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Woodruff-Sawyer Board Panel: Conclusion

October 7th, 2009

            In my conclusion of summarizing the Woodruff-Sawyer panel discussion on Board of Directors seat appointments, the final discussion point of the panel addressed the three key areas of Board consideration. These areas included Board dynamics, the management process & interaction with the Board, as well as the levels of protection afforded to Board members in carrying out their respective duties.  As discussed in my previous post, Bruce Lachenauer of Spencer Stuart had commented that it can be as difficult to remove yourself from the Board as it is getting the position in the first place. With this consideration in mind, great care must be taken by the candidate in assessing their offer.

 

            The panel spent good time discussing the considerations of Board dynamics. Some of the points that they touched on included;

Ø  Knowing what the views/perceptions are by Sr. Staff of the Board.

Ø  How the actions between Board members would be characterized.

Ø  What is the level of interaction between the Board and management?

Ø  What role does the Board play in corporate risk management?

Ø  What involvement does the Board have in the development of corporate strategy?

            Folino also commented that potential Board members should also be afforded the opportunity to engage and interview company executives in order to gain the appropriate insights on management styles, identify any concerns about corporate structure, or any other challenges a new Board member might have to deal with.   Additional considerations, outside of the management and member dynamics, might include;

Ø  Knowing the selection & interview process for new Board members.

Ø  Knowing the timing, frequency, and average agenda for meetings.

Ø  The nature of your ideal involvement with the Board.

Ø  Structure of Board meetings and conference calls.

Ø  Travel considerations for Board meetings and impact on current schedule.

           

            The final portion of the conversation touched on the compensation levels afforded to Board members, which will obviously vary according to the complexity and size of the organization. While Lachenauer commented that the average retainer is up over 50%, the level of compensation is still not commensurate with the level of work and risk for Board members, which has increases substantially in recent years. While there is typically a cash retainer, this is not the only level of compensation.  Lachenauer cited that the average cash retainer is approximately $75k. There is also typically an equity element, which is usually in the form of RSU’s. The level granted will also vary according to the size of the organization and will usually be higher for the smaller entities.

 

            I know as I start down this path to secure a Board position, which I am targeting for inside of the next 12-18 months, this was a very informative panel discussion to attend. For my colleagues out there who have experience sitting on a Board, I’d also welcome the feedback and know how your experiences compare to what I’ve outlined over the last few days.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

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