Spencer Stuart: Building a Board for the Long Term

Many boards focus on the short term goals, where the pressure to meet quarterly earnings and the demands of investors are top priority. Spencer Stuart outlines how boards can create value by looking further ahead. Part of the board’s ability to take a long-term view is informed by how it sees its responsibility to shareholders. The profile and expectations of investors have changed substantially over the past several decades, and all the evidence would suggest that in many markets long-term investors are a dying breed.

Among the recommendations:

• Develop a long-term vision for the business.
• CEOs that have to hold their shares beyond their retirement or departure date will, we think, be more concerned about their legacy and the performance of their successor.
• When making new appointments to the board they should be framed by their ability to uphold the long-term vision of value creation for the business.
• The right leadership is needed to set the tone and direction for the board and to ensure the proper long-term vision is in place.
• Review the effectiveness of the board to gauge if they are achieving its long-term vision.

Read the full report.