annual report 2006 90years of trusted insights annual essay Sir Harold Evans on Innovation 2006 annual report the conference board 3 CHAIRMAN’S LETTER 03 PRESIDENT’S LETTER 04 BUSINESS REVIEW 07 HISTORICAL OVERVIEW 16 ANNUAL ESSAY 22 PRODUCTS & SERVICES 28 FINANCIALS 34 GLOBAL COUNSELLORS 36 TRUSTEES 38 The Conference Board creates and disseminates knowledge about management and the marketplace to help businesses strengthen their performance and better serve society. Working as a global, independent membership organization in the public interest, we conduct research, convene conferences, make forecasts, assess trends, publish information and analysis, and bring executives together to learn from one another. Chairman’s Letter I congratulate The Conference Board on its 90th anniversary and our loyal members and talented staff for making its 90th year its best year! Once again, The Conference Board’s research and learning has helped companies strengthen their performance and better contribute to society. Seven of my Trustee colleagues conclude their service this year: Robert Benmosche, Erroll Davis, S. Dhanabalan, Niall FitzGerald KBE, Rijkman Groenink, Stephen Snyder, and Sir Martin Sorrell. We applaud their dedication and leadership, and acknowledge the contribution they have made to our strategy and governance. Let me also salute Dick Cavanagh, our president and CEO, who has provided exemplary leadership since 1995, and who announced his plans to step aside earlier this year. During his tenure, The Conference Board renewed its reputation, extended its global reach, enjoyed unprecedented prosperity, and executed initiatives in corporate governance and workforce diversity that have changed the heart and soul of business practice. Respectfully submitted, Samuel A. DiPiazza, Jr. Chairman, The Conference Board, Inc. Chief Executive Officer, PricewaterhouseCoopers llp 2006 annual report the conference board 3 President’s Letter e are pleased that our 90th year was also our Domestically, this year saw the advent of our W tm best year. Help-Wanted Online Data Series, a complement to As is the case for any organization that creates our monthly compilation and analysis of newspaper intellectual capital, our key measurements of success classified ads. This database covers all 50 states and include “impact and relevance.” In these realms, the top 52 U.S. metropolitan areas. our work and our people were cited more than 44,000 times in the media — generating 5.5 billion Strengthening Partnerships media impressions on subjects ranging from eco- Working with other like-minded organizations has nomic forecasts to advice on preparing for an avian long been a fruitful way to leverage our resources, flu pandemic. Our economic reports regularly moved avoid duplication of effort, and deliver superior the markets, our work on corporate governance value to our members. This year saw a renaissance has improved the conduct in boardrooms around in productive partnerships and joint ventures. the globe, and our research and outreach in work- Building on the second year of our successful force diversity has changed the face of management collaboration with the (U.S.) Business Council to in large-scale enterprises. survey and explain CEO sentiment about business Beyond our ongoing research and learning conditions, we extended the effort to Europe opportunities to advance the free enterprise system, (France and Germany) and Asia (Hong Kong and this year saw a number of new initiatives and some Singapore). The aim is to create and distribute new partnerships — and yielded record performance. timely knowledge about the economic perceptions of CEOs worldwide. New Initiatives In a similar vein, we joined forces with two We launched our China Center for Economics world-class business schools in joint research and Business this April in Beijing, dedicating our (INSEAD) and seminars (London Business School). new centrally located offices in the Qijiayuan We also held an inaugural conference on leadership Diplomatic Compound. Ten multinational firms, with the U.S. Naval Academy, complementing our headquartered in Asia, Europe, and North America, longstanding program with West Point. And we have have committed substantial financial and intellectu- launched a research consortium with three leading al resources for the three-year start-up phase. Our human resources associations to advance under- senior advisory board, co-chaired by Paul Volcker standing of workforce preparedness. and Chen Yuan (the governor of the China We joined with the National Safety Council in Development Bank), held its inaugural meeting sponsoring a global environmental health and safety at the Diao Yu Tai State Guesthouse. The Center award and were recognized by the Clinton Global