Financial Webinar Series
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Financial Webinar Series
“Students who took all or part of their
class online performed better, on
average, than those taking the same
course through traditional face-to-face
instruction.”
U. S. Department of Education: 2009
Financial Webinar Series
E-learning Tips
• Be anti-social: at least for now.• Turn off your cell phone or phone.• If it helps, take notes during the session.• Write down the questions you want to
ask.
• Accept different opinions, but don’t hesitate to question them.
Financial Webinar Series
When did the first distance learning program with formal accreditation take place?
• 1999
• 1728
• 1858
• 1969
Polling Question
Financial Webinar Series
Today’s speakers include:
The Audit Committee Fred Anderson: CEO/President, NH Electric Co-op
Equity Management Rod Crile: CFC Regional Vice President
CEO Succession
Planning
Caroline J. Fisher, PhD: Principal, Fisher Consulting Group,
LLC
Financial Webinar Series
Audit Committee
• The Role and Responsibility of the Audit Committee.
• Benefits of an Audit Committee to the
Co-op Director’s and the Members.
• Best Practices of Audit Committees.
Financial Webinar Series
What is the purpose of the
external audit?
• Detect Fraud.
• Prepare the Financial Statements.
• Check that staff is doing its job accurately.
• Express an opinion on the financial statements.
Financial Webinar Series
What was the average equity level
50 years ago?
• Less than 10%
• About 15%
• About 22%
• Greater than 30%
Polling Question
Financial Webinar Series
Equity Levels 2009 KRTA Data
0
5
10
15
20
25
30
35
40
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
Equity Level
Fre
qu
ency
(Nu
mb
er o
f Co
op
erat
ives
)
Median The 2009 median equity level is 41.26%
Upper Quartile (25% of all distribution systems have equity levels 52% or higher)
Lower Quartile (25% of all distribution systems have equity levels lower than 34%)
Financial Webinar Series
Equity Management
• What has the greatest impact on equity
– Margins
– Capital Credits
– Growth
• How to manage equity
– Financial policy statement
Financial Webinar Series
What Causes Equity to Change
Total Assets10%
MarginsCapital CreditsGrowth
40%
60%
40%
60%
Financial Webinar Series
Equity Management
• Create a financial plan
–Available on CFC website
– Financial metrics
• Coverage ratio
• Equity ratio
• LT debt
• Director responsibilities
• Management responsibilities
Financial Webinar Series
Caroline J. Fisher, PhD
Principal, Fisher Consulting
Group, LLC
CEO Succession
Planning
Financial Webinar Series
THE ROLE OF THE BOARD OF DIRECTORS: Ultimately,
what is the Board’s responsibility when it comes to CEO succession?
It is the Board’s responsibility to:
•Ensure there is a proactive and future focused plan for CEO replacement in the event of an unplanned departure, a retirement or other circumstance that results in a vacancy at the CEO level.
• Ensure that the organization continues to function operationallyand move forward over the course of time – and that it ultimately maintains strength, sustainability and performance for the shortand long term.
Financial Webinar Series
CEO SUCCESSION PLANNING: The big challenge; the
big opportunity
• “One of the most important decisions that a board of directors must make is the selection of the CEO of the company.” (Rock Center for Corporate Governance – Stanford Graduate School of Business, 2010)
• 44% of companies do not have a formal CEO succession plan in place. (National Association of Corporate Directors, 2009)
• 39% of corporate directors are not satisfied with their company’s succession plans. 53% believe their company should dedicate more time to this topic. (NACD Public Company Governance Survey, 2009)
Financial Webinar Series
CEO SUCCESSION PLANNING: The big challenge; the big opportunity
• “One of the most uneasy discussions that boards and (CEO’s) have is the issue of succession planning. The reason boards and (CEO’s) avoid this discussion is because they really don’t know what to say or do.” (Succession Planning: The Elephant in the Room, Community Driven Institute, 2006)
• “Our CEO succession is the biggest opportunity before us.” (CEO –San Francisco based technology company, 2011)
Financial Webinar Series
THE BIG PICTURE: Three Tiers to Effective CEO Succession Planning
CRISIS SITUATION (1 – 3 months): (Immediate appointment
to the CEO role in the event of an unplanned CEO
departure)
TRANSITION SITUATION (4 – 6 months): (Appointment of a
transitional leader/manager that will fill the CEO role while a permanent CEO, internal or external, is chosen)
PERMANENT CEO APPOINTMENT (Preferably 5 years or
longer): (Selection of a leader/manager that will
permanently hold the CEO role and move the organization
into its next chapter and phase of evolution)
Financial Webinar Series
CEO SUCCESSION PLANNING: So what’s the problem?
• “The problem with most succession planning in companies is either: 1) A plan simply doesn’t exist; or 2) The plan is based strictly on the past, not on the future. With the industry and marketplace changing at lightening speed, how can we presume that yesterday’s leadership criteria will truly move us forward?” (Albert Thomson, CEO - Midwest Manufacturing, 2010)
• “Proactive, future focused succession planning – from the CEO level to the front line management positions – will determine our ability to move into the future… or will ensure we don’t exist five years from now.” (CEO – San Francisco based technology company, 2011)
Financial Webinar Series
• “Past paradigms for success in the business world will have little or nothing to do with future success. We must have the courage anddiscipline ourselves to look forward – not back – when thinking about tomorrow’s leaders.” (Joel Barker, Futurist - 2006)
• Until recently, the most overlooked pre-requisite for CEO candidates was an understanding of culture and leadership development.
CEO SUCCESSION PLANNING: So what’s the problem?
Financial Webinar Series
QUITE A STATEMENT...
Davos, Switzerland
Reshaping and guiding corporate culture
and employee behavior is the second most
important CEO priority, second ONLY to
setting corporate vision and strategy.- Annual Meeting of the World Economic Forum, 802
CEO’s participating from North America, Europe, Asia and Latin America
Source: PricewaterhouseCoopers
CULTURE MATTERS: Linking culture to performance & results
Innovation &Customer Satisfaction
StablePerformanceOver TimeProfitability ROI, ROE
Operating PerformanceQuality
Employee Satisfaction
GrowthMarket Share
© Denison Consulting, LLC. All Rights Reserved
Financial Webinar Series
An important perspective…
From the CEO of IBM…
“I came to see, in my decade at
IBM, that culture isn’t just one aspect of the game - it is the game.”
- Louis Gerstner, “Who Says Elephants Can’t Dance”
Financial Webinar Series
SO WHAT’S A BOARD TO “DO”?
When it comes to CEO succession
planning, the Board should:
• Learn about culture
• Initiate discussion
• Identify criteria for great CEO leadership
• Create a three-tiered plan
• Hold accountable
• Be brave
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• Leave culture out of the conversation
• Micro-manage – PART 1
• Micro manage – PART 2
• Leave it to chance
SO WHAT’S A BOARD TO AVOID DOING?
When it comes to CEO succession
planning, the Board should NOT:
Financial Webinar Series
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