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    Stanford GSB Corporate Governance Research Initiative
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    Boards rate CEOs high in decision-making, low in talent development. A new study conducted by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford University’s Rock Center for Corporate Governance, and The Miles Group reveals that boardrooms are giving poor grades to CEOs for their mentoring skills and board engagement – but still prioritize financial performance above all else. STANFORD, Calif. —More than 160 CEOs and directors of North American public and private companies were polled in the 2013 Survey on CEO Performance Evaluations, which studied how CEOs themselves and directors rate both chief executive performance as well as the performance evaluation process. When directors were asked to rank the top weaknesses of their CEO, “mentoring skills” and “board engagement” tied for the #1 spot. “This signals that directors are clearly concerned about their CEO’s ability to mentor top talent,” says Stephen Miles, founder and chief executive of The Miles Group. “Focusing on drivers such as developing the next generation of leadership is essential to planning beyond the next quarter and avoiding the short-term thinking that inhibits growth.” However, when actually evaluating the performance of a CEO, companies place very little weight on many nonfinancial performance measures. The survey found that only a 5% weighting was given to a CEO’s performance in the areas of talent development and succession planning, and only a 2.5% weighting was given to employee satisfaction/turnover. “While boards clearly see mentoring and talent development as weaknesses in their CEO, the problem is that they are not evaluating CEOs against those measures in a meaningful way,” says David F. Larcker, James Irvin Miller Professor of Accounting and co-director of the Center for Leadership Development and Research at the Stanford Graduate School of Business. “Financial performance still dominates the grading metrics, so if boards really want CEOs to focus on other things as well, they will have to change the way they evaluate those in the top seat.” Additional key findings of the 2013 Survey on CEO Performance Evaluations include: Directors rate CEOs high in “decision making” but low in people management areas. In addition to mentoring and developing talent, “listening” and “conflict management” were the skills least mentioned as strengths of the CEO. “The fact that these were in the bottom three means that there is a real problem,” says Mr. Miles. “Each of these should be at least in the top five of a CEO’s strengths, because they are critical components to excelling in the CEO role. Decision-making, which directors overwhelmingly stated was their CEO’s greatest strength, is important, because you don’t want a CEO with ‘analysis paralysis.’ But ‘planning skills’ – which also made the top three in CEO strengths – are really what CEOs should be delegating, not focusing on themselves.” Little weight given to customer service, workplace safety, and innovation in CEO evaluations. While accounting, operating, and stock price metrics are assigned high value by boards, other factors generally hold little worth when boards rate their CEOs. “Seeming important things such as product service and quality, customer service, workplace safety, and even innovation are used in less than 5% of evaluations,” says Professor Larcker. CEOs and boards believe the evaluation process is balanced. Eighty-three percent (83%) of directors and 64% of CEOs believe that the CEO evaluation process is a balanced approach between financial performance and nonfinancial metrics, such as strategy development and employee and customer satisfaction. “Unfortunately, the truth of the matter is that the CEO evaluation process is not that balanced,” says Professor Larcker. “Amid growing calls for integrating reporting and corporate social responsibility, companies are still behind the times when it comes to developing rel