will conduct research, both independently and with Initiative for our joint corporate social responsibili- key Chinese partners like the National Bureau of ty program with Harvard and the Shorenstein Statistics, the Development Research Center, and Foundation. And last but not least, we have been the Peoples’ Bank, on business cycles, productivity, favored by generous support of our research on, and competitiveness. and outreach to, the maturing workforce by The We have been busy helping companies around Atlantic Philanthropies. the world learn from one another to prepare for an By no means new, the Ron Brown Award avian flu pandemic. To this end, we conducted a for Corporate Citizenship was presented to Bayer 500-company survey, generated a timely Executive Corporation, Johnson & Johnson, and S. C. Johnson Action report, and hosted two sold-out (and brac- & Son. This was the seventh White House Award ing) webcasts. ceremony for the award we administer to honor exemplary corporate behavior. 4 the conference board 2006 annual report Record Performance Conference on Aging. Our own President’s Award Last year, our talented and hard-working staff set was presented to Carolyn Brancato for her pioneer- 10 all-time records in areas ranging from mem- ing work in corporate governance. bership subscriptions to staff productivity to capi- This annual letter is my eleventh and final talizing on the Internet. This year, we surpassed one. I have decided to follow my own advice to these same 10 records. others about the practice of stepping aside after One reason for success is that our members a decade of leadership service. During that time, are exceedingly loyal — over 98 percent of our I have been blessed by wise Trustees, talented key customers chose to renew their membership colleagues, and loyal and generous members who this year. During the past year, we counted 19 have made my service a privilege, for which of the 20 largest U.S. companies, 80 percent of I am grateful. the Fortune 100 companies, and all of the 20 most respected companies in the world as members. Respectfully submitted, Overall, we experienced 10 percent revenue growth, earned a better than expected surplus, and returned $785,000 to our reserves. We saw exceptional growth in Asia (52 percent), webcasts (62 percent), sponsored research (30 percent), Richard E. Cavanagh and governance programs (26 percent). President and CEO, The Conference Board, Inc. Several of our researchers received important recognition. Two economists were lauded for their insights and prescience — Gail Fosler, by the Wall Street Journal, and Ken Goldstein, by the International Herald Tribune. Judy Bannister, our new global demographer, won the Klein Award from the U.S. Bureau of Labor Statistics. And Linda Barrington, Lorrie Foster, and Jeri Sedlar were selected as delegates to the White House 2006 annual report the conference board 5 Michael Christiansen Managing Director, The Royal Danish Theatre, addressed Trustees at the Royal Opera House in Copenhagen. Ann Henry Vice President, Global Operations, HP Financial Services, discussed the challenges of global redesign at The Conference Board Organizational Design and Renewal Conference. Steve Kerr Managing Director and Mukesh Ambani Chief Learning Officer, Goldman Sachs Chairman and Managing & Co., participated in a panel at the Director, Reliance Industries, Senior Human Resources Conference Ian E. L. Davis Managing Director, McKinsey & at The Conference Board that examined today’s most critical Company (left), and Robert H. Benmosche retired Directors’ Institute program human resources issues. Chairman and CEO, Metropolitan Life Insurance Co., hosted at Reliance Industries, are Trustees of The Conference Board. Trustees represent Jamnagar. 15 nationalities and nearly half are CEOs of firms based outside of the United States. 6 the conference board 2006 annual report the conference board Business Review 2005-2006 Global Growth and Global Impact tarted in 1916 as an organization of leading U.S. manufactur- on leadership development practices and, more specifically, ers, The Conference Board continued to meet its mission how multinational companies face the challenge of developing Sof serving business worldwide in its 90th year. More execu- local leaders in Asia. tives than ever profited from the business knowledge provided by The Conference Board, which now serves companies in all industries A State of Business Report: CEO Challenge 2006 and in many countries around the world. The Conference Board has In addition to bringing CEOs together, The Conference Board also always specialized in providing business knowledge to top compa- took the pulse of their opinions on major business issues in this nies, but now its wisdom is being spread