The Boardroom Practice Ltd News Feed http://www.boardroompractice.co.nz The Boardroom Practice Ltd Pause for thought.....future governance?http://www.boardroompractice.co.nz/news/37/Pause-for-thought-future-governance<p>Shareholder democracy is ailing. Snap&rsquo;s refusal to hand out any voting shares is part of a wider trend towards corporate autocracy</p> <p>DEMOCRACY is in decline around the world, according to Freedom House, a think-tank. Only 45% of countries are considered free today, and their number is slipping. Liberty is in retreat in the world of business, too. The idea that firms should be controlled by diverse shareholders who exercise one vote per share is increasingly viewed as redundant or even dangerous.</p> <p>Consider the initial public offering (IPO) of Silicon Valley&rsquo;s latest social-media star, Snap. It plans to raise $3-4bn and secure a valuation of $20bn-25bn. The securities being sold have no voting rights, so all the power will stay with Evan Spiegel and Bobby Murphy, its co-founders. Snap&rsquo;s IPO has echoes of that of Alibaba, a Chinese internet giant. It listed itself in New York in 2014, in the world&rsquo;s largest-ever IPO, raising $25bn. It is worth $252bn today and is controlled by an opaque partnership using legal vehicles in the Cayman Islands. Its ordinary shareholders are supine.</p> <p>Optimists may dismiss the two IPOs as isolated events, but there is a deeper trend towards autocracy. Eight of the world&rsquo;s 20 most valuable firms are not controlled by outside shareholders. They include Samsung, Berkshire Hathaway, ICBC (a Chinese bank) and Google. Available figures show that about 30% of the aggregate value of the world&rsquo;s stockmarkets is governed undemocratically, because voting rights are curtailed, because core shareholders have de facto control, or because the shares belong to passively managed funds that have little incentive to vote.</p> <p>Cheerleaders for corporate governance, particularly in America, often paint a rosy picture. They point out that fewer bosses are keeping control through legal skulduggery, such as poison pills that prevent takeovers. Unfortunately, these gains have been overwhelmed by three bigger trends. The first is that technology firms can dictate terms to infatuated investors. Young and with a limited need for outside capital, many have come of age when growth is scarce. Google floated in 2004 with a dual voting structure expressly designed to ensure that outside investors would have &ldquo;little ability to influence its strategic decisions&rdquo;. Facebook listed in 2012 with a similar structure and in 2016 said that it would issue new non-voting shares. Alibaba listed in New York after Hong Kong&rsquo;s stock exchange refused to countenance its peculiar arrangements. Undaunted, American investors piled in.</p> <p>At the same time there has been a drift away from the model of dispersed ownership in emerging economies, with 60% of the typical bourse being closely held by families or governments, up from 50% before the global financial crisis, according to the IMF. One reason has been lots of IPOs of state-backed firms in which the relevant government retains a controlling stake. Hank Paulson, a former boss of Goldman Sachs, helped design many of China&rsquo;s privatisations in the early 2000s. &ldquo;The Chinese could not surrender control,&rdquo; his memoirs recall. Mr Paulson hoped that the government would eventually take a back seat, but that has not happened. Other emerging economies, including Brazil and Russia, copied the Chinese strategy of partial privatisation. And across the emerging world, tightly held family firms, such as Tata in India and Samsung in South Korea, are bigger than ever.</p> <p>Voter apathy is the third trend, owing to the rise of low-cost index funds that track the market. Passive funds offer a good deal for savers, but their lean overheads mean that they don&rsquo;t have the skills or resources to involve themselves in lots of firms&rsquo; affairs. Such funds now own 13% of America&rsquo;s stockmarket, up from 9% in 2013, and are growing fast. A slug of the shareholder register of most listed firms is now comprised of professional snoozers.</p> <p>For many in business the decay of shareholder democracy is irrelevant. After all, they argue, investors own lots of other securities&mdash;bonds, options, swaps and warrants&mdash;that don&rsquo;t have any voting rights and it doesn&rsquo;t seem to matter. At well-run firms such as Berkshire, shares with different voting rights trade at similar prices, suggesting those rights are not worth much. Some managers go further and argue that less shareholder democracy is good, because voters are myopic. Last year Mark Zuckerberg, Facebook&rsquo;s boss, pointed out that with a normal structure the firm would have been forced to sell out to Yahoo in 2006.