The Challenge of Non-Executive Leadership in Poland and Central Europe

1. AmCham CEO Forum The Challenge of Non-Executive Leadership in Poland and Central Europe

2. Board Practice • The Challenge of Non-Executive Leadership in Poland and Central Europe • Investor Expectations vis-à-vis Non-Executive Directors • CEO Expectations from Non-Executive Directors • Bridging the Gap of Different Governance Models • The Role of Non-Executives in Leadership KEY QUESTIONS

3. Board Practice • CEO’s of WSE companies in Poland would like more support from their boards in the areas of: • Business Strategy & Competition / Market Analysis • Organization& Structure of Business • External Crisis Support • Stakeholder Relationships • Source: Ray & Berndtson 2006 CEO Expectations

4. Board Practice • to direct the company both as to strategy and structure; • to establish from time to time a strategy for the company, including a determination of the businesses that the company should be in and those that it should not be in; • to monitor executive management and ensure that they implement the company’s strategy and that they are compensated appropriately; • to ensure that the company has adequate systems of internal controls both operational and financial; • to select the chief executive, ensure succession and give guidance on the appointment of senior executives; • to provide information on the activities of the company to those entitled to it; • to ensure that the company operates ethically; • to provide for succession of senior management; • source: Millstein Report The Role of the Board

5. Board Practice Percentage of WSE CEO’s who support increased number of Women on their Supervisory Board: CEOs WIG 20 (2004) : 16% CEOs WIG 20 (2006) : 80% CEOs MIDWIG: 0% Source Ray & Berndtson 2006 CEO & Diversity

6. Board Practice Board’s have to go beyond corporate governance and strategic agendas. They must also identify the more important issue of whether or not the board is able to have the conversations it needs in different areas. Havoc is wreaked by boards' inability or unwillingness to address key issues. (from Director Magazine) The elements that make a powerful boardroom are that it is a friendly and cordial place to be, with a great team spirit between the Executives and the Non-Executives and additionally between the Non-Executives themselves. The best is a company where meetings and debates can take place both inside and outside the boardroom. (source Bird & Co Research) The Board Working Together

7. Board Practice There is a tremendous variety in tone, culture and style of decision making among boards. Boards must overcome the 10%-100% paradox: How can an executive spending 10% of his time add value to an executive spending 100% of his/her time on a business issue? How does he/she communicate it? Boards – especially Supervisory Boards in Poland – must be responsive to the business needs of their CEOs. Boards should spend more time focused on future oriented issues and less on past performance; In terms of past performance the role of the board should be oriented to evaluation of the CEO and appropriate compensation. CONCLUDING THOUGHTS