It's a New World, and Welcome to It
from November/December 2006
What are the main ways in which independent directors are having an impact on your board?
Foremost, says one director, bluntly articulating the views of many, they ensure that "the board is not a tool of management anymore."
They bring wisdom that comes from experience, and alternative ways of thinking about issues.
Peter T. Kissinger, 61
Chairman and CEO, Bioanalytical Systems, West Lafayette, Indiana
Independent directors are responsible for the much greater focus today on the board’s representing shareholders as well as suppliers, customers, and employees. Independent directors have taken that role of being truly independent very seriously. There has been a very important balance of responsibilities. The board is not a tool of management anymore. Board seats are no longer lifetime appointments.
Albert E. Paladino, 74
Chairman, RF Micro Devices, Greensboro, North Carolina
The impact of independent directors is felt most in a situation where the CEO comes in with the answers already canned. The independent directors ask the hard questions; they say, “Whoa, let’s hold on a second and walk through your thought process.” Even the best-intentioned inside directors have some kind of conflict that might cause them to hesitate and think about whose toes they’re stepping on. But as an independent director, it’s my job to ask questions until I’m satisfied.
Robert A. Beardsley, 45
President and CEO, Kereos Inc., St. Louis
CollaGenex Pharmaceuticals
Independent directors represent an evolutionary, progressive change. I don’t think creating conflict between directors and senior management is advised, but independent directors’ questioning senior management is important. The linchpin is, how independent are the independent directors?
Aubrey B. Harwell Jr., 64
Managing Partner, Neal & Harwell PLC, Nashville
Piedmont Natural Gas
I think the focus on independence has been one of the most critical and positive moves in the past five years. However, like other things, this can be taken too far. I saw a great cartoon where a guy was cryopreserved and the doctor is standing over him and says, “The good news is, you made it, you’re alive, you’ve been frozen for four years. But the bad news is, you’re the only person in the country who qualifies as independent and you have to serve on 4,383 boards.” Sometimes we miss the big picture on independence and get caught up in the sillier aspects of it. You can have people who are independent according to the rules, and yet if they don’t come to the boardroom and begin critically thinking about the issues and be willing to put down all their other agendas and work for this organization, then whatever you’ve done to check for independence is for naught.
Alice M. Peterson, 54
President, Syrus Global, Chicago
Williams Partners LP
Does your board have more interaction on the internet than it did two or three years ago, and if so, how? Do you like that?
We like it, we like it. We just don't fully trust it.
Absolutely. Technology is transforming the boardroom. The day-to-day speed at which information is being passed has vastly improved through technology. At one company, we receive all our board books electronically in a PDF file, so we read our huge board manuals on our own computers. Then when we get to the meetings, there are screens set up at each chair and you can scroll through the manuals on the computer at your desk at the meeting. And they’ve developed a section on the website for directors only, with a password and a PIN to get in, so you can access the minutes of any meeting. You don’t need to keep a lot of paper on hand. Our board is way out in front on that.
Karen M. Bohn, 53
President, Galeo Group, Edina, Minnesota
Gander Mountain Co., Otter Tail Corp.
The Internet is invaluable for getting access to board information if one is traveling and a board package fails to catch up with the traveler, and for archiving all the information we get as board members. I’m delighted to get all those piles off my floor, as the information is now in the board website, with easier access. But because of litigation, where statements can be taken out of context, the Internet is not good for board interchanges about issues. Those should take place in phone or in-person conversations.
Wendy Lane, 55
Chairman, Lane Holdings, Needham, Massachusetts
Laboratory Corp. of America Holdings, UPM-Kymmene Corp., Willis Group Holdings
The Internet has made it so easy for companies to communicate with their directors. They used to call us, then they faxed us, and now they e-mail us—it’s there for me to read whenever I want. When Premiere Global makes a big sale, millions of dollars in revenue, I get a notice of that over e-mail. In the past the CEO had to call up seven or eight directors individually.
Raymond Pirtle Jr., 65
Chief Manager, Claridge Co., Nashville
eNucleus Inc., IceWeb Inc., Premiere Global Services
On my boards, it’s used only for scheduling. Board books have to be read—that’s paper. And frankly, I think there’s more attention paid to board books because it’s on paper than if it were online. So we do scheduling online, but we wouldn’t use it for meetings or for communications or reading or studying.
Robert J. Easton, 61
Chairman and Co-Founder, Easton Associates LLC, New York City
Cepheid, CollaGenex Pharmaceuticals
The Internet has helped speed communications among board members. Gottschalks director Jorge Pont Sánchez in Madrid is nine time zones away, but I know I can reach him via e-mail. Beyond that, docking and inventory systems and RFID [radio frequency identification] tracking can all be transmitted via the Internet, and that will revolutionize business in the future. And there are a whole host of other innovations, from tracking of equipment in the field to speeding field reporting, that enhance the quality of information we get as directors. The one caution I have about the Internet is that having a lot of communication traffic can be mistakenly perceived as quality communication. Before the Internet, people seemed to be more aware of what they were communicating in terms of its substance, and they were more thoughtful.
Joseph J. Penbera, 59
Professor, Craig School of Business, California State University, Fresno
Blast Energy Services, Gottschalks Inc.
Our Internet interaction has increased and can be quite useful. But I still feel it is not a useful place for truly sensitive discussions.
Neil Williams, 70
Former Managing Partner, Alston & Bird, Atlanta
Acuity Brands
We communicate mostly by e-mail. Right now the company is looking aggressively into having an interactive board site, trying to figure out how we keep it secure. The Internet is a tool, but you can become too dependent on it. Another drawback I see is that the demand for an instant response is so enormous that we don’t give ourselves time to reflect. I think that’s an issue for the world in general: There’s not enough time to reflect.
Kay S. Jorgensen, 55
Owner and CEO, K.S.J. Enterprises LLC, Spearfish, South Dakota
Black Hills Corp.
