Peter Gleason is the President and CEO of the National Association of Corporate Directors (NACD). Gleason is a recognized expert on board leadership and corporate governance issues. He serves as a member of NACD’s national faculty, is regularly quoted in the national media, and is a frequent presenter on the subjects of corporate governance, executive and director compensation, risk, strategic planning, and board/shareowner relations.
Gleason currently serves on the board of NACD and on the advisory board of Nura Health, Inc., a development-stage healthcare company. Gleason is also a director of the NACD Capital Area Chapter, Deputy Chair of Global Network of Director Institutes, and is a NACD Board Leadership Fellow. He is the former chair of the International Professional Practices Framework Oversight Council of the Institute of Internal Auditors and was formerly a director of The Patriot Fund.
Before joining NACD, Gleason was a management consultant with both Ernst & Young and Pritchett & Associates. In addition, he served as Vice President and Director of U.S. Research for Institutional Shareholder Services. Gleason is a graduate of Dartmouth College and Virginia Tech, from where he has a MBA with concentrations in both Finance and Marketing.
The boardroom is undergoing consistent changes as the marketplace shifts. From new regulations to rolled back legislation to cybersecurity to social media, maintaining a broad perspective on the strategic opportunities and risks for public companies continues to become more complex. C-Suite spoke with Peter Gleason, the newest president and CEO of the National Association of Corporate Directors (NACD) to gain insights into how board members are educating themselves and preparing to face these changes—whether they are new to the boardroom or have been tenured over 20 years.
Peter Gleason: I’ve been President and CEO for just over six months, but I’ve been here since 2000, and our mission hasn’t changed. That said, the question of how we continue to advance exemplary board leadership is always at the forefront of what we do. Growth in our membership and attendance at our director education programs has been tremendous, especially over the past several years as the profession of director has become more complex. The bigger we get, the more strength we have in delivering on our mission. We’re now just shy of 18,000 members, and my job is to continue this growth.
Gleason: On the education front, we have gone above and beyond. We offer three different levels of director professionalism foundation courses, and we also offer targeted programs around cyber, strategy, risk, and a multitude of other topics.
Different board members have different needs, and we have to tailor our education offerings to meet these varying needs. If you’ve joined your first board, your first responsibility is to understand your fiduciary duties. New directors have to learn to move from an operating role to an oversight role. Many don’t have that baseline level set and are looking for educational opportunities. As we like to say, you rarely see an actual job description for a board seat.
For people who have been in the director’s seat for 20 years, the focus is more how do they share ideas, and how do they talk about what’s happening at their companies and share those trends with their peers. For example, cyber breaches may be technically different, but the things board members have to consider are the same—law enforcement, lawsuits, triage, communications—and we facilitate that kind of discussion in closed-door sessions.
There used to be a stigma attached to leaving a board. We need to change that.
Gleason: Cybersecurity is up there at the forefront of everyone’s mind, but at the same time, given the environment we are in, geopolitical risk can have a dramatic impact on companies as we become an increasingly global economy. You also have domestic uncertainty from tax reform to regulations. Directors are operating in a risk-rich environment, and the immediacy with which you’re asked to respond is now a lot faster than 10 to 15 years ago. As the Mike Tyson quote goes, “Everyone has a great plan going into the ring, and then they get punched in the mouth.”
Gleason: Our Blue Ribbon Commission Report three years ago focused on strategy development, and we followed that with another BRC on the board’s role in long-term value creation. As we dug in, we kept coming back to board composition. We look at board composition and refreshment as an ongoing process. You have to be constantly evaluating directors to ensure your board remains fit-for-purpose and is well-positioned to oversee the company’s strategy. These were all recommended in our BRC on the Strategic Asset Board.
There used to be a stigma attached to leaving a board. We need to change that. A director may be incredibly talented, but he or she might not have the right skill set for what the company currently needs to achieve its strategic priorities. When you look at succession planning and diversity, it’s a question of how is the company represented by a greater community of business professionals. How do we bring those skills and backgrounds into the boardroom? As long as there is a stigma associated with a board member’s departure, the number of open board seats will remain low.
Gleason: You don’t have to rotate all directors at once; this allows you to retain critical institutional knowledge. You can look at succession planning as tranches of directors—experienced at 8 to 12 years, mid-level at 5 to 8 years, and newer directors of 1 to 4 years. Then you can pursue a disciplined refreshment strategy at each level.
From a broader perspective, too many boards fall back on age and term limits. And you can’t base director succession on an evaluation. Board evaluations should be used to look for opportunities to improve, and if you use them as a tool to get someone off a board, you lose that opportunity and create negativity. Re-nomination should not be about whether an evaluation was poor, but structured more as a blank sheet of paper, looking at the board’s skill set matrix to consider what you have around the table and what you need.
Gleason: It’s hard to paint all activists with a broad brush. You may find yourself in a situation where they want to bring in three directors—well OK. But how do they know those three are the best directors for that board? I’ve had discussions with directors who have been put on activist slates, and I’ve had the opposite, people trying to fend them off. It is a challenge for the nominating and governance committee to go through a continual refreshment process to make sure the board is fit for purpose, and then have a new slate of directors proposed whose skill sets don’t align with the company’s strategy. We advocate the concept of “think like an activist,” and we’ve seen this raise the bar with respect to the performance of the board.
Gleason: I look to proactive engagement with management, which includes positively challenging the executive team. Not asking “Why haven’t you done this,” but suggesting “Here are five things another board was dealing with, how are you looking at these issues?” These things might be competitive threats, geopolitical pressures or cybersecurity risks—and what actions they need to consider. Directors should also be the biggest supporters of the company and serve as ambassadors for the company.
Another critical element to exceptional leadership is director education. The pace of change is faster than ever before, and if the board is not staying current on trending issues, they may be left behind. When a crisis hits, the first question is always “Where was the board?” We want to make sure directors are aware of the critical issues that should be on the board’s agenda.
I’ll circle back to something I mentioned earlier—the role of the board is oversight, not operations. Directors should not be expected to be experts in all areas, but they can be expected to stay educated, share best practices with their peers, and look honestly at themselves to ensure the board remains fit-for-purpose.