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Elizabeth Hammack Becomes a Prestigious NACD Fellow

Elizabeth Hammack Becomes a Prestigious NACD Fellow

NACD Fellows Demonstrate Their Commitment to the Highest Levels of Corporate Governance and Leadership in the Boardroom

WASHINGTON, August 5, 2013 — The National Association of Corporate Directors (NACD) is pleased to announce that Elizabeth Hammack of Granite Bay, CA has become an NACD Fellow, the highest level of credentialing for corporate directors and corporate governance professionals.  Ms.  Hammack currently serves as a director on the boards of two private companies.

As an NACD Fellow, Ms. Hammack has demonstrated her knowledge of the leading trends and practices that define exemplary corporate governance today, and has committed to developing professional insights through a sophisticated course of ongoing study.

“I am honored to join the distinguished and diverse group of individuals who make up NACD’s Fellowship program and who have committed to advancing the highest standards of boardroom leadership,” said Ms. Hammack. “The resources, insights and connections I’ve made through NACD’s Fellowship program will be key assets to the companies I serve, as well as to my professional growth as a director.”   Ms. Hammack also provides advice to private company owners and boards at the BrainTrust Board Advisors, Inc. website, BrainTrustBoard.com.

“We are proud to announce that Ms. Elizabeth Hammack has joined NACD’s credentialed directors and has taken the next step in the pursuit of boardroom excellence,” said Ken Daly, president and CEO of NACD.  “Our fellows help advance the highest standards for those who serve in the boardroom, strengthening our businesses and driving director professionalism. The impact of this program is unmatched and they should be commended for their ongoing commitment to their own professional development.”

Candidates for NACD’s Fellowship Program complete a strong foundation course which focuses on topical matters and committee-specific issues, followed by additional NACD education within a 12-month period. NACD Fellows renew their status every year, maintaining and advancing their knowledge with continuous learning and peer-led collaboration.

NACD’s Fellows serve on boards of some of the largest and most diverse corporations in the world, including NASDAQ OMX- and NYSE-listed companies such as Advance Auto Parts, Aetna, AstraZeneca, Ball Corp., AmeriGas Partners, Blackbaud, Broadridge Financial Services, Carpenter Technology Corp., CoBiz Financial, Cummins, Dell, The Dow Chemical Company, HealthSouth, Horizon Lines, INVESCO Ltd, JetBlue, Liquidity Services, Medtronic, Microfinancial, Nabors Industries, Nash Finch, PICO Holdings, PPG Industries, Sahale Snacks, Sonus Networks, Tiffany, Umpqua Bank, Union Pacific, UnitedHealth Group, Winn-Dixie, Zebra Technologies and Zynex.

NACD Fellows represent hundreds of companies and provide a snapshot of the caliber of corporate directors engaged in continuous learning with NACD–the leading organization that identifies, interprets and provides insights and information that boardroom leaders rely upon to apply their wisdom and knowledge and make sound strategic decisions.

For information about the NACD Fellowship program, visit www.NACDonline.org/Fellowships. Directors who are interested in becoming an NACD Board Leadership Fellow can contact Lori Whitehand, NACD Fellowship Manager, at 202-572-2084 or email Fellowships@NACDonline.org.

About NACD 

The National Association of Corporate Directors (NACD) is the only membership organization focused exclusively on advancing exemplary board leadership.  Based on 35 years of experience, NACD identifies, interprets and provides insights and information that corporate board members rely upon to apply their wisdom and knowledge to make sound strategic decisions and confidently confront complex business challenges and enhance shareowner value. With more than 11,500 corporate director members, NACD provides world-class director education, director training and proprietary research about leading boardroom and corporate governance practices to promote director professionalism and bolster investor confidence.  Furthermore, to create more effective and efficient boards, NACD provides corporate boards and their directors’ independent board evaluations and custom-tailored in-boardroom education and training programs, as well as director-led conferences, forums and peer-exchange learning opportunities to share ideas about current and emerging issues. Fostering collaboration among directors and governance stakeholders, NACD is shaping the future of board leadership. To learn more about NACD, visit www.NACDonline.org. To join, please contact Kelly Dodd at kkdodd@nacdonline.org or 202-380-1891.

 

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Is Your Board lazy?

Is Your Board lazy?

