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Latest NACD Board Confidence Index Shows Increased Director Assurance

Stocks in this article: HSII

WASHINGTON, April 7, 2011 /PRNewswire/ -- The National Association of Corporate Directors (NACD) reported today that for the second straight quarter, U.S. corporate directors' confidence continued to rise, according to the NACD Board Confidence Index (BCI), a leading indicator of the health of the economy as viewed through the corporate boardroom lens. The Board Confidence Index revealed overall board confidence increased to 64.9 in Q1 2011 from 64.4 in Q4 2010.

Despite this growing confidence, directors' optimism in the progress made over the past year and past quarter was tempered by a slight decline in expectations of future economic conditions. Overall, expectations for the next quarter dropped from 60 in Q4 2010 to 57 this quarter, while projections for the next year dropped from 71 last quarter to 69. However, companies with revenues of more than $10 billion were more confident across the board about both conditions compared to a year ago and looking ahead to the next year.

"NACD's Board Confidence Index gives a voice to directors about the state of the economy and their own companies' plans," said Ken Daly, president and CEO of NACD. "Since directors play such an important and integral role in managing and directing companies, their insights are a strong indicator of overall trends in corporate America."

NACD introduced its quarterly Board Confidence Index in October 2010 to measure corporate directors' level of confidence in the overall economy as well as provide a board perspective on the state of specific industry sectors. Ratings above 50 represent positive sentiments about the state of the economy, based on average scores between 0 and 100 assigned by directors.

The NACD BCI for the first quarter of 2011, compiled each quarter in collaboration with executive compensation consulting firm Pearl Meyer & Partners and leadership advisory and executive search firm Heidrick & Struggles, reflects the views of 176 leading corporate directors about the state of the economy and their own organizations' plans for the future. The data was broken down by sector and by company size based on revenue.

"Directors continue to be guardedly optimistic about the future, a trend that began last winter," said Theodore L. Dysart, vice chairman at Heidrick & Struggles. "While directors no longer show the hesitancy seen the last quarter of 2010, the current business conditions have not yet improved to a point that encourages outright enthusiasm." 

When asked to compare the current state of the economy compared to a year ago, the directors registered a confidence index of 73 in Q1 2011, up from a level of 69 in Q4 2010. Looking at changes in conditions from the previous quarter, as opposed to the previous year, directors' confidence also improved, registering a 61 in Q1 2011 versus 59 in the previous quarter. In general, the financial, industrials, and information technology sectors were more confident about their industries in relation to the overall market.

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