The top five issues on the agendas of corporate boards this quarter center on the impact of hurricanes Katrina and Rita, the increasing cost of fuel, rising interest rates, employment needs, and board recruitment, according to a report by Christian & Timbers.
The executive search firm, which based its report on interviews with hundreds of corporate board directors during the last month, observed that boards are reviewing the adequacy of their plans for hiring and corporate borrowing as well as disaster recovery.
Prompted by the recent Gulf Coast storms, ballooning fuel costs, and interest rates that continue to climb, “boards are asking tough questions of corporate officers,” said Christian & Timbers vice chairman Steve Mader, in a statement. “They sense that we’re headed for a slower economy and want to know whether the corporate officers are prepared.”
In response to the hurricanes and their effects on the economy, survey respondents said they will discuss the impact on this year’s financials and re-examine their hiring plans for next year. And although business continuity has been a perennial issue since the September 11 attacks, directors said they intend to focus on whether their plans could be implemented quickly in response to natural or man-made disasters.
Also on the list are cost-cutting measures to deal with the unexpectedly rapid climb in the price of fuel. Boards plan to consider passing on the increased costs to customers, but many directors are concerned about the potential for losing business as a result.
Yet another concern is the effect of the Federal Reserve’s “measured” interest-rate increases on the cost of capital. As boards address this issue, they will review their liabilities and plans for corporate borrowing.
Boards are also pushing toward global diversity by planning to recruit board candidates with global expertise, especially those with expertise in China, according to the report.