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    Boards rate CEOs high in decision-making, low in talent development. A new study conducted by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford University’s Rock Center for Corporate Governance, and The Miles Group reveals that boardrooms are giving poor grades to CEOs for their mentoring skills and board engagement – but still prioritize financial performance above all else. STANFORD, Calif. —More than 160 CEOs and directors of North American public and private companies were polled in the 2013 Survey on CEO Performance Evaluations, which studied how CEOs themselves and directors rate both chief executive performance as well as the performance evaluation process. When directors were asked to rank the top weaknesses of their CEO, “mentoring skills” and “board engagement” tied for the #1 spot. “This signals that directors are clearly concerned about their CEO’s ability to mentor top talent,” says Stephen Miles, founder and chief executive of The Miles Group. “Focusing on drivers such as developing the next generation of leadership is essential to planning beyond the next quarter and avoiding the short-term thinking that inhibits growth.” However, when actually evaluating the performance of a CEO, companies place very little weight on many nonfinancial performance measures. The survey found that only a 5% weighting was given to a CEO’s performance in the areas of talent development and succession planning, and only a 2.5% weighting was given to employee satisfaction/turnover. “While boards clearly see mentoring and talent development as weaknesses in their CEO, the problem is that they are not evaluating CEOs against those measures in a meaningful way,” says David F. Larcker, James Irvin Miller Professor of Accounting and co-director of the Center for Leadership Development and Research at the Stanford Graduate School of Business. “Financial performance still dominates the grading metrics, so if boards really want CEOs to focus on other things as well, they will have to change the way they evaluate those in the top seat.” Additional key findings of the 2013 Survey on CEO Performance Evaluations include: Directors rate CEOs high in “decision making” but low in people management areas. In addition to mentoring and developing talent, “listening” and “conflict management” were the skills least mentioned as strengths of the CEO. “The fact that these were in the bottom three means that there is a real problem,” says Mr. Miles. “Each of these should be at least in the top five of a CEO’s strengths, because they are critical components to excelling in the CEO role. Decision-making, which directors overwhelmingly stated was their CEO’s greatest strength, is important, because you don’t want a CEO with ‘analysis paralysis.’ But ‘planning skills’ – which also made the top three in CEO strengths – are really what CEOs should be delegating, not focusing on themselves.” Little weight given to customer service, workplace safety, and innovation in CEO evaluations. While accounting, operating, and stock price metrics are assigned high value by boards, other factors generally hold little worth when boards rate their CEOs. “Seeming important things such as product service and quality, customer service, workplace safety, and even innovation are used in less than 5% of evaluations,” says Professor Larcker. CEOs and boards believe the evaluation process is balanced. Eighty-three percent (83%) of directors and 64% of CEOs believe that the CEO evaluation process is a balanced approach between financial performance and nonfinancial metrics, such as strategy development and employee and customer satisfaction. “Unfortunately, the truth of the matter is that the CEO evaluation process is not that balanced,” says Professor Larcker. “Amid growing calls for integrating reporting and corporate social responsibility, companies are still behind the times when it comes to developing rel

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    2013 CEO Performance Evaluation Survey Results Form Stanford University and The Miles Group

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    Stanford GSB Corporate Governance Research Initiative
    Boards rate CEOs high in decision-making, low in talent development. A new study conducted by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford University’s Rock Center for Corporate Governance, and The Miles Group reveals that boardrooms are giving poor grades to CEOs for their mentoring skills and board engagement – but still prioritize financial performance above all else. STANFORD, Calif. —More than 160 CEOs and directors of North American public and private companies were polled in the 2013 Survey on CEO Performance Evaluations, which studied how CEOs themselves and directors rate both chief executive performance as well as the performance evaluation process. When directors were asked to rank the top weaknesses of their CEO, “mentoring skills” and “board engagement” tied for the #1 spot. “This signals that directors are clearly concerned about their CEO’s ability to mentor top talent,” says Stephen Miles, founder and chief executive of The Miles Group. “Focusing on drivers such as developing the next generation of leadership is essential to planning beyond the next quarter and avoiding the short-term thinking that inhibits growth.” However, when actually evaluating the performance of a CEO, companies place very little weight on many nonfinancial performance measures. The survey found that only a 5% weighting was given to a CEO’s performance in the areas of talent development and succession planning, and only a 2.5% weighting was given to employee satisfaction/turnover. “While boards clearly see mentoring and talent development as weaknesses in their CEO, the problem is that they are not evaluating CEOs against those measures in a meaningful way,” says David F. Larcker, James Irvin Miller Professor of Accounting and co-director of the Center for Leadership Development and Research at the Stanford Graduate School of Business. “Financial performance still dominates the grading metrics, so if boards really want CEOs to focus on other things as well, they will have to change the way they evaluate those in the top seat.” Additional key findings of the 2013 Survey on CEO Performance Evaluations include: Directors rate CEOs high in “decision making” but low in people management areas. In addition to mentoring and developing talent, “listening” and “conflict management” were the skills least mentioned as strengths of the CEO. “The fact that these were in the bottom three means that there is a real problem,” says Mr. Miles. “Each of these should be at least in the top five of a CEO’s strengths, because they are critical components to excelling in the CEO role. Decision-making, which directors overwhelmingly stated was their CEO’s greatest strength, is important, because you don’t want a CEO with ‘analysis paralysis.’ But ‘planning skills’ – which also made the top three in CEO strengths – are really what CEOs should be delegating, not focusing on themselves.” Little weight given to customer service, workplace safety, and innovation in CEO evaluations. While accounting, operating, and stock price metrics are assigned high value by boards, other factors generally hold little worth when boards rate their CEOs. “Seeming important things such as product service and quality, customer service, workplace safety, and even innovation are used in less than 5% of evaluations,” says Professor Larcker. CEOs and boards believe the evaluation process is balanced. Eighty-three percent (83%) of directors and 64% of CEOs believe that the CEO evaluation process is a balanced approach between financial performance and nonfinancial metrics, such as strategy development and employee and customer satisfaction. “Unfortunately, the truth of the matter is that the CEO evaluation process is not that balanced,” says Professor Larcker. “Amid growing calls for integrating reporting and corporate social responsibility, companies are still behind the times when it comes to developing rel