Boards can have Directors with stellar credentials.  The directors maybe be diverse in background (or not) and have fabulous skills and experience.  In theory and on paper, the Board is first rate.  But in practice, its it failing.  Directors are not coming prepared to meetings; they are not reading materials in advance; they are not calling before the meeting to ask the CEO, CFO or GC questions on major issues.  They are not keeping up to date on Company press releases or products or new business lines.  And by “they” I do not necessarily mean the whole Board.  It only takes one or two Directors to start the Board down the slippery slope to institutionalized laziness.  And laziness can be contagious.  Even with the brightest, most experienced professionals.  Directors temper their own behavior (consciously, or more often unconsciously) off the behavior of others in the groups they frequent.  So, if one or two Directors come to meetings noticeably unprepared, not only does it make the Board meeting less productive that one time, but it leaves an impression on the other Directors.  A well run Board or proactive Chairman will take those Directors aside immediately and inform them that being unprepared is unacceptable.  Almost better not to attend than to come unprepared to a meeting.  One Director’s behavior can affect the entire Boards’ behavior and culture, not just at that particular meeting, but at subsequent meetings as well.  Laziness, like a weed, must be quickly quashed, lest it spread among the other members of the Board and ruin the harvest.

Some laziness is not blatant or obvious, but to us who have sat in hundreds of Board meetings, we see the signs.  When directors bury their noses in the Board binder of materials when they arrive, it means they did not read the materials beforehand.  As a Board secretary, I always knew those Directors would be useless at the meeting.  In fact, whatever that director said would probably be a waste of time – a non-sequitur, meant to highlight his or her intelligence or skill, but contributing nothing to the matter at hand.  The unprepared Directors often were those who spoke a lot at the meetings; more interested in getting their voice heard or asserting their own points of view than taking time to understand the details of the matter.  Staff or executives who spent days preparing the meeting materials, would then need to reiterate all the information to those Directors who did not prepare.  In many instances, the staff is not given the opportunity to educate those lazy directors – and poor, uniformed decisions were made.  Failure or less than optimal outcomes are the result.

Directors – be prepared!  Not only will you fail the Company and its shareholders by indulging in laziness, but you risk personal liability.  You are a fiduciary!  You have a Duty of Care!  A critical part of that is being informed and prepared.  Do it or resign.

Chairman – Observe.  Who asks questions or makes statements just to talk?  Who asks questions that show they did not read the material?  Take those Directors aside immediately after the meeting (if circumstances call for it, take a break during the meeting) and discuss the behavior.

Behavior can show the true nature of a person.  If this Director comes to another meeting unprepared, take the director aside and ask for his/her resignation on the spot, even if it disrupts a meeting.  You have to take a stand.  The Chairman sets the tone for the Board and the Board sets the tone for the whole company.  Laziness is more insidious than you can believe.  Once the Board gets a reputation as lazy, the executives may start down the same path, then employees, etc…

Posted in: Genral Management, Information, Interesting Topics

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Temptation Is Always Here

Temptation Is Always Here

Ahhhh, it may not be obvious, but it is so, so often there to some degree.  Temptation.  Temptation to pad one’s wallet, or indulge in a pleasure not often afforded to you.  It does not necessarily have to be at the expense of others either.  Just doing something that helps line your pocket or make your life materially, physically or otherwise better in some fashion, do something which you would not otherwise have the opportunity to do or have something you would not ordinarily be able to easily obtain.  You can have either a strong or vague feeling that it is not quite right, but no one is really going to get hurt, so its OK.  Hopefully, it nags at you.  If its does not, then, well, you are probably “ethically challenged.”  In the context of a Corporate Board, acting on temptation can lead to personal liability not only for the Director (financial, legal, financial and/or reputational), but often for the rest of the Board and the Company.

