annual report 2005 Collective Wisdom of Executives Worldwide annual essay Douglass North on Leadership in an Uncertain World “A bend in the road is not the end of the road, unless you fail to make the turn. For business leaders, the key is to identify the bend in the road very early, to prepare changes in strategy. The Conference Board provides a world-class forum for business leaders to discuss new trends and burning issues. It helps evolve practices and standards that enable the smooth functioning of mar- kets. Most importantly, The Conference Board’s work enables us to share and understand best practices across industries, countries and corporations.” Nandan Nilekani CEO, President and Managing Director of Infosys Vice Chairman of The Conference Board 2 the conference board 2005 annual report Leaders Working Together to Strengthen Performance and Values To grow and thrive in an ever-changing business climate, leaders need great ideas they can use today. We believe that ideas that work come from building the right relationships with the right people. Leaders need a place where they can hone their ideas with trusted peers who offer experienced, practical advice — and expect the same in return. Where a diverse mix of perspectives draws out the most useful problem-solving insights from the most unexpected places. Where they participate in a global conversation with one ground rule: Challenge all assumptions in favor of what actually works. The Conference Board brings respected economic and management experts together with experienced leaders in business, government and academia to create an unrivaled global community of leaders who bring their collective wisdom to bear on today’s most pressing business, economic and social concerns. Participation in our forums and access to our research provides leaders with the ideas and tools they need to break from ordinary thinking, cultivate innovation and address critical issues in ways that help strengthen the performance and shape the values of their organizations and the world around them. Paul Volcker, former Chairman of the Board of Governors of the Federal Reserve System and Chairman of the independent United Nations inquiry into the Iraqi Oil for Food Program, keynotes The Conference Board’s Annual Meeting this November. As a co-chair of The Conference Board Global Advisory Council (with Kees Storm, Member of the Supervisory Board, AEGON n.v.), he continues to be a major force in the work of The Conference Board. The council, which advises and supports The Conference Board’s economic research agenda, is composed of global business leaders “StraightTalk ®*is a good who are committed to advancing the way to keep up with what’s understanding of the global business happening to the economy environment. and an intelligent discussion of what’s in store—when you don’t have the whole Federal Reserve staff to do it for you.” Paul Volcker CHAIRMAN’S LETTER 05 PRESIDENT’S LETTER 06 BUSINESS REVIEW 08 PRODUCTS & SERVICES 21 ANNUAL ESSAY 26 FINANCIALS 30 GLOBAL COUNSELLORS 32 *Monthly economic report on global trends by Gail Fosler, Chief Economist TRUSTEES 34 of The Conference Board Chairman’s Letter congratulate our loyal members and the Niall FitzGerald kbe talented staff of The Conference Board for Chairman, The Conference Board Chairman, Reuters Group plc Ianother successful year. In the most impor- tant ways, the Board set records — in service to our members; in contribution to the public interest; and in market performance. The Conference Board is well positioned in the increasingly competitive marketplace for best practice research, economic insight, the continu- gratitude to my fellow Trustees for their insight ing education of executives, and shaping the and dedication; to The Conference Board staff values that guide business leaders worldwide. for their hard work and ingenuity; and to our Two particular future challenges are extending thousands of member executives around the international reach and sharpening our branding. world for their long-standing generosity and Let me take this opportunity to thank support. Much has been achieved in recent years, two retiring Trustees, Sharon Patrick and John which should give confidence to set the aspira- Hunkin, for their service and contribution. tions even higher. The Conference Board continues to benefit from the tradition of distinguished and active Trustees, Respectfully submitted, drawn from the ranks of business leaders from Asia, Europe, and North America. This is at the heart of what makes us unique. Finally, I am delighted that my friend and Niall FitzGerald kbe colleague, Sam DiPiazza, has agreed to succeed Chairman, The Conference Board, Inc. Chairman, Reuters Group plc me and chair this extraordinary group of Trustees. As I prepare to step aside, I want to express my 2005 annual report the conference board 5 President’s Letter e are pleased to report success in advancing Within hours of the South Asia tsunami, our our dual mission of helping businesses Contributions Council and staff colleagues facilitated Wimprove their