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    2013 CEO PERFORMANCE E VALUATION SURVE Y

    TA B L E O F C O N T E N T S

    Executive Summary: Key Results

    Survey Questions

    3 12 14 15 16

    Descriptive Statistics

    About the Sponsors

    About the Authors

    Contact Information

    2013 Survey on CEO Performance Evaluations

    Executive Summary: Key Results

    In Grading CEO Performance, Financials Still Dominate Boards rate CEOs high in decision-making, low in talent development
    A new study conducted by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford Universitys Rock Center for Corporate Governance, and The Miles Group reveals that boardrooms are giving poor grades to CEOs for their mentoring skills and board engagement but still prioritize financial performance above all else. More than 160 CEOs and directors of North American public and private companies were polled in the 2013 Survey on CEO Performance Evaluations, which studied how CEOs themselves and directors rate both chief executive performance as well as the performance evaluation process. When directors were asked to rank the top weaknesses of their CEO, mentoring skills and board engagement tied for the #1 spot. This signals that directors are clearly concerned about their CEOs ability to mentor top talent, says Stephen Miles, founder and chief executive of The Miles Group. Focusing on drivers such as developing the next generation of leadership is essential to planning beyond the next quarter and avoiding the short-term thinking that inhibits growth. However, when actually evaluating the performance of a CEO, companies place very little weight on many nonfinancial performance measures. The survey found that only a 5% weighting was given to a CEOs performance in the areas of talent development and succession planning, and only a 2.5% weighting was given to employee satisfaction/turnover. While boards clearly see mentoring and talent development as weaknesses in their CEO, the problem is that they are not evaluating CEOs against those measures in a meaningful way, says David F. Larcker, James Irvin Miller Professor of Accounting and co-director of the Center for Leadership Development and Research. Financial performance still dominates the grading metrics, so if boards really want CEOs to focus on other things as well, they will have to change the way they evaluate those in the top seat. Additional key findings of the 2013 Survey on CEO Performance Evaluations include: Directors rate CEOs high in decision making but low in people management areas. In addition to mentoring and developing talent, listening and conflict management were the skills least mentioned as strengths of the CEO. The fact that these were in the bottom three means that there is a real problem, says Mr. Miles. Each of these should be at least in the top five of a CEOs strengths, because they are critical components to excelling in the CEO role. Decision-making, which directors overwhelmingly stated was their CEOs greatest strength, is important, because you dont want a CEO with analysis paralysis. But planning skills which also made the top three in CEO strengths are really what CEOs should be delegating, not focusing on themselves. Little weight given to customer service, workplace safety, and innovation in CEO evaluations. While accounting, operating, and stock price metrics are assigned high value by boards, other factors generally hold little worth when boards rate their CEOs. Seeming important things such as product service and quality, customer service, workplace safety, and even innovation are used in less than 5% of evaluations, says Professor Larcker. CEOs and boards believe the evaluation process is balanced. Eighty-three percent (83%) of directors and 64% of CEOs believe that the CEO evaluation process is a balanced approach between financial performance and nonfinancial metrics, such as strategy development and employee and customer satisfaction. Unfortunately, the truth of the matter is that the CEO evaluation process is not that balanced, says Professor Larcker. Amid growing calls for integrating reporting and corporate social responsibility, companies are still behind the times when it comes to developing reliable and valid measures of nonfinancial performance metrics. CEOs failing to engage boards. Board relationships and engagement tied with mentoring and development skills as the #1 weakness in CEOs. This serious disconnect between management and the boardroom has multiple negative ramifications, says Mr. Miles. Board engagement is absolutely vital to the function of the CEO and to the health of a company. How can the board understand whats going on in the company if the CEO is not engaging?