</p> <p>It doesn&rsquo;t take a billionaire to poke holes in this logic. For economies, toothless shareholders are damaging. In China and Japan firms allocate capital badly because they are not answerable to outside owners, and earn returns on equity of 8-9%. A study in 2016 by Sanford C. Bernstein, a research firm, got Wall Street&rsquo;s attention by calling passive investing &ldquo;the silent road to serfdom&rdquo;. Without active ownership, it said, capitalism would break down.</p> <p>Democratic deficit</p> <p>At the firm level, voting rights are critical during takeovers, or if performance slips. At Viacom, a media firm with dual-class shares, which ran MTV in its heyday but which has stagnated for the past decade, outside investors are helpless. Control sits with the patriarch, Sumner Redstone, aged 93, who has 80% of its votes but only 10% of its shares. Yahoo (once as sexy as Snap) has lost its way, too. But because it has only one class of shares, outsider investors have been able to step in and, using their voting power, force the firm to break itself up and return cash to its owners.</p> <p>The system may be partially self-correcting. Some passive managers, such as BlackRock, are stepping up their engagement with companies. If index funds get too big, shares will be mispriced, creating opportunities for active managers. If shares without votes are sold for inflated prices, their owners will eventually be burned, and won&rsquo;t buy them again. And if fashionable young firms miss targets, they will need more cash and will get it on worse terms. But in the end shareholder democracy depends on investors asserting their right to vote in return for providing capital to risky firms. If they don&rsquo;t bother, shareholder democracy will continue to decline. That is something to think about as fund managers queue up for Snap&rsquo;s IPO.</p> <em>This article appeared in the&nbsp;Business&nbsp;section of The Economist February 11th 2017.</em><br /> <br /> &nbsp;1491220800http://www.boardroompractice.co.nz/news/37/Pause-for-thought-future-governancehttp://www.boardroompractice.co.nzPause for thought.....future governance?http://www.boardroompractice.co.nz/news/37/Pause-for-thought-future-governance Political Pressure on Directorshttp://www.boardroompractice.co.nz/news/36/Political-Pressure-on-DirectorsThis recent post on Kiwiblog looks at the sutuation whereby politicians are demanding directors risk five years jail: <p>A former union boss (Andrew Little) who campaigned on worker safety, along with Winston Peters, is basically demanding that the Government allow entry into the Pike River mine, instead of sealing it.</p> <p>Now let&#39;s be clear that the only ones who can make the decision about Pike River are the directors of Solid Energy. The Board have had advice that it is unsafe to allow entry, and that it should be sealed.</p> <p>So what would happen to a Director who because of political pressure said &quot;Let&#39;s risk it&quot; and allowed entry - and someone was harmed.</p> <p>That Director would <strong>face a jail term of up to five years imprisonment and/or a fine of up to $600,000</strong> which <strong>can not be covered by insurance</strong>.</p> <p>This legal liability can not be waived or avoided. Why? Because of the law brought into place due to the Pike River tragedy. It does not matter who volunteers to go in, and what waivers they offer. If a director is found not to have done due diligence (which ignoring your own official advice and the advice of Worksafe would surely qualify) they will be found guilty of a criminal offence.</p> <p>So when politicians such as Peters and Little demand Solid Energy allow entry into Pike River, they are demanding the Directors expose themselves to a five year jail term, and a $600,000 fine.</p> <p>It doesn&#39;t matter if you transfer it to another entity. The decision makers in that entity would face the same liability.</p> <p>Now you could argue that Parliament could pass a special law exempting Solid Energy&nbsp;from the workplace safety law. So then you are arguing that the very&nbsp;site which led to the tougher health and safety laws, should&nbsp;have an exemption from the same laws. That lies somewhere between irony and hypocrisy.