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Woodruff-Sawyer Board Panel: Part I

October 1st, 2009

                As mentioned yesterday,  I had the opportunity to attend a panel discussion on the considerations to accepting a Board of Directors position. The panel was sponsored by Woodruff-Sawyer and led by Paul Folino, who is the Chairman of Emulex Corporation. The panel was also rounded out by Priya Cheria Huskins, Esq. and Bruce Lachenaur. Priya is a Partner at WS and is considered a leading expert in D&O liability risk and corporate governance. Bruce is a Partner with Spencer Stuart, which is a leading executive search and consulting firm and leads their Board Services Practice. It’s worth noting that Spencer Stuart is active on a very high percentage of all Board related searches nationally.

 

            As an individual who has had extensive interaction with Boards and presentations to, I have not previously sat on a Board and have initiated this as a goal to achieve within the next year. To my benefit, one of the opening stats that Lachenauer touched on was the shift in Board compensation from being more internally focused to having a higher degree of outside influence. It was mentioned that the trend has almost reversed and the current ratio is approximately 3:1 with regards to external Board members. This bodes well for those looking to become involved with outside companies. However, as a result of the current climate, it has also become more difficult to secure that first time Board seat. Recent statistics show that only 16% of Board appointments were first-time appointees versus the historical figure of 40%. Consistent with the trend for outside influence, there is an increasing demand for a Chairman that is independent of the company and can bring unique perspectives.

 

            The panel also discussed the aspect of Committees, as well as the make-up of individuals that should sit on those committees, as well as the Board. Lachenauer commented that the most difficult committee spot to fill has been that of the compensation since this has become such a contentious area of the previous few years. With the contentious nature of the business environment in mind, in all areas, Paul Folino commented that he “can’t imagine having a Board make-up that does not include strong legal counsel”. Folino also commented, in response to a question, that age is really a non-issue with respect to the Board. That all considerations are based on the experience that one brings to the Board, and in some cases to the detriment of the Company, Board age limits can result in the loss of immense expertise and experience.

 

            There was an extensive amount of information that was shared during the panel and I look forward to summarizing my notes in future postings. The additional areas will include the considerations to sitting on an outside Board and strategizing that with your current company, the search & interview process, compensation levels, as well as what dynamics to consider in choosing what Board you will commit your time to.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

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