    2013 Survey on CEO Performance Evaluations

    Directors lukewarm when comparing their CEOs against peer group. Forty-one percent (41%) of directors believe that their CEO is in the top 20% of his or her peers, while 17% believe that their CEO is below the 60th percentile. For almost half of directors to say that their CEO is just in the top 20 percent is not exactly a ringing endorsement, says Mr. Miles. The board hires the CEO they should believe that they have the individual in that job who is absolutely the best, or can quickly become the best. The fact that nearly 20% of directors feel that their CEO ranks below the top 40% means that a lot of CEOs should be preparing their resumes. Disconnect in how CEOs and directors regard the evaluation process. Sixty-three percent (63%) of CEOs versus 83% of directors believe that the CEO performance process is effective in their companies. Nearly a third of CEOs dont think that their evaluation is effective, says Professor Larcker. The success of an organization is dependent on open and honest dialogue between the CEO and the board. It is difficult to see how that can happen without a rigorous evaluation process. 10% of companies say they have never evaluated their CEO. Given their fiduciary duties, its strange that any company would not evaluate its CEO, says Professor Larcker. The CEO performance evaluation should feed all sorts of board decisions, including goal setting, corporate performance measurement, compensation structure, and succession planning. Without an evaluation of the CEO, how can the board claim to be monitoring a corporation?

    CEOs highly likely to agree with the results of their performance evaluation. Only 12% of CEOs believe that they are rated too high or too low overall, and almost half (49%) do not disagree with any area of their performance evaluation. Shareholders have to wonder at the objectivity of the evaluation process, says Professor Larcker. Its hard to believe that boards are pushing CEOs on their evaluations if they pretty much agree with their evaluation. Only two-thirds of CEOs believe that their own performance evaluation is a meaningful exercise. Even though a high percentage of directors and CEOs think that the CEO evaluation process is meaningful, this number really should be 100%, says Mr. Miles. Every board has the power to meaningfully evaluate the CEO whether doing it themselves, or bringing in someone to do it, or some combination thereof. Directors unlenient on violations of ethics but more forgiving of CEOs with legal or regulatory violations that occur on their watch. A significant minority of directors 27 percent say that unexpected litigation against the company would have no impact on their CEOs performance evaluation, says Professor Larcker, while approximately a quarter of directors (24%) say that unexpected regulatory problems would also have no impact. By contrast, all directors (100%) say that their CEOs performance evaluation would be negatively impacted by ethical violations or a lack of transparency with the board.

    2013 Survey on CEO Performance Evaluations

    Survey Questions

    1. How often does the board of directors formally evaluate the performance of your CEO?
    CEOs and Directors Combined. Percentage

    3. Do you engage an outside consultant or advisor to supplement the review process?


    CEOs and Directors Combined. Percentage

    Have never been evaluated

    9.9

    Yes 21.4

    Less frequently than one time a year

    6.8

    No 78.6

    One time per year

    75.3

    4. How satisfied are you with the services provided by this outside consultant or advisor?
    CEOs and Directors Combined. Percentage

    Two times per year

    4.3

    Four times per year

    3.1

    Very satisfied

    38.2

    More frequently than four times per year

    0.6

    Moderately satisfied

    58.9

    2. Who is primarily responsible for leading the process for the formal evaluation of the CEO performance?
    CEOs and Directors Combined. Percentage

