1. THE DYNAMICS OF GETTING ON A PUBLIC CORPORATE BOARD
ELLEN B. RICHSTONE
JUNE 2017

2. NUMBER OF PUBLIC COMPANIES HAS REDUCED: US BOARD POSITIONS LESS
1997– through 2016
US down by 46%
NON US up by 28%
Number of Directors on each US board also dropping- average 11 for large cap; 9 for Mid Cap;
Many going down to 7

3. Time Commitment Rising Average Age of Directors increasing
Board Compensation rising slower than time commitment

4. Board Compensation (2016) Size* Avg. Total Compensation % Cash
Micro $121, %
Small $157, %
Medium $181, %
Large $222, %
Top $272, %
All Firms $191, %
Micro ($50-499); Small ($ ); Medium ($1-2.4 Billion); Large ($2.5 B-9.9)
Top 200 ($10 Billion plus):
Source: NACD Director Compensation Report

5. BOARD REFRESHMENT: WHAT DRIVES IT?
MAJORITY:
RETIREMENTS
TERM LIMITS
ILLNESS OR DEATH
SPECIAL SITUATIONS
M&A
CHANGING NEEDS IN BUSINESS STRATEGY
ACTIVIST SHAREHOLDER

6. Differences between Public and Private Boards
Needs
Legal Compliance
SEC reporting
Visibility: Reputational Risk
Time Commitment
COMPENSATION (not negotiable)

7. Director Needs Change with Company Life Cycle
Start UP Rapid Growth Maturity Distressed
TYPE:
Private Hands On/ Specialization Broad Exp Legal, Exit M&A
Pre-Pub Prior IPO Specialization Indust Exp Legal; M&A
Public SEC Finan/ IR, Marketing Corp Finance/M&A
Mature/
Public Broad indust Exit strategy
New Prod intro/
Life Cycle Mgmt.

8. CHARACTERISTICS OF NEW INDEPENDENT DIRECTORS
Title or Skill set
Financial Background % 25%
Divisional President/Functional 15% 23%
Active CEO’s/ Presidents 29% 19%
Retired CEO’s % 19%
Academics/nonprofit 8% 4%
Consultants % 3%
Lawyers % 1%
Others % 6%
ACTIVE OR RETIRED CEO’S MAKE UP 38% OF NEW INDEPENDENT DIRECTORS

9. How Do Boards Decide on Needs:
Hot Need Areas:
Digital Marketing
Technology
Sitting CEO of Public Company
Financial Expert/ Experience as Audit Chair of a Public Company

10. THE CURRENT ENVIRONMENT: LOOKING FOR A DIRECTOR
Lots of candidates –
Most boards do not want to be your first public board– they want you to go through learning process elsewhere
Premium on Women or Minority Candidates– but still 75% of seats going to white males
Age can be a factor: Age limits are moving to between 72-75: Most boards do not want someone for less than eight to ten years. So after 65 probability of getting on your first board drops significantly.

11. SO HOW DOES A BOARD DECIDE WHO TO ADD?
IT STARTS WITH AN EVALUATION OF WHO THEY HAVE
REINFORCED BY REQUIREMENT TO DISCLOSE WHAT EACH DIRECTOR’s VALUE IS.
NOMINATING GOVERNANCE USUALLY TAKES LEAD

12. Skill Matrix Review: Board Composition
Company’s strategic plan
Future combined with tactical expectations
Evolving Structure
Strengths, style interests
Competency today and in the future
Succession discussion
Gap analysis today and in the future
Sample skills matrix- handout

13. Best ideas for getting on Boards
NETWORK
SPEND TIME WHERE BOARD DIRECTORS ARE
ROLE OF RETAINED SEARCH FIRMS IN BOARD SEARCH

14. Spend time where Directors spend time
NACD (National Association of Corp Dir)
Seat at the Table
WCD (Women Corporate Directors)
ACCD (American College Corporate Directors)
Audit Firms have Audit Committee programs; Deloitte-Governance.
Law Firms have Director institutes
Board Leaders

15. Understand your value add
KEY STEPS: 1
Understand your value add
Board Style: Bio and Resume- different than traditional
Education: Bootcamps/ Webinars; programs to be current with public company board issues; Demonstrate your seriousness.

16. KEY STEPS: 2 Networking with:
People you know WELL professionally who currently sit on public boards
People you know WELL professionally who are advisors to public boards
People you know well- personally who currently sit on public boards
Getting on your first board is the hardest: % of the time it will be through your network.

17. Once you get the interview?
Questions to Ask Before you join a Board (article-handout)
Be prepared
Come with questions: strategic as well as tactical

18. From start of process: often quoted for first board: 18-24 months
Time Frame
From start of process: often quoted for first board: months
Faster if need is urgent: example Audit Chair