Corporate Boards Get Busy Online

More companies are communicating with directors over Internet portals, but the push for paperless governance isn't always easy

by Rachael King

Keeping board members abreast of company matters was getting out of hand for credit risk management firm Radian Group (RDN). Before each quarterly meeting, the company rushed to assemble and ship bulky board books—some containing as many as 300 pages and each replete with confidential information—to all 10 board members scattered across the country. The task became even more complicated when directors were traveling, says Rick Altman, Radian's senior vice-president for corporate planning.

So last summer, Radian began to use BoardLink, an online portal from Thomson (TOC), to distribute online board books, schedule meetings, and send secure messages. "We wanted to ease communication at board meeting time and in the interim period, and to do that in a more secure fashion," he says.

Secure Online Portals Proliferate

Radian is one of a growing number of companies that are starting to implement online portals and other tools to help boards of directors communicate more efficiently. Companies such as Chevron (CVX) and Allstate (ALL) have created homegrown Web portals, according to a report from the Society of Corporate Secretaries & Governance Professionals. BoardVantage, a company that offers online board portals, counts 20 of the Fortune 100 as clients. Other vendors that offer software and services for boards include 80-20 Software, InfoStreet, Diligent Board Member Services, IntraLinks, ENDEXX, and Computershare World Records. In a survey published in 2005 by the governance group, about 12% of respondents said they use a Web site for board communications.

Interest in these tools appears to be growing. On June 29, the NASDAQ stock market (NDAQ) said it would acquire Directors Desk, a small firm in Washington that sells online collaboration workspaces to boards of directors at companies such as Eastman Kodak (EK). "We really are trying to provide our companies with all the tools they need to be public companies," says Bruce Aust, executive vice-president for the corporate client group at NASDAQ.

For some, private portals provide greater security than other methods of staying in touch. E-mail is the most common means of electronic communication, but about 53% of companies use unencrypted e-mail to communicate with the board, according to the 2005 survey. Those e-mails, which may contain sensitive information, can potentially be intercepted. "If you don't give directors a secure way to communicate internally, it's going through their system and it's all over the place," says Nicole Silsby Sandford, partner in corporate governance services at Deloitte & Touche.

And in recent years, amid a rash of corporate scandals and more stringent oversight requirements, boards are becoming all the more actively involved in companies. That in turn necessitates more frequent communication. About 64% of 1,468 respondents to a February, 2006 McKinsey survey said boards have become more actively involved in strategy, finance, and other areas of corporate performance than they were five years earlier. Noridian Mutual Insurance Company now meets six times a year, up from once a quarter, says Michael Hamerlik, Noridian's corporate secretary.