    Neither satisfied nor dissatisfied

    Moderately dissatisfied

    Chairman (if different than the CEO)

    36.1

    Very dissatisfied

    2.9

    Lead independent director

    13.9

    Head of the nominating and governance committee

    8.9

    Head of the compensation committee

    15.2

    Entire board of directors as a group

    15.8

    Outside consultant or advisor

    2.5

    Other 7.6

    2013 Survey on CEO Performance Evaluations

    5. Who establishes the criteria or metrics that your company uses to assess the performance of your CEO?
    CEOs and Directors Combined. Percentage

    6. On a scale of 0 to 100, what weighting do you place on this metric?


    Assign a number from 0 to 100 for each selected metric; your total should add to 100. CEOs and Directors Combined. Mean

    Chairman

    22.2

    CEO (if you are not the CEO)

    4.9

    Accounting, operating or stock price performance

    41.1

    Lead director

    3.1

    Strategy development

    17.0

    Board of directors as a group

    71.0

    Customer service / satisfaction

    4.2

    Outside consultant or advisor

    6.2

    Employee satisfaction / turnover

    2.5

    Human resources

    3.7

    Product or service quality

    4.4

    General counsel

    0.6

    Workplace safety

    1.5

    Major Investors

    3.7

    Innovation 3.7

    I dont know

    1.9

    Leadership skills

    14.6

    Other

    11.7

    Succession planning / internal talent development

    4.9

    Other

    6.1

    2013 Survey on CEO Performance Evaluations

    7. What impact would each of the following have on your overall evaluation?
    Assign each according to a scale of: very negative impact, moderately negative impact, no impact. CEOs Directors Major negative PR event Percentage 36.6 16.0 Very negative impact 53.5 52.1 62.1 Very negative impact 9.9 43.7 33.8 Moderately negative impact 4.2 4.1 No impact 6.7 No impact Moderately negative impact 77.3

    Unexpected financial restatement Percentage

    Unexpected regulatory problem* Percentage 23.9 21.3 Very negative impact 42.3

    Unexpected litigation Percentage 21.1 12.0 Very negative impact 52.1 61.3 Moderately negative impact 26.8 26.7 No impact

    54.7 Moderately negative impact 33.8 24.0 No impact

    * Such as with the Environmental Protection Agency/OSHA/Food and Drug Administration, etc.

    Unexpected resignation of senior executive team members Percentage Missed forecast of revenues or earnings Percentage 23.9 32.0 Very negative impact 69.1 58.7 Moderately negative impact 7.0 9.3 No impact No impact Moderately negative impact 38.0 26.7 11.3 10.7 Very negative impact 50.7 62.6

    2013 Survey on CEO Performance Evaluations

    Negative results from workplace engagement survey Percentage 18.3 8.0 Very negative impact

    8. Which individuals are interviewed as part of the review process?


    Select all that apply. CEOs and Directors Combined. Percentage

    CEO 53.5 76.0 Moderately negative impact 28.2 16.0 No impact Executives two levels below the CEO Event in which CEO violates ethical principles or personal conduct standards Percentage 91.6 98.7 Very negative impact 4.2 1.3 Moderately negative impact 4.2 0 No impact Board members

    48.2

    74.1

    Executives one level below the CEO

    40.7

    6.8

    Executives three or more levels below the CEO

    2.5

    Customers 6.8

    Suppliers 1.2

    Analysts 2.5

    I dont know

    31.1

    Other 7.4

    CEO lacks transparency with the board of directors Directors Only. Percentage

    9. How amenable is your CEO to the process of being reviewed?


    Directors Only. Percentage

    Very negative impact Moderately negative impact

    86.3 Very cooperative 13.7 Moderately cooperative 20.0 64.0

    Neither cooperative nor uncooperative

    8.0

    Moderately uncooperative

    8.0

    2013 Survey on CEO Performance Evaluations

    10. Does the CEO do a self-evaluation as part of the formal review?


    Directors Only. Percentage

    13. Who reviews the evaluation with the CEO?


    Select all that apply. Directors Only. Percentage

    Chairman of the board (if different than the CEO) Yes 74.7 Lead independent director No 25.3

