On Boards Podcast

Ed Pendergast has served on numerous boards - public, private, and nonprofits - for more than 40 years. Very few people have had the opportunity to serve on such a broad range of boards over such a long period of time as Ed, and for good reason. He is the consummate board member. Armed with a deep understanding of business finance and operations, and what it takes to be an effective board member, Ed exemplifies the qualitied that every company seeks on its board.

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Links

https://dunnrush.com/

http://pendergastco.com/

Quotes

Impact of the pandemic:

"Well, it's varied pretty dramatically. I sit on five boards…and some of them have been hit very hard, some are booming. It seems to depend upon the industry they're in or the impact that coronavirus has had on the business."

"You probably have heard more talk in the last few months about supply chain than you have in the rest of your life."

"In our investment bank, we are advising companies generally not to sell the business right now because valuations are so strange."

Question: If you're advising a family owned, operated business, and they're thinking about forming a board for the first time, but they're hesitating and there are several reasons why they do. What advice do you give them?

Answer: Well, I advise them not to start out with their uncle's lawyer and their brother's banker, but that they try to think about "why are we having this board?" What type of skill sets do we need that would be helpful to this business and try not to pack it with all people you've known for a long time? It's okay to have a couple of people that you've known a long time, but it's very helpful to think outside of the box.

Question: When people say "we don't have time of the money for a board, what kind of advice to give them? What do you tell them?

Answer: Well, what's the return on the investment? If we can bring together five people with great talent, some of which you don't have in your business who can help in business development and it costs you $50,000 and it generates a strategy that builds the business from $50 million to $250 million, pretty cheap. On the other hand, if you don't put it together properly, it can be a pain in the ass and not be successful.

When there's a crisis is when the private company board is really helpful to calm things down. How are we going to get through this? How are we going to work our way out of it?

Big Ideas/Thoughts

Board meeting haven't changed much – we've had a focus on coronavirus that we didn't have before , but board meetings always have talked about risks and how do we deal with risk and what are the risks we haven't foreseen? And how do we think through that process?

One difference is that when you're in person, you have some casual time, you usually have a meal. Something when you're off the topic. When you're on a zoom board meeting, you're on topic, the fraternization, the getting together, the personal aspect of it is missing and so it's harder to gauge how people really feeling or what's going on. When you're sitting across from somebody at dinner, you really get a different approach. And that's particularly true in boards where we have traditionally had the senior leadership team present at the dinners.

And that's key because one of the major parts of being a board member is to make sure that the people are the right people. That they're performing properly, that motivated properly, and develop properly. And that's harder to do through video conferencing.

Going forward, I think you're going to see a lot of closings, a lot of bankruptcies, particularly companies relying on disposable income: airlines, restaurants, hotels, casinos, even clothing. I think it was Bloomingdale's that said they're only selling tops.

On why more private companies are forming boards.

Well, part of it is that the visibility of governance has expanded dramatically. I think a good deal of it as to what the National Association of Corporate Directors has done, to raise the visibility, the standards of sitting on a board have clarified over the years and, many people who have started their own business had worked for a larger company and have seen that there was some efficacy to the board in family businesses. Particularly when family members say we need somebody outside of the family to have a role here so that we can listen to people who have had outside experiences.

Question: One thing that seems to be a constant challenge for many companies is refreshing the composition of their boards. The board that may have been right five years ago is not necessarily the right board today. What is the best approach of reviewing the composition of the board and offboarding when necessary?

Answer: Refreshing the composition of a board is probably one of the thorniest issues any board faces. One way to address it is to have a regular evaluation process. How the board going, how individual board members are going, how committees are being operated. but it's a tough process. I have some ex-friends that I have counseled off boards and, as I sometimes say, it's not who got you here it's who is going to get you there

David R. Koenig has been fascinated by and focused on understanding risk virtually his entire life and is recognized as a global leader on the governance of risk. He has held executive and board positions, published across multiple media (including 2 books: Governance Reimagined and The Board Members Guide to Risk), founded the DCRO (The Director's and Chief Risk Officers Group), co-founded PRMIA (the Professional Risk Managers' International Association) and advised many companies in a wide variety of industries and sectors, over many years. If you listen to this episode, you will understand that managing risk, in a comprehensive, forward-looking manner is an essential best practice in running any business.

