Selecting the right director program can be a challenge.
Corporate secretaries are not only charged with upholding extraordinary expectations for their companies’ legal departments, they are also responsible for preparing their companies’ board directors for communications with shareholders and clients. But the ongoing education of members of the board of directors is a key responsibility that sometimes is overlooked. So, why is director education so important?
‘Corporate secretaries not only provide advice to boards, but they have to make sure that directors are up to speed with the changing regulatory environment,’ says Stephen Brown, associate general counsel and director of corporate governance for New York-based Teachers Insurance and Annuity Association of America - College Retirement Equities Fund (TIAA-CREF). ‘Additionally, there is an increasing pressure from shareholders to hear directly from the board. No corporate secretary is going to allow a director to talk to shareholders unless they are aware of current best practices and are able to respond to the new demands placed upon them.’
The demands placed on today’s corporate directors are multifaceted and selecting the right director education program from the overwhelming range on offer – the one that caters best to your board’s diverse needs – can be very difficult. Perhaps that’s why some governance professionals put this issue on the back burner.
‘A very good corporate secretary is going to manage this [director education] process from top to bottom,’ Brown notes. He says corporate secretaries ought to suggest when board members receive education, and how much. For example, ‘A new director needs to focus broadly and do more than one course,’ says Brown, ‘while a director who has been at the job for a few years might require a deeper dive into a specific subject area.’
Brown and his team in the corporate governance group at TIAA-CREF work to enhance the overall governance practices of companies held within the organization’s various portfolios. TIAA-CREF manages $453 billion in assets and its goal is to improve the shareholder value and long-term performance of the companies in which it’s invested. Brown also advises the management and boards of the TIAA-CREF group of companies on internal corporate governance operations and director education.
So how does Brown advise you to choose the right program for your board?
First, he suggests corporate secretaries ensure their directors know that they have access to director education programs. ‘And a filtered list should be provided that says why one program is better than the other.’
Next, directors should be screened on a regular basis to determine their individual level of knowledge on a variety of subjects. ‘Corporate secretaries need to know the level of expertise of each director and then tailor the selection of the education programs to the individual directors so that the board can achieve a higher level of effectiveness.’
Soliciting feedback on which programs work and which do not is also important.Brown suggests keeping the feedback in a database for future reference. ‘It’s important to take the opportunity to call the program provider and let them know what your directors thought,’ he says. Being able to listen to and gather responses from the directors will help you find the right program faster.
Finally, Brown advises corporate secretaries to work closely with providers and organizations to enhance director education programs. While this may seem a bit out of the ordinary, the providers need to know what is relevant and what should be addressed.
‘By following these steps a successful corporate secretary can raise the
board's governance IQ and ensure they have the proper advice and
resources to handle their responsibilities,’ concludes Brown.