    51.2

    22.0

    11. When is the information in the evaluation shared with the CEO?
    Directors Only.

    Head of the nominating and governance committee

    9.8

    Head of the compensation committee

    26.8

    Percentage Another outside director Both in the middle and at the end of the process 20.0

    2.4

    Entire board of directors as a group

    24.4

    Only at the end of the process

    80.0

    Outside consultant or advisor

    2.4

    12. How is this information shared?


    Directors Only. Percentage

    Other 4.9

    Verbally 44.0

    14. Do you agree with the following statement: The CEO evaluation process [My evaluation process] is a meaningful exercise?
    CEOs Directors Percentage 25.0 60.0 Strongly agree 39.8 28.0 Agree 19.1 6.7 Neither agree nor disagree 13.2 5.3 Disagree 2.9 0 Strongly disagree

    In writing

    2.7

    Both verbally and in writing

    53.3

    2013 Survey on CEO Performance Evaluations

    15. Do you agree with the following statement: The CEO evaluation process is a balanced approach that focuses on financial (stock price and accounting) performance and non-financial (strategy development, leadership, employee and customer satisfaction)
    CEOs Directors Percentage 18.6 48.0 Strongly agree 45.6 34.7 Agree 24.3 12.0 Neither agree nor disagree 8.6 5.3 Disagree 2.9 0 Strongly disagree

    17. Do you agree with the following statement: There is no way that the board can really understand my performance?
    CEOs Only. Percentage

    Strongly agree

    5.8

    Agree 11.6

    Neither agree nor disagree

    14.5

    Disagree 50.7

    Strongly disagree

    17.4

    16. How would you rate your personal understanding of the strengths and weaknesses of your CEO?
    Directors Only. Percentage

    Excellent understanding

    78.7

    Moderate understanding

    20.0

    Very little understanding

    1.3

    2013 Survey on CEO Performance Evaluations

    18. What are the biggest strengths of your current CEO?


    Select all that apply. Directors Only. Percentage

    19. What are the biggest weaknesses for your current CEO?
    Select all that apply. Directors Only. Percentage

    Decision making skills

    69.5

    Board relationship and engagement

    24.4

    Board relationship and engagement

    47.6

    Mentoring skills / developing internal talent

    24.4

    Planning skills

    46.3

    Sharing leadership / delegation skills

    22

    Team building skills

    43.9

    Listening skills

    20.7

    Communication skills

    41.5

    Conflict management skills

    18.3

    Motivational skills

    39

    Planning skills

    14.6

    Sharing leadership / delegation skills

    39

    Team building skills

    13.4

    Persuasion skills

    35.4

    Interpersonal skills

    13.4

    Interpersonal skills

    32.9

    Compassion / empathy

    12.2

    Compassion / empathy

    26.8

    Decision making skills

    11

    Mentoring skills / developing internal talent

    23.2

    Communication skills

    11

    Listening skills

    23.2

    Persuasion skills

    11

    Conflict management skills

    19.5

    Motivational skills

    7.3

    Other 12.2

    Other 11

    I dont know

    2.4

    I dont know

    3.7

    2013 Survey on CEO Performance Evaluations

    10

    20. Which of the following areas of your evaluation do not reflect your personal opinion of your performance.
    Select all that apply. CEOs Only. Percentage

    21. Do you agree with the following statement: The best board evaluator is someone that either is a CEO or has recently been a CEO
    CEOs Only. Percentage

    None of these

    48.8 Strongly agree 14.3

    Decision making skills

    15 Agree 40.0

    Sharing leadership / delegation skills

    11.3 Neither agree nor disagree 21.4

    Listening skills

    11.3 Disagree 18.6

    Conflict management skills

    11.3 Strongly disagree 5.7

    Compassion / empathy

    11.3

    22. Do you agree with the following statement: I am generally rated too high or too low on my performance evaluation
    CEOs Only. Percentage