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Links

http://www.linkedin.com/in/davidrkoenig

https://dcro.org/

https://davidrkoenig.com/the-board-members-guide

Quotes

My father introduced me to the stock market when I think I was 10 or 12 and I was just fascinated by what made stock prices go up and down. It's, you know, it's kind of a sad story, but that was part of what I was raised to understand.

"Any company not doing the type of risk analysis you've described is not really looking at its strategic plan in a holistic way. They're missing an important piece in trying to project what it can really accomplish."

The reason you put a Risk Committee in place is to understand the impact of let's say cultural changes. Once you start piecing those all together and say, "where does this come back and impact us?" it becomes much more clear that it's akin to understanding your clients better, to understanding market share better, to understanding your competitors better. You have now a much clearer picture about the things that affect the bottom line of your success and what you might do about them. That's the forward-looking aspect of risk management and again, culture is but one example.

The really good Chief Risk Officers are the ones who think like businesspeople. They're not control people. They are people who have the same mindset of an entrepreneur, the same mindset of the head of a business unit. In fact, the best thing that risk managers can be doing within the business units is advising those businesses on how to take risks well. Since they think like a businessperson, questions a board might ask are "What opportunities to take risks better do you see?" "Are we competitive in terms of what it's costing us to get the capital to pursue our objectives? "What aren't we looking at closely enough?"

Big Ideas/Thoughts

I started by helping organizations to understand the risks that they could or couldn't control and ways to change that more to their liking. I worked with airlines, endowments, portfolio managers, banks, all sorts of different entities to help them change their risk profile,

You want to understand as much of it as you can. You're never going to understand every part of it.

Let's, for example, look at factories that pollute. In the 1970s, I grew up not far from Gary, Indiana. We would get some of the steel mill air that would come to our town. Lake Michigan was polluted, there are places up there that you couldn't believe people were swimming or eating fish from. But those companies weren't being charged for that pollution. Then the Environmental Protection Agency came along, rules about clean water, clean air came along and now the Southern shore of Lake Michigan in most places is pristine and beautiful. Those firms a lot of them aren't there anymore, or if they are they've significantly revamped what they were doing, and the problem was that they were not accurately paying for the cost of doing what they did. One of the things that risk management does is give you inputs that you're generally not seeing now - which is: what is the cost of pursuing our objectives or in some cases, the cost of not pursuing something else.

I've been in this risk management profession for 35 years or so and most companies still don't have formal risk management departments.

I think the question really is for a board to have a conversation about how well they understand the complexities of all the systems they depend upon for success. If they feel like they've got a handle on that, they can have a really deep discussion, and if they really feel comfortable that they get those complexities and how they interrelate, you may not need a risk committee. But I find it challenging to think an organization of $100MM in revenue, or maybe even half that size, can't generate enough positive return through a better understanding of risk to justify some investment in risk infrastructure.

I'll just talk about a company I talk about in the book what in essence was the equivalent of a Risk Committee at an executive level that was looking at the kinds of things that would threaten their ability to serve their customers. There's a good story in Texas Monthly talking to CEO, their senior executives around sustainability and supply chains. They started looking at the possibility of pandemics back, I think, 15 years ago and so they knew what to do. They had a plan laid out.

Another example, and this is not a formal Risk Committee at the company at that time, but it would be the equivalent of such, saying, "how are we going to make sure we can stay in business?" If something interrupts our normal facilities for operation?