</p> <p>Now again the Government can not order the Directors of Solid Energy to allow access. The Directors can not avoid liability just because a shareholder requests or even instructs them to. &nbsp;They can not get a waiver and they ca9n not get insurance to cover them.</p> <p>So as Peters and Little politic to gain advantage from the tragedy that happened at Pike, just remember what they are actually doing - undermining the very law that resulted from Pike River, and effectively bullying directors to expose themselves to criminal liability and five years in jail.<br /> <em>As posted in Kiwiblog 14 Dec 2016</em></p>1481626800http://www.boardroompractice.co.nz/news/36/Political-Pressure-on-Directorshttp://www.boardroompractice.co.nzPolitical Pressure on Directorshttp://www.boardroompractice.co.nz/news/36/Political-Pressure-on-Directors Voicing Dissenthttp://www.boardroompractice.co.nz/news/35/Voicing-DissentA common issue in board practice concerns disagreement or a dissenting voice at the boardroom table. &nbsp;The following is the current TBPL view:<br /> <br /> Abstention is not really a viable option for a director and collective action was the underlying philosophy behind a board (see for example Section 40 of the Companies Act 1993).<br /> <br /> <strong>Can a director abstain</strong><br /> In an absolutely literal sense a director can abstain from voting in the sense that nobody can be forced, at least in New Zealand, to vote on anything. Consequently, if a director remains silent he or she is in effect abstaining. Their vote therefore would not be counted in any resolution which was passed or rejected by the board.<br /> <br /> There are however some important caveats and some context which needs to be understood in respect of this.<br /> <br /> <strong>Responsibility cannot be rejected except by resignation</strong><br /> Simply because a director cannot be &ldquo;physically&rdquo; forced to vote and in that narrow technical sense they are abstaining, does not in any way absolve them of the responsibilities of a director. The most recent case on this is the James Hardie case in Australia &ndash; which New Zealand courts follow &ndash; in which the judgment stated that it is always the duty of a director to take responsibility for making a reasoned and reasonable assessment of the issues surrounding any particular resolution. Thus &ldquo;blame or responsibility&rdquo; cannot be shifted to management, ignored (for example because you intend to abstain from voting) or otherwise done away with. The director is required to investigate to a reasonable extent and assess, discuss, and form an opinion of some kind.<br /> <br /> Note that the validity of the opinion, its popularity, its political implications or indeed any other matter of content is not at issue. What is at issue is the requirement to make some kind of adequate assessment.<br /> &nbsp;<br /> <strong>Liability</strong><br /> Regardless of whether a director abstains or votes &ldquo;yes&rdquo; or &ldquo;no&rdquo; that director remains a member of the collective which is the board. Consequently they are responsible (and at the limit) liable for decisions made by the board. It is not therefore possible to &ldquo;walk away&rdquo; from any particular issue on the grounds that a director wishes to be no part of the decision or that they wish to have &ldquo;nothing to do with this one&rdquo; or other like protestations.<br /> &nbsp;<br /> It would be difficult if not impossible for example to successfully claim that one was not liable for a decision on the grounds that one had abstained from voting. In that sense it is not possible to abstain from the responsibility. One may walk from physically voting but one may not walk from one&rsquo;s responsibilities and the liability associated with those.<br /> &nbsp;<br /> <strong>But I didn&rsquo;t say &ldquo;Yes&rdquo;</strong><br /> This form of argument does not succeed 100% either. It may be that in abstaining or remaining silent or refusing to vote one did not say &ldquo;yes&rdquo;. At the same time there was the full opportunity to say &ldquo;no&rdquo; and thus the decision not to exercise that opportunity means that the director is in some form of &ldquo;voting vacuum&rdquo; but not in any form of vacuum in respect of responsibilities and very likely liability. In other words the responsibility must still be discharged and liabilities accompanying it are likely to survive. Abstention does not remove one.<br /> <br /> It would perhaps be easier if there was black and white associated with abstentions and votes. There is not, and the reasons for that are set out above. What is black and white is that as a director one must exercise one&rsquo;s responsibilities quite regardless of the &ldquo;awkwardness&rdquo; of the situation.