Temptation can be reduced, if not eliminated, with the introduction and use of a Code of Ethics (also called a Code of Conduct).  The most important parts of such code are the rules for what activities, financial investments, connections and relationships a Director must disclose.  Disclosure is key to the mitigation of improper acts instigated by temptation.  If a Director has disclosed all existing and potential conflicts of interest, there is no temptation to take an acton to obtain something (given ones position as Director) behind the backs of the other Directors.  A Director should not be able to financially gain from a relationship based on the fact that they are a Director of a company (for example, a Director should not profit from having the Company use a product that the Director’s personal company produces at an above-market price) to the detriment of the shareholders.  The interests of the shareholders must be primary.  The Director cannot be allowed (or tempted) to put his or her own interests before that of the shareholders.  Directors have legal duties not to so so (Duty of Care and Duty of Loyalty), but  a Code of Ethics can provide clear guidelines for disclosure and avoidance of conflicts of interest.  It is best to avoid conflicts of interest, so Directors must be cognizant that once they join a board, they may be restricted in their personal behavior and investments in the future.  If a potential (or current) Director is not willing to so personally restrict themselves, they should not serve on a Board.  Smart ownership and chairmen will vet their Directors and, ideally, not hire any Directors with any, let alone significant, existing or potential conflicts of interest.  Since not all temptations (conflicts) can be anticipated, a Code of Ethics can serve as a backstop.  Directors (and counsel) should regularly review the Code of Ethics, keep its guidelines fresh in the minds of the Directors, and revise its guidelines when appropriate.

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Boards & Social Media – Part 3

Boards & Social Media – Part 3

Following up on my previous Blog in which I championed having rules in place for how Directors use social media and technology for their Board duties, this Blog asserts that Board in consumer product or services industries should have a Director who is a tech savvy marketer.  The internet, mobile media and social media are so prevalent in every part of our lives, that a Company which does not have at least one Director who has a strong understanding and hands on experience with those technologies an marketing tools is doing itself a huge disservice.  In my book (BrainTrust Boards), I argue that having a marketer on the Board is a necessity if your company sells anything to the public, or a subset of the general public (whether you sell household products, legal services, tax preparation services, software, car parts, or pharmaceuticals).  As I discuss in the book, the Board needs directors who have a direct connection with the world outside the Company, can see new developments in other industries and technologies that can be applied to the Company.  More and more, not only do you need a marketing expert, but one that is also savvy in social media marketing (the dos and don’ts and emerging marketing techniques linked to social media).  Get in touch with the real world that your Company has to live and compete in – make sure you get a Director on your Board with expertise in Marketing and the new technology and media driving consumer opinion and purchasing now.

Posted in: Education, Featured, Interesting Topics

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Boards & Social Media – Part 2

Boards & Social Media – Part 2

Boards should have a Social Media policy for themselves.  As we learned in the Rock Center survey on social media (see Blog: Boards & Social Media Part 1), some Directors use social media in the personal and business context, others only in the personal context, others not at all.  You should have guidelines in place both for the protection of the Company, but also for the protection of the Directors.  Because Social Media is relatively new to the world of business (& Boards in particular), Boards have not integrated rules around usage of social media into their governance rules or ethics rules.  A Social Media policy can be a ‘stand alone’ policy or covered within Boards’ other governance & ethics rules.  Regardless of how it is documented, it should be documented and the Directors versed in the rules.  As most of us know too well from experience, it is far to easy these days to type something in a moment of anger or without properly proofreading, and with a too quickly push of a button send an email out that is embarrassing, regretful or even damning.  And that is just with email, with FB, LI and Twitter, a mistaken tap of a button could have that embarrassing or incorrect statement broadcast to thousands of people (clients, customers, shareholders, news media, employees, etc…) and cause havoc, loss of reputation and potential liability. Don’t be that Director or that Company; get the rules in place upfront and make sure the Directors stay abreast of the developing social media platforms and technology.

Posted in: Education, Information, Interesting Topics, Private Company News

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Boards & Social Media – Part 1

Boards & Social Media – Part 1

The Conference Board and the Rock Center for Corporate Governance at Stanford University issued the results of their survey of executives and board members in North American companies regarding their views of social media earlier this year.

After discussing the potential benefits of social media (ability to: engage closely with and collaborate among stakeholder; gather information inexpensively and quickly on market, competitors, products and stakeholders; and disseminate information quickly) and risks (loss of control over company and product branding, reputation, proprietary information; potential for quick spread of misinformation to market and stakeholders), the report proceeds to show the feedback from executives and directors on their knowledge and use of social media.  The vast majority were familiar with the names of the largest social media sites (Facebook, Twitter, LinkedIn, Google+, etc.).  13% did not have a social media account.  The most common site that the respondents had accounts on was LinkedIn (80.4%).  41.3% said that they used LinkedIn most frequently and 17.9% said they used Facebook most frequently.  The results also said that the respondents used social media for personal purposes and business purposes.  I thought that was rather predictable and no surprise.