When I worked there in Des Moines, Iowa, which is where the company is based, it was the largest city at the time in the country to lose its entire water supply because of the confluence of two rivers flooding that overwhelmed the 30 foot high banks of their water treatment plant. Suddenly everything in downtown Des Moines was flooded and unusable because there was no fresh water. The next day I was told to meet at a specific point. I went to that point. I was handed a folder. The folder told me exactly everything I was going to be doing for the next 12 hours and over the next week. We were up and running, managing a multibillion-dollar risk portfolio in about a day and a half. If they hadn't been thinking forward within what was the equivalent of their Risk Committee, that would have been never happened and I can't tell you how many millions we might've lost, because we weren't able to do anything about our exposure

The case for a Chief Risk officer. Once it gets up to the board, you don't necessarily want to have business unit specific discussions about whether you're taking the right risks. It's really a question of how is the CEO looking at this and how is the CEO incorporating all these different moving parts? I would say the Chief Risk Officer is somebody who has that task of taking all these disparate technical skills and technical roles and bringing them into a common risk framework.

Cyber risk has become a massive concern and it's been there for a while, but the DCRO did a survey recently and there's a multiple fold increase in the amount of phishing attacks that companies are seeing because they have employees working home. I've seen people who are really smart fall for these because they're getting really good.

To the extent that our corporations are more effective risk takers, they're better employers, they're better at returning into their community, they're better at serving their customers, they're better at serving their suppliers. All their relationships become better.

If you have a board nominating people to join the board, to replace people who are leaving, they're almost always going to be more naturally drawn to people who are like them. We see that in our social sorting in all parts of our own lives. It's much easier for us to be around people like us, who agree with us in times of threat when an organization's facing a competitive challenge or crisis, like we've got with COVID. But lack of diversity in board composition creates risk.

Ian Sheridan has been innovating in the financial world, in a variety of roles, for many years. He has brought that innovative mindset to the venture fund where he is a managing partner, Vestigo Ventures. In this episode of On Boards we discuss the fascinating approach in the use of data they employ in making investment decisions and to how they work on the boards with the entrepreneurs that lead the companies in which they invest.

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Links

https://www.vestigoventures.com/

https://www.linkedin.com/in/iansheridan1/

Quotes

"The boards are small, they're, intimate - business conversations dealing with every aspect of business."

"The best entrepreneurs are driving the company and their teams … the board is there in this early stage to be a coach, to help them navigate, maybe it could be networking within the industry, whether that's growing the business on the distribution side or working with the regulatory compliance side of things – whatever it takes."

"We use data to source, underwrite and empower our portfolio companies."

"What's different about this crisis? Well, I think the first piece is working from our home. Right? So, how do you stay connected? How do you keep that relationship at the right level and make sure you're really understanding where is that person today and what are they facing and how can I move through that issue? ……I would say as challenging as these times are, and the real pain that's happening across the planet and our country, I do see an unbelievable spirit of innovation and drive from these entrepreneurs that hasn't been shaken through this process."

Ideas/Comments

FinTech is about two things: reducing costs and providing an delightful experience to the customer. This is what all the innovation and improvements in FinTech revolves around. Now we live in a world very if you can think it, we can probably create it and that is what investing now means.

The opportunity that Cogo Labs affords us is the ability through big data to predict with a tremendous amount of accuracy which is the next IP address in North America that has the potential to go viral. What are the big ideas that consumers are thinking about? And then we train our machines to go through that data and say, Vestigo, these are the companies you should look at, these are financial services or FinTech companies to consider and do it very early in the day. If you know what the early adopters are doing on one side, and then you can see what everyone else is doing, you can run some really cool math to understand and predict the next thing.

When Vestigo invests in a company and becomes part of the board the company gets the benefit of the collective expertise of all partners at Vestigo regardless of who actually is on the board. All partners at Vestigo have been operators, serial entrepreneurs and that is really an excellent value-add for the company.

Boards at this early stage are very intimate and although there are various committees and other governance practices and there are a lot of hats to wear and as a board member one is thinking across the business model. The role as a fiduciary does not change but there is a lot more of a bigger white board to work with.

The CEO or the founders of these companies, these are passionate people who are going to run their companies. and, and the best know how to, how to use their board for counsel and advice, and, and potentially, networking. So, whether as an investor a board member or a board observer, we're here for the people we've invested in and that's kind of a 24/7, whenever they need us, we're there for them.