performance and strengthen a private-sector relief response to this tragic natural their service to society. These efforts rewarded us disaster. More than 100 companies used our special Web with a record fiscal year. site, which recorded more than $250 million in assis- tance to relief agencies. At this writing, in September, Better World this same group is at work helping to facilitate the We take seriously our 90-year-old duty to help business response to Hurricane Katrina’s devastation. contribute to a better world. Here are some highlights of our work to shape values and improve business standards: Better Business The bread and butter of our work is directed toward • We continued our efforts to restore trust in corporate bringing executives knowledge, ideas, and perspective governance. Our Directors’ Institute has now provided to help them improve their skills and strengthen their continuing education to 300 sitting corporate directors performance. We do this by creating and sharing intellec- (representing half of the Fortune 500), including a dozen tual capital over a wide range of critical management on-site sessions with boards of leading companies. endeavors — and through a world-class economics pro- We released a new, updated Corporate Governance gram that forecasts and explains trends in nine markets Handbook; held two transatlantic Corporate/Investor that represent two-thirds of the world’s GDP. Summits; and learned that the Harvard Business School Press accepted Carolyn Brancato’s book for publication. Creating Knowledge and Know-How We published nearly 30 major reports this year — • Our corporate ethics conference was again the signal a dozen of which were accompanied by user-friendly event in the field. And our annual CEO Forum featured PowerPoint presentations — and more than 50 online Citigroup CEO Chuck Prince on “Living Your Values in Executive Action reports. Eight of these publications the Global Economy.” focused on subjects of special interest to mid-size companies. • We extended our diversity efforts beyond North America. Our economics programs continued to innovate To help our members in Europe capture the benefits and win accolades. We created the Help-Wanted Online of workplace diversity, we created a new council and Data Series — a monthly census of Internet job listings — undertook an EU review of diversity best practice. to complement our national Help-Wanted Advertising Today, six diversity councils serve more than 250 Index of 51 major newspapers. We revised our Leading corporate diversity executives; we held seven major Economic Indicators to make them even more valuable conferences about the issue; and our research on the in predicting economic turning points. Gail Fosler, our maturing workforce earned praise from the academic Chief Economist, was named by the Wall Street Journal world and high interest from executives facing multi- as one of the two most prescient forecasters of inflation. generational workforces. And the U.S. Business Council invited us to conduct and present their closely watched semiannual CEO • We held our seventh Ron Brown Awards ceremony at surveys of economic sentiment. the White House, this time recognizing J. P. Morgan We made special efforts to help business (and public) Chase, KeySpan and Luxottica for exemplary leaders better understand the many facets of risk — an corporate citizenship. increasingly complex topic in an uncertain world that is further complicated by new markets, new financial prod- ucts and services, and greater levels of leverage. We com- pleted the first comparative survey of risk management practices in Europe and North America; and explored 6 the conference board 2005 annual report best practices through conferences, councils, a working group, and nearly a score of reports and publications. One of our most promising initiatives — a world- class, independent research center on economics and business practice in China — was launched, with ten major multinational companies (from Europe, Asia, Richard E. Cavanagh and North America) pledging generous financial support President and CEO and top management attention during the three-year The Conference Board startup. Our China Center will be located in Beijing and New York and will collaborate with leading Chinese universities. Two distinguished leaders have agreed to co-chair the group — former U. S. Federal Reserve Chairman Paul Volcker and Chen Yuan, Governor of the China Development Bank (CDB). Customer loyalty was exceptional and gratifying. Some 97 percent of our key accounts chose to renew Educating Executives (including a remarkable 99 percent of our key U.S. This year, some 15,000 senior executives from six customers). U.S. conference attendance grew 20 per- continents participated in more than 200 conferences, cent; and we posted double-digit revenue growth in 120 councils, 17 research working groups, and 50 U.S. councils, subscriptions and conferences in Asia, Webcasts on subjects ranging from corporate security advertising income, and research working groups — to productivity improvement.