TheCorporateCounsel.net

This LinkedIn post from Adam Epstein caught my eye. The point of the post is to emphasize the importance of an experienced board chair – but it also shows how well-organized board dinners can improve overall board effectiveness. In the anecdote he gives, the (seasoned, new-to-the-company) independent chair added structure to board dinners after observing that the company’s earnings calls were not as polished as they could be and that the other directors may not have been listening to them. Adam explains what happened next:

The chair conferred with the CEO, corporate secretary (CFO), and the chair of the nominating/governance committee and made a recommendation.

Each independent board member – 6 total – will be assigned one of the company’s publicly-traded competitors. At each board dinner they should be prepared to: (1) succinctly discuss what they learned from listening to the competitor’s most recent earnings call; and (2) compare what they heard to what was said on the company’s most recent earnings call.

The results after just a couple of quarters were palpable.

– The board dinners became so focused that the subsequent board meetings were not only more nuanced, but the engagement level was transformed. Creating structure for the board dinners was unpopular at first, but the board members had no choice but to rise to the challenge lest their short dinner presentations telegraph unpreparedness.

– Upon greater reflection on the strategic challenges facing the company, the complete board realized that their board composition was no longer apt. One of the most tenured board members decided not to stand for re-election (with some measured cajoling) and they are now beginning a search for a new board member that has the experience the board requires.

– Several of the board members conferred about the professionalism delta between competitor earnings calls and the company, and two changes are now afoot: (1) the company is going to hire an experienced internal investor relations professional; and (2) the CEO is interviewing several prospective speaking coaches.

As Adam notes, “corporate governance ain’t rocket science”… and it’s impossible to overstate the importance of having an experienced chair.

– Liz Dunshee