<br /> <br /> Ultimately if there are too many issues on which a director would rather not be a director (for that is effectively what one is saying in attempting to absent oneself through abstention) then the more useful course is to resign or not become appointed in the first place.<br /> &nbsp;1472558400http://www.boardroompractice.co.nz/news/35/Voicing-Dissenthttp://www.boardroompractice.co.nzVoicing Dissenthttp://www.boardroompractice.co.nz/news/35/Voicing-Dissent Governance for Success http://www.boardroompractice.co.nz/news/34/Governance-for-SuccessTBPL is presenting this short course based on theory, practice and the skills required to operate effectively in a boardroom and give you confidence as a director. It is run by two experienced directors who are also practitioners.&nbsp;The course will be run in conjunction with the University of Auckland in July. For further information: <a href="http://www.exec.auckland.ac.nz/short-courses/governance-for-success">Governance for Success</a>&nbsp;(browser back button to return to our site)1458644400http://www.boardroompractice.co.nz/news/34/Governance-for-Successhttp://www.boardroompractice.co.nzGovernance for Success http://www.boardroompractice.co.nz/news/34/Governance-for-Success NZ directors" fees slipping, study sayshttp://www.boardroompractice.co.nz/news/33/NZ-directors-fees-slipping-study-saysDirectors on New Zealand owned companies are slipping behind their overseas counterparts when it comes to their fees, a study out this morning shows.<br /> <br /> The Institute of Directors Fees Report also indicated New Zealand non executive directors were spending much more time on their duties without their fees moving up by a corresponding amount.<br /> <br /> IOD chief executive Simon Arcus said in 2014, New Zealand owned company director fees were on average 58% less than overseas owned companies. In 2015, they were 63% less.<br /> <br /> Many variables needed to be considered when determining a fair and reasonable fee. Directors played a central role in the economic health of the country.<br /> <br /> ''Economies are about confidence. Directors are the backbone of that confidence. I am not afraid to say that directors are worth it. We pay directors to do the right thing, not the commercially safe thing.''<br /> <br /> That could involve taking risks, he said.<br /> <br /> New Zealand needed directors who were courageous but for whom the risk and reward balance in remuneration made sense.<br /> <br /> The report showed director fees rose modestly in the year but workloads almost doubled, reflecting an environment where boards were facing more scrutiny and regulation than ever before.<br /> <br /> The median increase in non executive fees rose by 4% but most (88%) had a median increase of 41% in time commitment, Mr Arcus said.<br /> <br /> The right balance between risk and reward was critical to attracting skilled, competent and diverse talent to the board table.<br /> <br /> There could be pressure on director remuneration levels in an era of increased liability and compliance. Members said the burden of compliance had grown, he said.<br /> <br /> ''What New Zealand needs is highly skilled, fairly remunerated directors. It's not enough to say there are plenty of directors lining up out there. New Zealand needs a focus on quality, not quantity.''<br /> <br /> This was the first year the institute had worked with EY to undertake the annual fee survey and there was a 27% boost in survey participation, making it the most comprehensive.<br /> <br /> Survey data showed only 50.6% of directors were satisfied with their current level of remuneration. EY partner Una Diver said diversity in the boardroom was another area where progress had been slow.<br /> <br /> ''There are good economic arguments for getting the right skill mix and gender on to boards. Research shows even one woman on a board can enhance its performance. It's time to see the diversity statistics improve.''