David Rosen has been a CEO, served in other C-suite capacities has served as a board member and is a life-long entrepreneur – and has developed a passion about the importance of boards in private companies. As a result, helped found the Boston Chapter of The Private Directors Association (PDA), a national organization whose focus is to support the owners, board directors, investors, and C -suite executives to improve their board caliber as well as the governance practices for private companies.

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PDA Boston

Quotes

"I won't start a company without creating a board almost from the beginning."

Big Ideas/Thoughts

There are a lot of governance needs is on the private company side, which is why I believe the PDA is so important.

There is more money on the balance sheets now, as of 2019, in private companies, then there is in public companies, while the number of publicly traded companies since the .com bubble is almost half for what it is today.

The private capital formation into companies has been a tremendous driver of activity and wealth not only in this country, but worldwide

I advise my clients from the beginning that they should think about board governance- after they've learned cashflow balance sheets and cost of goods sold it is time to start focus on governance issues

It really behooves a board to understand the skill sets that are required for the current and long-term future of a business, which may be different from what it was three-five years ago.

Episode Description

Larry Stybel talks what a board need to do to really do its job properly and the critical role of the Nomination/Governance Committee in that process. Do we have the right talent on this board? Are the board members sufficiently educated to handle their fiduciary responsibilities? And does the board understand that it has primary responsibility for defining the corporate culture?

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Links

https://www.boardoptions.com/

https://www.stybelpeabody.com/

https://www.issgovernance.com/

Quotes

"If you really don't understand the industry that you're in, who is your chief learning officer for the board of directors, and in many cases, by default, the chief learning officer of the board of directors is the CEO and if the board also has the responsibility of evaluating the CEO's performance, is there something wrong with this picture?

Board evaluation is that time when the board shines a spotlight on itself and says, "what are we doing positive and negative to advance shareholder value?"

"Every company that I have ever worked with says we are innovative, and the question is: who's the role model for innovation? If it's not the board, then where?"

"I think the board has primary responsibility for defining the corporate culture, and then the CEO has the responsibility for executing the corporate culture."

"The board is usually putting the spotlight on the CEO and senior management. So, in that way, I can understand why putting the spotlight on themselves is not something they actually want to do.

Right it goes like this: "I think performance evaluation is great for you, Joe, but not for me."

"There is a song by Leonard Cohen, and I think you know it, Raza, "Everybody Knows." And that song applies to boards. Everybody knows who's making a major contribution and everybody knows who isn't. They just don't want to talk about it."

"There's a kind of cliché that I that I see among young, inexperienced founders it's called "the problem solved problem." And that is: we had a problem, you know, 70% of our revenue is coming from one company and that one company is threatening to go to a competitor.

I flew to California and I talked with the CEO and I got him not only to stay with us, but to increase our business. And I go back to my friends and family board and I say, we had a problem, its solved - and they say, great, what's for dinner?"

"I think podcasts like these are, are an excellent way for board people to learn while they're driving or learning while they're exercising." (Thanks Larry!)

Ideas/Comments

If a board wants to keep what is often a superficial sense of collegiality, they don't want to do board of directors self-evaluation because you're going to get to issues that one or more board members are going to be uncomfortable with.

When board self-evaluation is defined as an event, it usually is a onetime event.

If a board is really serious, they're going to do board of directors self-evaluation.

People think of diversity in many ways. Gender diversity is one of them, racial and ethics diversity are others but the way, somebody does problem solving is another important dimension to add to the matrix of what you need on a board to make it truly diverse.

I have encouraged CEOs to do on boards is to send something to the board even once a month or a one pager. It could be a snapshot of financials. It could be three or four sentences about what's going a brief, but helpful, update so that when you're walking into the board room, or even when you're getting the materials for the next board meeting, you have been updated all along. No surprises. The board should not be surprised. You should not walk into the board room and find out something's been going on,

What happened with Equifax (theft of the credit records of 143 million people) should be part of every board education course., First, they did not immediately inform people that their data had been stolen. They delayed it for six weeks, which gave the hackers a chance to really use the information they had stolen. And the second thing, maybe even more egregious, members of the senior management team actually sold shares of stock during the time before the public knew that the breach had occurred so they would not take a hit on their stock shares. And this gets back to corporate culture. So, what was going on at Equifax that made senior executives think that what they did was okay to do?