    Planning skills

    10

    Mentoring skills / developing internal talent

    10 Strongly agree 2.9

    Communication skills

    10 Agree 8.7

    Team building skills

    8.8 Neither agree nor disagree 63.8

    Persuasion skills

    7.5 Disagree 20.3

    Motivational skills

    6.3 Strongly disagree 4.3

    Interpersonal skills

    6.3

    Other 5

    2013 Survey on CEO Performance Evaluations

    11

    23. How would you evaluate the effectiveness of the CEO performance [your performance] evaluation process?
    CEOs Directors Percentage 40.0 15.5 Very effective 42.6 47.9 Somewhat effective 6.7 16.9 Neither effective or ineffective 8.0 12.7 Somewhat ineffective 2.7 7.0 Very ineffective

    24. How would you rank your present CEO relative to his or her peers [your performance relative to peers] in your industry?
    CEOs Directors Percentage 9.9 6.7 The absolute best 56.3 41.2 Top 20 22.5 34.7 21-40 8.5 10.7 41-60 1.4 4.0 61-80 1.4 2.7 Bottom 20

    2013 Survey on CEO Performance Evaluations

    12

    Descriptive Statistics

    Methodology: Survey conducted in February and March 2013. Respondents were asked to consider each question from the standpoint of the corporation they are most closely associated with. Respondents were screened to include only CEOs and nonexecutive directors. CEOs include a small number of executives with joint president and/or COO titles. Note: Percentages may be rounded to achieve 100.0 percent Demographic Data: Total Population Directors and CEOs What is your primary professional background?
    Percentage

    What is the revenue for the company that you are most closely identified with?
    Percentage

    <$500 million

    50.0

    $500 million to $1 billion

    11.0

    $1 billion to $5 billion

    16.2

    $5 billion to 10 billion General corporate executive background 46.8 $10 billion to $20 billion Academia / Government service 3.6 >$20 billion Accounting or auditing 2.2

    8.8

    4.4

    9.6

    Gender
    Commercial banking 1.5 Percentage

    Consulting 3.6

    Male 78.7

    Engineering 3.6

    Female 21.3

    Finance 15.4

    Age
    Percentage

    Investment management

    5.8 31 to 40 3.6

    Law 3.6 41 to 50 Technology 5.1 51 to 60 Other 8.8 61 to 70 27.7 42.4 19.7

    >70 6.6

    2013 Survey on CEO Performance Evaluations

    13

    What is the industrial sector for the company that you are most closely identified with?
    Percentage

    Respondent: Director or CEO


    Percentage

    CEO 49.4 Business Services 8.1 Outside Director Chemicals 1.5 50.6

    Commercial Banking

    2.9

    Commodities 0.7

    Communications 5.1

    Computer Services

    13.2

    Electronics 12.5

    Energy 7.4

    Financial Services (other than commercial banking)

    8.8

    Food and Tobacco

    7.4

    Industrial and Transportation Equipment

    3.7

    Insurance 2.9

    Other Manufacturing

    7.4

    Other Services

    11.8

    Retail Trade

    2.2

    Transportation 0.7

    Utilities 1.5

    Wholesale Trade

    2.2

    2013 Survey on CEO Performance Evaluations

    14

    About the Sponsors

    About Stanford Universitys Rock Center For Corporate Governance


    The Arthur and Toni Rembe Rock Center for Corporate Governance is a joint initiative of Stanford Law School and the Stanford Graduate School of Business, created with the idea that advances in the understanding and practice of corporate governance are most likely to occur in a cross-disciplinary environment where leading academics, business leaders, policy makers, practitioners and regulators can meet and work together. The Rock Centers goal is to conduct research and tap this wealth of expertise to advance the practice and study of corporate governance. The Rock Center works closely with the Center for Leadership Development and Research.

    About The Miles Group


    The Miles Group develops talent strategies for organizations, teams, and individuals focusing on high-performance, world-class leadership. Headquartered in New York, The Miles Group advises top global corporations through CEO succession, executive transitions, board assessment and training, and talent development. The firms coaching and advisory services enable leaders to raise the bar on their own performance, as well as create an environment for success throughout the organization.