<br /> <br /> <em>Thanks to Dene MacKenzie, ODT for this article</em>1439726400http://www.boardroompractice.co.nz/news/33/NZ-directors-fees-slipping-study-sayshttp://www.boardroompractice.co.nzNZ directors" fees slipping, study sayshttp://www.boardroompractice.co.nz/news/33/NZ-directors-fees-slipping-study-says Governance for Tough Timeshttp://www.boardroompractice.co.nz/news/32/Governance-for-Tough-TimesA recent paper by Brent Wheeler, Chair of The Boardroom Practice Limited<br /> <a href="/files/209/file/Governance-for-Tough-Times-pdf" data-object-ref="attachment:61">Governance for Tough Times</a>1437307200http://www.boardroompractice.co.nz/news/32/Governance-for-Tough-Timeshttp://www.boardroompractice.co.nzGovernance for Tough Timeshttp://www.boardroompractice.co.nz/news/32/Governance-for-Tough-Times Corporate Governance Leadership Assethttp://www.boardroompractice.co.nz/news/31/Corporate-Governance-Leadership-AssetFeatured Article by Professor Bob Garrett, TBPL&nbsp;Affiliate<br /> <a href="/files/207/file/Corporate-governance-leadership-asset-May-2015-1-pdf" data-object-ref="attachment:59">Corporate Governance Leadership Asset</a><br />1432641600http://www.boardroompractice.co.nz/news/31/Corporate-Governance-Leadership-Assethttp://www.boardroompractice.co.nzCorporate Governance Leadership Assethttp://www.boardroompractice.co.nz/news/31/Corporate-Governance-Leadership-Asset Are You Getting all you can from your Board of Directors?http://www.boardroompractice.co.nz/news/30/Are-You-Getting-all-you-can-from-your-Board-of-DirectorsBoards of directors have always, in all cultures,&nbsp;represented the shareholders in publicly traded&nbsp;companies&mdash;validating financial results, protecting&nbsp;their assets, and counseling the CEO on strategy&nbsp;and on finding, then nurturing, the next generation&nbsp;of leaders. It&rsquo;s a tough and demanding responsibility,&nbsp;requiring individual directors to learn as&nbsp;much as they can about a company and its&nbsp;operations so that their insights and advice can&nbsp;stand up alongside those of executives. That,&nbsp;at least, is the ideal.<br /> <br /> <a href="/files/206/file/Are-you-getting-all-you-can-from-your-board-of-directors-pdf" data-object-ref="attachment:58">Read more......</a><br /> <br /> Browser back button to return to site1425812400http://www.boardroompractice.co.nz/news/30/Are-You-Getting-all-you-can-from-your-Board-of-Directorshttp://www.boardroompractice.co.nzAre You Getting all you can from your Board of Directors?http://www.boardroompractice.co.nz/news/30/Are-You-Getting-all-you-can-from-your-Board-of-Directors Can Chairmen Lead?http://www.boardroompractice.co.nz/news/29/Can-Chairmen-Lead<strong>The characteristics of highly effective chairmen.<br /> </strong><br /> In June 2013, I helped a large private transportation company to upgrade its governance system. The change, among other things, included the creation of a board of directors with an independent chairman. We offered the job to a newly retired CEO from an engineering company, who had some previous director&rsquo;s experience, but had never chaired a board himself. Recently I met with the key actors in the governance system &ndash; the company&rsquo;s founders, the chairman and another independent director to assess the situation.<br /> <br /> The feedback was generally positive &ndash; the board approved the 2014 budget and management incentives, selected an external auditor, changed organisational structure, hired two senior executives and fired one. But all of the interviewees I met with expressed disappointment regarding the &lsquo;lack of leadership&rsquo; from the chairman. The chairman himself confirmed their view: &ldquo;I cannot lead. It&rsquo;s an awkward situation &ndash; I have the most senior job in the company, but I cannot change anything &ndash; I have no power or resources.&rdquo;<br /> <br /> <strong>Leading change</strong><br /> <br /> Leadership is an activity of mobilising people and their resources to achieve meaningful goals which cannot be achieved through existing routines. The transportation company&rsquo;s shareholders had expected the new chairman to bring about changes to the way their board of directors operated, which would make them more productive and more satisfied with their work. This in turn, they hoped would have a positive impact on the performance and value of their business. But the chairman was unable to deliver. From our conversation I found out that he had not only struggled with tools to influence the board, but did not have a vision &ndash; an essential component of effective leadership. Due to his CEO background, he could not see what kind of change agenda he could bring to the company as chairman.