Have you heard about the terrible problem facing many boards?
There aren’t enough directors to go around. Demand for directors, especially independents, is growing like the monster in the Steve McQueen movie The blob. Demand is a thick, gooey mass, slowly absorbing every last available candidate for directorships. At the same time, the supply of candidates is dwindling, going the way of the ever-diminishing hero of The incredible shrinking man.
Everyone knows the reasons for the dearth of directors: being on a board requires greater commitment post Sarbanes-Oxley and more boards are restricting the amount of outside board service their directors can do. More worrying for directors, perhaps, especially in light of January’s WorldCom settlement, is the increasing amount of personal liability directors face.
Maybe the answer to this horrible problem is part of the problem’s definition. The supply has decreased, especially among sitting CEOs. Doesn’t this indicate that boards need to move beyond their Casablanca-style approach to director recruiting and stop rounding up the usual suspects? SEC chairman William Donaldson seemed to be thinking exactly that when he said in 2003: ‘Finding good, qualified directors is no small task, but it is time to expand the talent pool and create a new generation of directors.’
Whenever Harrison Ford’s Indiana Jones character is in pursuit of some archeological marvel, he uses whatever comes to hand, whether it’s a shovel, a whip or his fists. He’s driven cars and tanks, flown planes and ridden horses. He’s deciphered clues in books, stone tablets and tombs. This is not a guy who has problems changing tack whenever the old one isn’t going well.
Maybe the folks who look for new directors also need to change tack when they recruit. And what does ‘a new tack’ mean in terms of potential directors? First, good candidates should have a thorough understanding of how boards and their committees work and of the duties of a corporate director. They should be able to discern the true meaning of Sox, SEC regulations and listing requirements of the stock exchanges. A solid background of dealing with meeting minutes, proxy statements and annual meetings with shareholders wouldn’t hurt, either. Years of experience with institutional investors and senior management, handling corporate governance issues and maybe even a law degree would be the icing on a candidate’s cake.
And where can we find these paragons of corporate directorship? If you’re reading Corporate Secretary, you already know the answer: among the ranks of corporate secretaries, the governance experts.
There are some people who might not like this idea. The first is your CEO – it’s not hard to picture him or her getting a little miffed at being ignored while the corporate secretary gets invited to the ball. But the others who might not like this idea are corporate secretaries. Many of them already feel like Paul Robeson singing ‘Ole Man River’ in Showboat. They’re lifting that bale and toting that barge, accompanied by the wonderful musicians in the SEC orchestra.
So it’s possible that, if asked, corporate secretaries would decline the invitation to serve. Then again, maybe they’re just like Melanie Griffith in Working girl, waiting for their shot.
Geoff Loftus is president of the Society of Corporate Secretaries and Governance Professionals (the Society). Any views or opinions are solely those of the author and do not necessarily represent those of Corporate Secretary or the Society.