What I found interesting, however, is that 76.4% said that their company used social media to support or promote its business, but 65.6% said that their company does not use information gathered from social media as part of key performance measures to track the success of business activities.  Also, 50% said that they do not use social media to monitor potential risks to business activities, and 17.65 did not know if social media was used in the rick monitoring process.

Furthermore, at the Board level, 90.7% said that the Board has no oversight over social media monitoring efforts, and 85.8% said that the Board does NOT receive any reports containing summary information and metrics from social media.   Even more surprising for me is that 55.5% of senior management does NOT receive any reports containing summary information and metrics from social media.  Those results did surprise me.  In this digital age and rampant social media use, I would have thought that all senior managers not only received reports, but had input as well to the social media strategy.

Boards should be more aware of not only what their company is sending out through social media, but also the information and metrics that can be gathered with social media.  Not paying attention to something like the company’s social media strategy, its results and the strategies and results of the company’s competitors (and potential competitors) can cause the company to loose control, among other things, of their brand, market sentiment and the direction of their industry.

Posted in: Education, Genral Management, Interesting Topics

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10 Things To Know Before You Join a Private Company Board

10 Things To Know Before You Join a Private Company Board

Meeting the Chairman of the Board, perhaps some, if not all of the other Directors, the CEO and, the owners (or largest shareholders) of the Company is not enough.  If there was a recruiter involved, she may have provided some additional information on the company and people involved.  However, before you agree to join a Board, you really need to dig deeper, otherwise you may find yourself regretting your decision.

Here is a list of things to know before you say ‘yes.’

1.  Who are the other Directors

Not just their names, but their backgrounds, personalities and reputations.  If possible, have lunch or dinner with each.  Can you work with each one?   Can you trust each one?  Not just trust in the sense of their honesty, but do they seem active and engaged?  Are they willing to share their experience?  Are they open to new ideas and interested in the company?  You will be working with these handful of people for years to come.  You want people around you who will contribute to a positive and productive work environment and help you increase shareholder value.  Even one ‘bad apple’ can taint the culture of the Board and ruin its effectiveness and the willingness of others to contribute.  It is not worth your time to join a dysfunctional Board, or worse, one that will damage your own reputation by association.  A Director needs to be cynical  and objective; use those skills when assessing your fellow Directors-to-be.

2.  The financial status of the Company (review at least 3 years of financials; including latest to date)

Ask for the last 3 years of financials (hopefully they are audited financials by a reputable accounting firm) and the year-to-date (usually unaudited) financial statements.  Review them carefully, noting trends and outliers.  Get familiar with the balance sheet, cash flows and revenue/expense figures.  Most private companies will not give you their financials early in the recruiting process.  However, once they have made an offer for a board seat, you really do need to see these before you can give a final answer.  You should raise any concerns immediately with the Chairman and, ideally, one other person (director, CFO,  auditor, etc…).  Unless you are comfortable with the answers, decline the board seat.  I am not saying you should only agree to sit on the boards of companies with strong balance sheets or excellent revenue projections – companies go through cycles and sometimes those who are in financial difficulty are the ones that are the most rewarding to work with for a director.  The point here is to make sure the company has its finances in order, accounting is being properly done and reviewed and there are no red flags.

3.  Mandate from the Shareholders/Owners; Vision for the Company

Unlike public companies, Private Companies are usually owned by a small distinct group of people, such as a family or a few founders.  These owners may have a vision for what they want the Company to do or become.  Such vision may not center around maximizing profit.  For example, the owners may care deeply about the environment and tell the Board that they want the Company to only use vendors who meet certain ‘green’ standards or otherwise impose other goals on the company besides maximizing profit.  So, you need to know what limitations and visions the shareholders are imposing on their company.  This can be a really enjoyable challenge for a Director.  It can cause you broaden your own vision and work on goals that are more satisfying that mere profit maximization.  However, some visions can clash with your own philosophies or are unappealing to you.  It is best if you know about the shareholders’ vision for the company before you join the Board.

