercise, we thought we would find a pattern like that,” says Joe Shalek, partner and managing director at AlixPartners Consultants. “However, we did not find any meaningful correlation between readily observable factors and performance. But the performance of these directors is clearly above and beyond. It is not random and it is reproducible. They are doing something different and are getting significantly better results.”
Call it the “secret sauce” to success in the boardroom. “How these people behave towards their fellow directors and management, and how they influence both of these groups, depends on things like tenure and committee roles. “There's something that doesn't show up in the visible features,” says Reed DuPriest, partner and managing director at the firm. Alix Partners.
To dig deeper into outstanding board service, we spoke to several top 20 directors about why great board members consistently perform well (with more to come in the coming months). ). What are their views? It takes time, dedication, professionalism, discipline, humility, emotional intelligence, leadership talent, versatility, guts, and even a little guile.
“We're not there to run a business,” says Bill Easter, current director of Delta Air Lines and Emerson. “We're there to provide oversight, guidance, input, but depending on the company and its location and the location of the individual leader, we're there to provide some coaching to management and certainly provide encouragement. may be there.”
Read the insights below:
• Jan Babiak, Director, Walgreens Boots Alliance, Bank of Montreal
• Bill Easter, Director of Emerson and Delta Airlines
• Maggie Wilderotter, Director, Costco, DocuSign, Sana Biotechnology, Tanium Inc.
• John Surma, Director, Public Service Enterprise Group and Trane Technologies, Marathon Petroleum Corporation
Top 20 Value Creation Directors
All 20 directors were in the top 15% of independent corporate directors with an average market capitalization of $1 billion or more during their tenure and who served on four or more boards with board start dates in 2008 or later. .
AlixPartners assessed each director's TSR and those of their industry peers during their board membership and aggregated the results into an index to identify the high-performing directors whose TSR performance best exceeded that of their industry peers. Each director was required to hold at least one active position on the board of an S&P 500 company. The position of CEO is not included in his four membership numbers.