    About Stanford Graduate School of Business, Center For Leadership Development and Research
    The Center for Leadership Development and Research mission is to advance the intellectual understanding of corporate governance and executive leadership by engaging academics, regulators, practitioners and professionals, bridging the gap between theory and practice. We aim to strengthen governance and leadership as independent areas of teaching and scholarship in business schools worldwide and to generate new insights into fundamental big issues.

    2013 Survey on CEO Performance Evaluations

    15

    About the Authors

    David F. Larcker
    David F. Larcker is James Irvin Miller Professor of Accounting at the Graduate School of Business of Stanford University and professor at the Stanford Law School (courtesy). He was previously the Ernst & Young Professor of Accounting at the Wharton School of the University of Pennsylvania and Professor of accounting and information systems at the J. L. Kellogg Graduate School of Management at Northwestern University. He received bachelors and masters degrees in engineering from the University of Missouri Rolla and a doctorate in business from the University of Kansas. David is senior faculty at the Stanford Rock Center for Corporate Governance and Morgan Stanley Director of the Center for Leadership Development and Research. He is also a trustee of the Wells Fargo Advantage Funds. David has published many articles and book chapters on topics such as executive compensation, corporate governance, measurement of intangible assets, and strategic business models. He received the Notable Contribution to Management Accounting Literature Award in 2001. He is the coauthor of Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences. In 2012, he was named to the NACD Directorship 100 as one of the most influential people in the boardroom and corporate governance community. He has served as a consultant to numerous organizations on corporate governance and design of executive compensation contracts. Email: dlarcker@stanford.edu

    Stephen Miles
    Stephen Miles is the founder and chief executive officer of The Miles Group. Previously, he was a vice chairman at Heidrick & Struggles and ran Leadership Advisory Services. With more than 15 years of experience in assessment, executive coaching, top-level succession planning, organizational effectiveness and strategy consulting, Stephen specializes in CEO succession and has partnered with numerous boards of global Fortune 500 companies to ensure that a successful leadership selection and transition occurs. He has also led many chairman successions and board effectiveness reviews, partnering with boards of directors to help them with their overall effectiveness, committee effectiveness and individual director effectiveness. Stephen is a recognized expert on the role of the chief operating officer, and has consulted numerous companies on the establishment and the effectiveness of the position and supporting the transition from COO to effective CEO. He is a coach to many CEOs and COOs around the world, and his clients cut across all industry sectors. Stephen and his CEO advisory services were profiled in the Bloomberg BusinessWeek article The Rising Star of CEO Consulting.Prior to The Miles Group and Heidrick & Struggles, Stephen held various positions at Andersen Consulting. Stephen is author and co-editor of the best-selling business book Leaders Talk Leadership. He also co-authored Riding Shotgun: The Role of the Chief Operating Officer, as well as the cover article in the May 2006 issue of Harvard Business Review on the same topic. Email: smiles@miles-group.com

    Brian Tayan
    Brian Tayan is a member of the Center for Leadership Development and Research at the Stanford Graduate School of Business. He has written broadly on the subject of corporate governance, including the boards of directors, succession planning, compensation, financial accounting, and shareholder relations. Tayan is co-author of Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences.

    Michelle E. Gutman
    Michelle E. Gutman, associate researcher, is a member of the Center for Leadership Development and Research at the Stanford Graduate School of Business, and at the Rock Center for Corporate Governance at Stanford University. She is a founder and advisor to Stanford Women on Boards, an initiative to increase the representation of outstanding Stanford-affiliated women on fiduciary boards of directors. Follow Stanford twitter feeds: @StanfordCorpGov & @StnfrdLeadrship for research news.

    2013 Survey on CEO Performance Evaluations

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    Contact Information

    For more information on this report, please contact:


    Katie Pandes, Stanford Graduate School of Business Phone: 650-724-9152 Email: pandes _ katie@gsb.stanford.edu

    Rock Center for Corporate Governance at Stanford:


    http://rockcenter.law.stanford.edu/

    The Miles Group: Stanford GSB Center for Leadership Development and Research:
    http://www.gsb.stanford.edu/cldr/ http://miles-group.com/

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