4.  What is the D&O Liability Insurance Coverage

Being a Director opens you up to potential liability.  Even if you are the epitome of a perfect Director, obeying all legal rules and acting always in good faith and in an informed manner, you can be sued.  The lawsuit can be frivolous, but there are always legal costs involved.  Often legal defense costs can be enormous.  For a director of a private company, even when the private company has an indemnity provision in the bylaws or in your contract, it is only as good as the company is viable.  A bankrupt company cannot pay your defense costs.  Sometimes you can get the shareholders to sign an additional indemnity, be you still have the same problem.  Make sure there is commercial Directors & Officers liability insurance in place and ask to review the policy.  I would also recommend that you have an attorney or insurance expert/broker review the policy as well.  Private company directors may not have the exposure to huge shareholder class action lawsuits that public company directors have, but they still are subject to potentially large liabilities.  Protect yourself.

5.  Governance Rules for the Board

Ask to review the Board’s Governance Rules.  If there are none, this is not a deal-killer, but it is a concern.  Discuss with the Chairman whether there are any unwritten governance guidelines.  Whether there are or not, ask the Chairman if he is open to having Governance Rules drafted and in place.  As discussed in my book, Governance Rules are like the foundation of a house, without them the structure is weak and subject to collapse.

6.  Code of Ethics

The Board should also have a Code of Ethics.  Sometimes it is in the Governance Rules, or sometimes the Code of Ethics for the company also encompasses the Directors.  Read it and make sure you understand the rules and processes to follow the rules.

7.  Social Media Policy

Many Boards do not have a Social Media Policy yet.  If yours does not, suggest strongly they create one.  Sometimes the company has such a policy and you can broaden it to include Directors or model the Board’s policy on it.  In the modern business world, social media has a huge impact – not only in influencing customers, but employees, vendors and your local community. A company’s reputation can be adversely affected by an inadvertent or poorly worded tweet.  You need a policy and one to which all Directors acknowledge and adhere.

8.  Director Education & Evaluation policies

How are Directors evaluated annually?  Is there a process in place?  What has been the results in the past?  Who conducts the evaluations?  Is feedback given?  Is the process transparent?

9.  How much access will you have to the executives other than the CEO

As stated above, I have assumed you met with the CEO and perhaps the CFO, in addition to the Chairman and some of the Directors.  But how much access will you have to executives?  Is the CEO willing to allow you direct access without going through him?  You need to evaluate the CEO, his personality and confidence in himself and his staff.  Insecure CEOs will not want you speaking to his staff without his knowledge or presence.  Ask Chairman and other Directors their experience in reaching out to the executives.  Of course, as a Director, you need to ‘keep your fingers’ to yourself, but you also need to ‘stick your nose in’ matters and often that means calling up the CFO or GC or VP of HR to ask questions.  If you are not given assurances and believe that you will be given access to executives, then you will not be able to do your job properly.

10. How Diverse is the Board

Is there skill, background, age and/or other diversifiers on the Board?  Is everyone similar?  Are you similar? Or are you the only minority or token diversifier?  Think about how effective (not) a homogenous Board is and whether you want to join such a Board.  On the other hand, if the Board is diversified, but the skill sets are not adding value to the Board (for example, the Chairman has put his friends on the Board who are very diverse, but their skills or background have nothing whatsoever to do with the business of the Company).  Another example is a Board that is loaded up with one type of skill, such as former CFOs and other financial/accounting types.  It may be appropriate in certain industries to have a board with more of those skills, but to have a Board extremely overweighted in any one skill is not going to be as effective as one with more and relevant skill sets – and most importantly for a new Director, not as interesting.

Most of this information should be set forth in the Board Manual, which you should ask to review before you accept the position.  However, many Private Companies do not have a Board Manual, so be sure you go through the list above to make sure you go in with eyes-wide-open.

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Open For Board Excellence

Open For Board Excellence

BrainTrust Board is officially open for business as of January 2013.  The site BrainTrustBoard.Com and the Blogs that  appear on the site, will primarily provide advice and insight for Boards of Directors, particularly for Private Companies.

Private Companies comprise the majority of businesses in the United States, yet most all governance information is directed at public company boards.  This site and its blogs seek to remedy the lack of information by providing resources to Directors of Private Companies in an easy to access and easy to understand format.  Not only will the site BrainTrustBoard.com  have general board and corporate governance information, but will also contain opinions of a former general counsel, board secretary and board member.  We look forward to an interesting and informative 2013 and beyond.  Thanks for visiting.

Posted in: Company News

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