August 9, 2010

New England Directors Have Increased Optimism About Revenue Growth in the Next 12 Months

BOSTON (August 5, 2010) – As the 2010-11 fiscal year is now underway for many companies, Directors across New England are increasingly confident they will see revenue increases over the next 12 months, that according to a survey conducted by the National Association of Corporate Directors New England Chapter.

 

The NACD New England’s 2010 Leadership Survey on Economic & Corporate Governance Trends, which asked 135 directors who currently sit on public, private and non-profits Boards of Directors questions about the economy and key issues facing Boardroom leaders today, showed that 22 percent are “extremely confident” that their companies will see revenue growth in the coming year; 48 percent are “somewhat confident” about their companies’ ability to increase revenue. Both have increased since July 2009, when only 11 percent said they were “extremely confident” and 41 percent said they were “somewhat confident.”

 

“Our Director members are some of the region’s most influential business leaders, and their optimism concerning revenue growth in the next 12 months is a very encouraging sign for the New England economy,” said NACD New England Chapter President Bill Earon.   “It is also positive to see that a large majority continue to believe our national economy remains on an upswing. We all know that this has been a difficult time for both our regional and national economies but the positive sentiments from our Boardroom leadership are an excellent sign.” 

 

Sentiment is mostly unchanged regarding how the New England economy stacks up against the rest of the United States. Six percent believe the New England economy is significantly stronger than the national economy, while 62 percent believe it is slightly strong. That’s a slight increase in both percentages in the last year, when only four percent felt New England was significantly strong and 59 percent believed it was slightly stronger.

 

There was a slight drop off in overall confidence for the prospects for the U.S. economy in the next 12 months. Twelve percent of respondents said that the U.S. economy will see significant recovery in the next year compared to 20 percent that felt the same a year ago. Sixty-four percent believe we’ll see slight improvement in the next year, which is slightly higher than 58 percent that had a like response last year.

 

“While the belief that our economy will be making a major recovery in the coming year has decreased, there remains a confidence among the majority that still believe we’ll take positive steps over the next 12 months,” said Win Priem, a member of the Boards of EMC Corporation and the NACD New England Chapter.

 

Risk Management Remains a Key Boardroom Focus

 

For the second straight year, risk management is a key issue to New England directors. Forty-seven percent of respondents listed it as either a top priority or one of the top priorities of the Boards they serve. Another 41 percent called risk management important, but not one of their Boards’ top priorities.

 

Despite that, 47 percent said their Boards do not spend enough time dedicated to risk management. That compares to the 50 percent who say they spend sufficient time on the topic and just one percent that feels their Boards spend too much time on risk management.

 

All the concern and attention about risk management hasn’t prompted too many Boards to change their structure. Seventy-eight percent said they have no risk committee in place, compared to seven percent that do have a separate risk committee and 13 percent who said their risk committees were a subset of the audit committee.

 

Board members feeling increased risk, time devoted to Board matters

 

With Federal legislation pointing towards increased government oversight and an increased number of shareholder-driven lawsuits, directors themselves also feel at risk. In a new question on the 2010 survey, respondents were asked if risk associated with sitting on a Board has increased in the last year. Thirty-one percent said risk has increased significantly and an additional 49 percent believe there has been a slight increase in risk. Only 19 percent said they do not feel like there is increased risk associated with sitting on Boards.

 

Not surprisingly, with increased risk also comes additional time required for Board members to devote. Thirty-five percent of respondents said the amount of time they dedicated to Board work increased by 20 percent of more in the past year. An additional 37 percent said they’ve slightly increased their time commitment (less than 20 percent). While 24 percent said the amount of time they commit has remained the same, only two percent said there has been any decrease in time whatsoever.

 

Diversity Continues to be Important; More Companies Embracing Diverse Skills

 

Eighty-seven perfect of the respondents said that diverse backgrounds and skill sets are important when choosing Board members, a three percent increase from 2009. And showing that Directors are practicing what they preach, 46 percent of respondents said they are serving on boards with extremely diverse backgrounds, up from 35 percent a year ago.

 

For the first time, the survey also asked respondents how diverse the Boards they serve on are in terms of gender and ethnicity. Twenty-two percent consider their Boards “extremely diverse,” with several minority or female members; 62 percent consider their Boards “somewhat diverse, meaning they have one or two minority/female members; and 16 percent said their Boards are not diverse, that they have no female or minority members.

 

About the Survey

 

The NACD New England 2010 Leadership Survey on Economic & Corporate Governance trends surveyed 135 active Directors serving on public, private and non-profit boards. Each respondent was asked a total of 21 questions about the economy and issues surrounding boardroom leadership.

 

For full survey results, please contact Jim Connelly at 617-861-3654 or via email at jconnelly@elevatecom.com.

 

About the National Association of Corporate Directors

The National Association of Corporate Directors (NACD) is a not-for-profit membership organization devoted exclusively to improving director and board effectiveness in fulfilling their obligation to ensure shareholder and stakeholder value. Founded in 1977, NACD conducts educational programs and standard-setting research and provides information and guidance on a variety of board governance issues and practices. NACD’s 10,000 director members comprise both individual directors and entire boards ranging from the Fortune 100 to smaller public, private, and closely held companies. NACD is the publisher of Directors Monthly and provides governance information online at www.nacdonline.org.

 

For more information about the NACD New England Chapter’s, please visit www.nacdne.org.