Planning for a crisis is not a luxury and boards must be a very good at crisis management - we're seeing just how important that is right now. For this topic, we've assembled an incredibly experienced panel - our first panel episode - to delve into the role that boards are playing, and must play, during a crisis.

Jay Lorsch Bio

Jay Lorsch is the Louis E. Kirstein Professor of Human Relations at Harvard Business School. For the past 35 years he has specialized on the functioning and operations of corporate boards and is widely recognized as Recognized as a leading expert on the subject. His full bio here: https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6502

Ellen Richstone Bio

Ellen Richstone is a former Fortune 500 CFO and former CEO of a private company. She has been sitting on public company boards for over 15 years- on micro caps up to Fortune 500 in size. She is currently sitting on the board of three public companies in : Technology; Industrial and Clean Tech. Her prior board experience includes companies in: Consumer Products, Bio Tech, Financial Services and Pharma. She also sits on the Board of NACD New England and is both an NACD Board Leadership Fellow and also received the first Distinguished Director Award from the Association of Corporate Directors.

Rick Williams Bio

Rick Williams is Managing Director of Williams Advisory Partners, LLC. He has a breadth of experience as an executive and board director for technology companies including medical technology, software, and financial services. Rick is a nationally published thought leader. His soon to be published book entitle "Create the Future – for your company and yourself" is a is a "how to field guide" for leaders who want to think creatively about where to take their organization. Williams Advisory Partners provides CEO and board advisory services for middle market technology companies. He was Chairman of the Board of Point Care Technologies and formerly was Chairman of a quasi-public bank/VC firm. Rick is on the board of an ocular drug delivery company and a leading company in gene therapy. Rick is past President of the Harvard Business School Association of Boston. He was a management consultant with the global consulting firm Arthur D. Little, Inc. He is a physics graduate of the University of Pennsylvania. www.WilliamsAdvisoryPartners.com

Quotes

"Clearly, number one is the focus on employee health and employee safety. The takeaway I would give on this area is the need to balance empathy, safety and yet execute where execution is still critically needed."

"There is a demand for increased communications with all parties promptly, clearly with increased transparency, and this is all stakeholders - employees, customers, supply chain, and of course shareholders."

"How does all of this change our long-term strategy - or not? What pivots should we be making within our strategy for the long term?"

"I think it's very, very important to have board leadership and to recognize that one of the board's primary duties is to make sure that leadership is in place and functioning effectively, not only with the board but with management."

"I think the "trick" of being a lead director or a chairman is to figure out how to build a relationship with management through the CEO and how to maintain cohesion within the board so that the two groups, that is management and the board, can work in a collaborative way for the good of the shareholder, for the good of the company."

Ideas/Comments

We're going to rethink the reliance that companies have on their supply chains and critical resources: are they exposed to getting cut off in the kind of crisis that might happen over time?

In today's world, boards have to be ready to move in and deal with a crisis - whether the crisis is externally generated like this one is or whether it's a CEO who suddenly has a heart attack or decides he wants to quit, the board has to be very good at crisis management, and that really goes back to the leadership of the board.

Succession planning is being done very differently than the way we traditionally have done it at the board level, given that you need to really dive down into many levels, which the board doesn't usually do. The reason we must do that is because, as people get sick, you need to make sure that the critical areas are covered. We're learning lot about management at levels below the very top.

Has there ever been a time when honest, authentic communication has been more important for a company?

Messaging must be realism about the challenges facing the company, a message of brutal honesty as to what is going on and what the threats are - and at the same time, a message of hope.

George Davis has been a trusted advisor to multinational, public sector and private equity backed organizations seeking guidance on critical boardroom issues for many years. We discuss with him what boards of directors need to do in a crisis, how this crisis is different from those in the past and what it may mean in the future for companies and the boards that serve them.