<br /> <br /> I shared two cases which I felt were relevant to his situation. In the first case, a newly elected independent chairman of a successful public company, which was controlled by its energetic and authoritarian founder, decided that his principal mission was to turn the company into a learning organisation, starting with the board and the CEO. In the second case of a recently privatised energy company, the chairman now represented a new controlling shareholder. His priority in the first year on the job was to instil a performance culture in the company. After reflecting on my stories the chairmen seemed to become enlightened: &ldquo;We also need a performance culture. And we are too internally-focused; we need to learn from other companies. But even if I decide to promote these causes I have no instruments to do it &ndash; the processes seem to be quite rigid &ndash; board meetings, committees, agendas&hellip; I just conduct meetings&rdquo;.<br /> <br /> Chairmen do not possess leadership skills that corporate executives are accustomed to &ndash; managers reporting to them, budgets, executive orders, business units and service functions, but they do have at their disposal a number of tools to advance their leadership agendas. We reviewed some of them with the chairman of the transportation company.<br /> <br /> <strong>You have the power</strong><br /> <br /> <strong>Attention of key players.</strong> The chairman of any company commands a resource no other member of an organisation, including the CEO has &ndash; the attention of people who make things happen. Chairmen have virtually unlimited direct access not only to people who make key decisions &ndash; directors and shareholders - but also to people who execute them &ndash; the managers. This unique position makes any chairman potentially a very powerful leader. Intelligent and consistent application of other ways to implement his vision transforms this potential into effective leadership.<br /> <br /> <strong>Board agendas.</strong> Chairmen decide what should be discussed at the board and allocate the board&rsquo;s time to each item on the agenda. This is a powerful tool to steer attention to his leadership vision and to encourage other directors and executives to adopt and carry it into the organisation. Profound discussions initially create awareness and then cause interest in the subject matter, both fundamental elements of a change process. The chairman of the energy company (from my example) put performance reviews as the number one item on the agendas of all five board meetings of the year following the privatisation, and allocated sufficient time to them. Not only was the message clear that they were serious about performance, but board members and senior executives were given a forum for establishing new standards and developing a common language in the area of performance management and productive corporate culture.<br /> <br /> <strong>Board sessions.</strong> Chairmen run board meetings &ndash; they choose formats, presentations, discussions, Q&amp;A sessions, individual remarks, allocate time to speakers, frame questions and formulate resolutions. This gives chairmen extra levers to influence other participants and advance their leadership agendas. In the case of the public company, the chairman made it the norm to bring examples of external best practices no matter what question was being discussed; often invited external and internal experts to share their views with the board and executives; and requested that internal benchmarks be a part of all management presentations. During discussions, he repeatedly asked questions such as, &ldquo;What have we learned?&rdquo;, &ldquo;How are we going to learn?&rdquo;, &ldquo;Who can we learn from?&rdquo; <br /> <br /> He also made the assessment of learning potential a mandatory requirement of all acquisition and investment proposals presented to the board. This approach made key members of the company including the CEO, aware that corporate learning is an important element of organisational development. Furthermore, it ignited interest in the subject since managers could see how benchmarking could help them to fulfil their duties. Finally, this approach provided executives with frameworks to start experimenting with knowledge management and moved them to the next stage of change process &ndash; the trial of new behaviours.<br /> <br /> <strong>Board committees.</strong> Although in most countries chairmen do not have the formal authority to nominate board committees, in practice they have a great influence over the process. By defining committees&rsquo; composition, their membership and agendas, chairmen promote their leadership vision and create new organisational vehicles for advancing them. The new chairman of Novartis, Jorg Reinhardt, believes that &ldquo;innovation is the key to success&rdquo;. Under his guidance, Novartis&rsquo; board created a Research and Development Committee while abolishing two committees which concentrated on more traditional performance and investment issues.