Proxy Access: Be Sure Your Board Is Ready

(page 2 of 2)

Revisit your director orientation program. Whether you choose to address board composition proactively or are forced to react to a shareholder candidate, the bottom line is that proxy access is likely to result in new directors entering the boardroom. As such, nominating/governance committees would do well to revisit their director orientation programs. Regardless of how a new director joins your board, he or she will be in a better position to contribute to board discussions and decisionmaking after getting a comprehensive orientation about the company, its business, competitive landscape, and people.

Learning about a new company, especially if a board member comes from outside the industry, can be challenging. Fortunately most companies have moved past the practice of handing new directors a binder and instructions to show up at the next board meeting. A full day or two at company headquarters meeting with the CEO and other executives is now the norm. While this is always a good idea, it can be somewhat overwhelming for a new director.

For this reason, many boards are now dividing director orientation into two phases: An initial session either before or just after directors attend their first meeting is followed by a second session six to nine months later. The follow-up session is valuable because new board members have by then had a chance to pursue a learning curve. They will often have different questions at this stage than at the outset, yet they'll still find it valuable to have a private day of orientation to ask those "dumb questions," exploring answers in detail rather than spending time on them during a board meeting.

Be sure to include site visits in your orientation program if your business lends itself to this practice. Touring a plant, spending an afternoon in a franchise operation, or visiting research labs can provide a far greater sense of the business to any new director than could months of PowerPoint presentations in a boardroom.

Even if proxy access doesn't become an issue for your board, reviewing board composition—identifying gaps and taking steps to identify candidates to fill them—and updating your director orientation program can still be a valuable exercise for your nominating/governance committee. Doing these things will not only put you in a better position to respond if a proxy access proposal comes forward, it may inspire some excellent ideas your board will want to explore in any event.

Beverly Behan has worked with more than 85 boards of directors over the past decade on issues including CEO succession planning, board engagement in strategy, board and director evaluation and general consulting to boards and CEOs on maximizing board effectiveness. She can be reached through her website: www.boardadvisor.net.

Business Exchange

Track and share business topics across the Web.