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Links

https://davispartnersgroup.com/

Quotes

A good board member understands their role and how to be supportive from a governance perspective and to fight the inclination to become a part of the management team. 10:38

I try to counsel people to say, look - this is when the CEO needs more room to breathe, to be able to pivot, to react. Don't choke him or her with a hundred questions because you're concerned about something you have not agreed to that the board thinks is a concern. 11:44

Some of the fundamentals that have always been true will, post crisis, be even more of a focus as it will be clear how important they were. A truly diverse board, with many different perspectives and skillsets, is far more likely to be able to advise their CEO than a board that wasn't as well constructed. 17.19

I have a strong belief that after this crisis board appraisals and board succession planning will become a hot topic. Just like CEO succession planning became a hot topic after the 2008 crisis. In each case the question will be: did we have the right people around the table? 19:36

How do you layer the competencies and the matrix skills of the board to match where the future of the company is going to be? And with this huge consumer disintermediation that's going to happen post Covid-19.

Fight the urge to be false predictions of overconfidence. Be extremely clear in your communications, honesty right now is way more appreciated than anything. So, if it's uncertain, say it's going to be uncertain. If it's going to be hard, tell them it's going to be hard.

I think false positives destroy morale. 25.50

Ideas/Comments

Crisis management protocols and feedback loops and risk mitigation are pertinent to today's crisis, but in the past, everybody felt that it was either an economic turn or there was a cycle and we'll pop out of it. The magnitude of change in board rooms today is quite different.

If you've developed a strong foundation of trust and transparency with your CEO and their team then it's going to be a lot easier to say:

"Go do what you got to do. We just need a briefing. We need a one hour. We don't need a long board meeting, for example, because we know you're going to do the right thing. We know you're going to tell us what we need to know, and we know you're going to tell us the truth about it. We trust you."

The boards that don't have that relationship are going to struggle ansd it's going to highlight this fundamental thing that we talk about all the time about having that relationship with the leader of the company.

Joe Baerlein, a nationally known strategic communication advisor for some of the country's largest companies, trade associations, large non-for-profits, talks about what matters: always consider the long-term impact on the company's brand and reputation - and never be afraid of providing truthful information or being proactive about providing it.

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Links

https://baerleinpartners.com/

Message from Arne Sorensen, President and CEO of Marriott International

https://twitter.com/MarriottIntl/status/1240639160148529160

Quotes

If you are a CEO of an organization, you need to say we're doing everything we possibly can. We're observing everything that the CDC, the various state departments of public health are telling you. But we want you to know that we care about you. We are one community…this will eventually recede if we do everything.

If the CEO of a particular company can't deliver that message and come across as authentic after two tries, then I would say that's not the messenger. And you'd have to think about who might be the best messenger. It could be the senior vice president of health and safety who may live this in his or her bones every single day. It could be the chair of the board - because people will smell in a second if you're not authentic. 13:08

I think this [Covid-19] changes everything. Why? Because it's unknown and I think smart CEOs are going to look at their board and say, what do you think? 7:46

[Information you provide to the press] must be 100% accurate because you do not get the proverbial second opportunity to make the first impression. 15.10

Ideas/Comments

Companies have to have a communications vehicle that can speak to all of their publics, broadly defined, meaning who's important to them: their employees, their customers, their vendors, the community where they do business. And they have to be able to talk in real time.

During the coronavirus crisis the separation of management and governance for boards will shift - it's all "hands on deck." Companies need the expertise of their C-suite, of their outside experts and their board now more than ever because they need to figure this out, together.

When there is a crisis, the company's brand and its reputation is a responsibility of the board.

When an unknown hits, you should at least have to have some operating principles on how you would react. What are our highest risks? What could happen in this company from A to Z? How would we manage those risks? What level of resources would we need? What are the five worst things that could go wrong? What are the first five things you do? It depends on what the business is, but it allows you to have a game plan, that you will alter depending on circumstances, when and if something bad happens. But at least you have a game plan on how to respond when a crisis strikes.

