SEC comment to a Fortune 1000 board in September 2010: “Please revise your disclosure to discuss the specific experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a director. Your current disclosure is too general (emphasis added).”
Jeff Cunningham
Dodd-Frank has made experience the equal of expertise. It’s not, so don’t fall into that trap. That’s just another mechanism the plaintiff bar can use to assess liability against a board because it proudly claimed deep experience in its disclosures. Boards must go further.
Experience is a dwindling asset, while expertise is renewable. At a recent roundtable I moderated with Mary Pat McCarthy of KPMG, Alex Mandl, former president of AT&T, and today a director at Dell, was asked about the shelf life of a director’s technology knowledge. His answer: six months. Even directors with outstanding experience can rapidly lose their edge without continuous learning.
Where does that leave us? With the development of a new tool that will do for boards what Crotonville does for GE: I call it “Think Week”—a concept originally designed by Bill Gates to set aside time to think about how to take Microsoft into the future. For the board, Think Week is a time when directors and managers, experts and customers can meet to review the business, the models, the risks, and most importantly, assess qualifications and expertise on the board, then benchmark results against the peer group. What makes this any different than typical board sessions? More interactive, more time to absorb, more of a learning environment and more personal. With Think Week, the proxy statement won’t only be referring to the directors’ pasts, but how they are preparing for the future.
Jeff Cunningham is managing director and senior advisor to NACD. He is nationally known for his views on boards and corporate governance. Prior to starting Directorship magazine, he was publisher of Forbes and managing partner of the U.K. private equity firm Schroders. He has served as an independent board chair or director of 10 public companies.