<br /> <br /> <strong>Board composition. </strong>The same is true with regard to the board composition&rsquo;s management. To help advance the leadership agenda, the chairman promoted those who shared his vision, and had the knowledge and social competencies to advance it on the board and let go of people who blocked it or had very different priorities. When the chairman of DTEK, Oleg Popov, felt that the company should make leadership capital its first priority, he replaced some &lsquo;technocratic&rsquo; directors with people with a more humanistic outlook and experience in leadership development.<br /> <br /> <strong>Executive compensation and evaluation</strong>. I do not believe that the amount of money paid to executives has a significant impact on their behaviour on the job. However, the way their pay is structured and most importantly the factors they are evaluated against noticeably influence what they do and how they do it. Chairmen have a great opportunity to advance their leadership vision by designing executive compensation and conducting evaluation sessions with key executives. A strong believer in innovation and performance through collaboration, Reinhardt, chairman of Novartis, led his board to compose remuneration of senior managers so that it was more dependent on the overall group&rsquo;s results. Conversely, the chairman of the energy company introduced a very significant individual performance component to the compensation of his top executives to advance the culture of personal responsibility and accountability.<br /> <br /> <strong>Role models</strong><br /> <br /> Last, but not least, chairmen could be effective role models to realise their visions and change other people&rsquo;s mind-sets and behaviours. Directors and executives watch them continuously, spot consistency and discrepancies and both consciously and subconsciously adopt some of their behaviours. Oleg Popov not only expects his executives to find and develop talent, but takes the time to meet individually with the 200 members of the DTEK&rsquo;s leadership talent pool. These meetings send a strong message to the company about how serious the board is about leadership development. The founder-CEO of the public company admits that his chairman&rsquo;s stand on corporate learning produced a &ldquo;revolution in his mind&rdquo; and he catches himself systematically repeating the chairman&rsquo;s favourite questions in discussions with his managers. Leading by example, works well in the chairman&rsquo;s case because of the special status and organisational centrality of that position.<br /> <br /> I have had the privilege of meeting a number of chairmen who have demonstrated effective leadership styles and have had a lasting impact on their companies. They come from different backgrounds, have different personalities and demographics. But they all share four characteristics which I believe helped them to become real organisational leaders. They had an ambition to lead; they had a vision; they were aware of the constraints and opportunities that came with the chairman&rsquo;s position and adapted their leadership accordingly; and they were passionate and persistent in advancing their leadership agenda. Nothing out of the ordinary, but taken together, these attributes produced great results.<br /> <br /> Two days after our meeting, the chairman of the transportation company called to inform me that he had decided to make risk management and corruption prevention his leadership priority for the next 12 months. He wanted to create a risk management board committee, bring a director experienced in risk management to the board and to change executive compensation to reflect his new priority. He had already had some discussions with other directors and they supported the idea. The chairman sounded passionate, determined, but specific and practical &ndash; just like a leader.<br /> <br /> <em>Stanislav Shekshnia is an INSEAD Affiliate Professor of Entrepreneurship and Family Enterprise. He is also the Co-Programme Director of Leading from the Chair, one of INSEAD&rsquo;s Board Development Programmes and a contributing faculty member at the INSEAD Corporate Governance Initiative</em><br /> <br /> <br /> Read more at <a href="http://knowledge.insead.edu/blog/insead-blog/can-chairmen-lead-3098?nopaging=1#dRqidHUA8y8hlLM2.99">http://knowledge.insead.edu/blog/insead-blog/can-chairmen-lead-3098?nopaging=1#dRqidHUA8y8hlLM2.99</a><br />1407067200http://www.boardroompractice.co.nz/news/29/Can-Chairmen-Leadhttp://www.boardroompractice.co.nzCan Chairmen Lead?http://www.boardroompractice.co.nz/news/29/Can-Chairmen-Lead