John Hession, legal advisor, business advisor and angel investor, holds the world land record for number of board meetings attended. He's been working with emerging growth companies for over 35 years and he has seen it all.

He talks about the discipline, tough love and results required if investor backed companies are going to be successful. It is a message that all boards would benefit from listening to and following.

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Links

https://www.morse.law/attorneys/hession_john

https://www.firstlightdx.com/

https://seraf-investor.com/compass/article/key-angel-investing-tax-issues-infographic

Quotes

Well, if they're investor backed (companies), you know, there's an insistence on having a good strong board and that often means that simple phrase: tough love. 3:01

If you don't hire a good board and build a good board, you don't have great guidance for the company. ….an investor-backed company, it needs results and oftentimes they're going to be a more difficult, they're going to be more challenging on management strategy. 4:00

Investor backed boards, are much more conscientious, much more deliberative, much more demanding on management (than most private company boards). "You need to solve this problem." 8:33

I'm delivering this advice (to you as CEO of the company), Joe, and it has to come through everything. Because I would like to see you succeed. And even if I have to give you tough love, it's not personal. It's because I want to see you succeed. 15.47

You can't have the CEO/founder be the chair. If you're going to build an outside board, the chairperson, usually has to be someone who's got a lot of scalps on the belt, a lot of scars, a lot of experience, and been involved in boards. 16.29

Bill Moffitt, was probably was one of the best chairs I ever worked with. He had a way to drive the discussion, drive the agenda, to stop tangential discussions to stay focused on those action items that I talked about and demand performance and, on the action items.

He was the most masterful, yet at the same time, urbanely diplomatic chairman I've ever had the pleasure of working with. He was just so good about assigning tasks, not only to the management team. But to other board members. 17.13

What if you don't find Mr. Perfect (as a Board chair)? How do you find the next level? How do you find a chair that you can make it work? Because the person you described, you just said he was one of the best chairs you've ever seen. Not everyone's going to deliver all the goods. What do you do if, you can't find that person or the chair is not that person? 18:49

1202B stock (capital gains stock) …. is the heart and soul and sinew of American capitalism. Why? The first $10 million of gain is zero capital gains tax. Now, who said the uncle Sam will, they'll give you a gift from town to town Joe. 23:09

Big Ideas

The disciplined approach used to identify board members in investor backed companies should apply to all private company boards as well. It can be a board of five, seven, eleven - it doesn't matter. Exactly what do we need? What are the skills, expertise, attributes that we need in this person and let's go find him or her.

It also applies to off-boarding unproductive board members. It happens that there may be a more definitive incentive to do it in investor back companies. But what's the difference between those companies and a really productive, successful family company board where some of the board members really are just mailing it in?

Transparency and trust are fundamental to the management/board relationship, no matter what size company, what type of company. And "brutal honesty" goes both ways. So a founder has to be brutally honest with himself or herself.

Beth Boland is a force to be reckoned with. Named one of Massachusetts "most influential lawyers," Beth was first initiated into the world of shareholder defense working as a clerk for a district judge on the Mike Milken and Ivan Boesky cases. Now chair of Securities Enforcement & Litigation Practice at Foley & Lardner LLP, she also serves as President of the New England chapter of the National Association of Corporate Directors (NACD).

An expert on how boards operate, she champions the expansion of diversity on boards and has worked tirelessly to bring gender diversity to the boardroom.

Quotes

"I think folks are really growing away from the idea of thinking of their board as a potential nuisance that they have to deal with, and [thinking of it] as one that is really a strategic asset." [12:10]

"I guarantee you that there are some rock star women and aspiring directors of color who will knock your socks off." [19:05]

"Take care of your people, who will take care of your product, which will take care of your shareholders." [27:40]

Big Ideas

The increasing interest of private companies to run their boards more similarly to their publicly held counterparts. [09:50]

Board expansion and diversity. [14:53]

Delaware courts' decision to hold boards accountable for additional stakeholder interests. [22:38]

Links

Beth Boland's Website

Beth Boland on LinkedIn

B Corps

Business Roundtable

NACD