The simple life

Douglas Ian Shaw is a man with a mantra: ‘keep it simple’. It’s a good rule too, enabling him to keep up with his varied career path and multitude of interests, from sailing his boat ‘Ironic’ to training his Hanoverian warmblood gelding Whiz Kid for dressage competitions. This simple approach also helps him synchronize his duties as investor relations officer and strategist in his duel role as senior vice president and corporate secretary at Suffolk Bancorp (parent to Suffolk County National Bank). 

A resident of Southampton on the East End of Long Island, Shaw’s interests might lend one to view him as a typical Hampton-ite. But he focuses more on value and less on appearances. Case in point, his Sunday weekend treat is a deluxe breakfast at the local McDonalds. 

Shaw began his career in the late 1970s on Wall Street with a brief term at First Boston. ‘I decided I was not quite ready to swim with the sharks’ says Shaw, so instead he took a few years to show, coach and train horses. After two years he found himself looking for a job in the depths of stagflation. To pay the bills, he drove a truck. ‘I still have a class C license in New York State,’ Shaw notes proudly.

Shaw took his first job at Suffolk 26 years ago as a bank teller. ‘Everyone had to begin as a teller in those days, and I was a rather bad teller. I made money for the bank the wrong way.’

From teller, Shaw moved to audit, did a few demonstration projects using ‘microcomputers, what we now call PCs,’ he says. A stint as a systems analyst in the controller’s office followed. When the company did a secondary offering in 1987 they saw the need for an investor relations officer and Shaw fit the bill. When Suffolk’s long tenured corporate secretary retired in 1989, he assumed that role also. 

Selecting the right person for the right job

Shaw is not general counsel at Suffolk, and he is not an attorney. For Suffolk, that’s an advantage. ‘It’s simpler. I don’t have conflicts of interest because I’m never of counsel.’  As a smaller bank, Suffolk doesn’t have an internal general counsel. And hiring internal general counsel might not be effective. The broad experience required by the bank is no different than that required by a bigger firm. Shaw helps coordinate the bank’s outside law firms, including outside general counsel as well as experts in consumer banking, commercial transactions, securities questions and human resources. His role is to identify legal problems and match them to the right skill set of internal and external resources. On commercial lending, real estate lending, consumer banking or human resources issues, he defers to the heads of those departments to obtain appropriate counsel. But Shaw runs interference, evaluating how these resources are working and deployed at any given time. ‘I’ll oversee as necessary, ask questions, watch for value and lend perspective.’

Shaw took on the role of strategy coordinator in 1991. ‘The board and executive management are obviously responsible for strategy. I author the plan that leads the discussion. Typically our CEO will be asked to lead or facilitate a strategy discussion. Afterwards, I’ll memorialize the strategy reviews. The key skill required is the ability to mediate among all sorts of people. That’s why it’s hard to come in cold from outside of any firm and be effective. You have no sense of the personalities. There is no substitute for time. With it, you can observe the key players over time.’

Shaw sees these roles as dependent on aptitude, interests and ongoing professional development. He references his systems background and his ‘keep it simple’ mantra when discussing exactly how he approaches setting up policies and procedures, or developing work product like board packages. ‘We’re a small company without extended staff, so we need to document and institutionalize how we do things. On the one hand you need good checklists, but with the sensitivity to look at potential agenda items to assess which you can just stick on there and which you need to negotiate onto the agenda.’

Forewarned is forearmed

Banking is a heavily regulated industry, and agenda items for board meetings can be largely informed by regulatory recommendations from examiners. Since the bank and it’s subsidiaries ask much from directors who attend, on average, 43 board and committee meetings a year, Shaw liberally employs his simple approach to be sure that directors receive what they need in advance so they can strategically make best use of a meeting. ‘If you have a good strategic plan, and execute it well, there shouldn’t be a lot of special items to surprise you. If there are, that can be a red flag. If that’s the case every month you have to ask whether you’ve lost focus on the business.’

Another of Shaw’s ‘keep it simple’ processes relate to annual reviews of policies and procedures. ‘We have to consider the expense to shareholders if we over-manage compliance and policy reviews. We want to do just the right amount to maintain appropriate controls. If we are doing more than we need to, we’re wasting corporate assets and shareholder value.’

Spin-free zone

‘We have a pretty snazzy internal reporting system. As IRO, I’ll have a pretty clear feel for the past quarter by about day five or six of a new quarter. Save one or two oddball items I’ll have a pretty complete set of numbers. We’ll have looked at this against what the analysts are expecting, and we write a one page release, supported by a tabular financial summary including a balance sheet and P&L, a format that requires that we keep it simple and straightforward. It’s a discipline that forces us to stay focused on what’s really important – like a haiku.’

Shaw’s CEO and CFO read the releases that come from peers, often chuckling at the spin they see from some. He notes that ‘you build the trust and confidence of your investors over time, and spin doesn’t help to do that.’

Shaw’s disclosure committee process begins with his drafting the release, and then a conference call among all participants a day or two after (audit committee chair, with optional participation from other members; CEO; CFO; controller; independent registered public accountant and Shaw as IRO). The release is targeted for distribution on the 15th of the month. A similar process applies to Q and K forms. ‘There is lots of money to be saved if you can discipline yourselves rather than making last minute changes. These really shouldn’t be a crisis each time’ cautions Shaw. The controller, CFO and Shaw have worked together for years, and in this process he finds that his IR and corporate governance hats wear well together.

Since investor relations, corporate strategy and corporate secretarial work all draw from the same body of information and on the same company contacts, this ‘puts you in the middle of things’ Shaw observes. ‘Strong relationships with your directors and management are needed to be an effective corporate secretary. The same relationships are required in order to really understand corporate strategy. And this understanding is required to be able to articulate strategy and makes you an effective investor relations officer and better at traditional shareholder relations.’

And Shaw’s unique knowledge of what it means to run a small company positively impacts Suffolk’s corporate relations. ‘We’re a small and relatively simple business,’ he says. ‘We’re not a complicated story. Enough is what we want to do – not more for the sake of more. We try not to make things more complicated than they have to be.’