In a first-of-its-kind exercise, CBM and AlixPartners partnered to identify the Top 20 Value-Creating Directors in America, using an approach that relies on total shareholder return (TSR) relative to peers for the companies these board members help guide. (See chart below.)
It’s one thing to use quantitative measures to come up with America’s best independent board members, but it’s quite another to figure out what qualities lead to those superior results. Why are these 20 elite performers able to function at such a high level? What metrics can be teased out as qualifications or predictors that put the most effective board members atop thousands of peers?
Good questions. But observable characteristics, which were analyzed using AI and machine learning, simply don’t provide definitive clues, such as, “The best directors all have financial experience” or “The best directors are those with the longest tenures” or “The best directors have deep industry experience.”
“When we started this exercise, we thought we would find patterns like that,” says Joe Shalleck, partner and managing director at AlixPartners consultants. “But we found no meaningful correlations between readily observable factors and performance. Yet these directors’ performance clearly stands above. It’s not random, and it is repeatable: They’re doing something different that is producing markedly better results.”
Call it a “secret sauce” for success in the boardroom. “There’s something about how these people conduct themselves with their fellow directors and with management and how they influence both of those groups that doesn’t show up in observable characteristics like tenure or committee roles,” says Read DuPriest, a partner and managing director at AlixPartners.
To dig into stellar board service, we spoke with several of the Top 20 directors (and we’ll speak to more in the months to come) about why excellent board members perform consistently well. Their take? It requires time, dedication, professionalism, discipline, humility, emotional intelligence, leadership savvy, versatility, guts and even some guile.
“We’re not there to run the business,” says Bill Easter, a current director of Delta Airlines and Emerson. “We’re there to provide oversight, guidance and input, and—depending on the company and where it is, and where the individual leader is—we may be there to provide some coaching and certainly encouragement for management.”
Read insights from:
• Jan Babiak, Director, Walgreens Boots Alliance, Bank of Montreal
• Bill Easter, Director, Emerson and Delta Air lines
• Maggie Wilderotter, Director, Costco, DocuSign, Sana Biotechnology and Tanium
• John Surma, Director Marathon Petroleum, Public Service Enterprise Group and Trane Technologies
The 20 Top Value-Creating Directors
All 20 directors were in the top 15 percent of independent corporate board members who have served on four or more boards with a market cap that averaged $1 billion or more during their tenure, with board start dates of 2008 or later.
AlixPartners evaluated company and peer-industry TSR during each director’s board memberships and rolled the results up to indexes that identified over-achieving directors whose TSR performance most exceeded that of their industry. Each director had to have at least one active position on an S&P 500-company board. CEO positions aren’t included in the count of four memberships.
