New general counsel navigating the boardroom are faced with a myriad of challenges: building relationships with the board, understanding the necessary processes, and decoding board members’ personalities, to name but a few.
Christine Edwards, capital partner at Winston & Strawn and Peggy Foran, chief governance officer, vice president and corporate secretary at Prudential Financial, were among the panelists during an invitation-only gathering at the Women, Influence and Power in the Law conference Washington, D.C.
“Half of the battle is knowing the comfort level in the boardroom,” Edwards said. One way to get a pulse on what that comfort level is us through executive sessions during committee meetings.
“In committees, they are very different because the committees is where the senior management are far more actively involved,” Edwards explained. “It gives members of management further down in the organization a chance to engage with many of the directors.”
While annual meetings may seem like a necessary evil to leaders of public companies, they are very important to the board.
“It’s a process. The CEO of the company has to go through ‘what are my questions.’ I think the point of this is to respect the fact that directors take that very seriously,” Edwards explained. “Shareholders and investors and activists are using those communications in so many different instances to talk to the directors of the board about their expectations.”
Foran advises inside counsel to provide board updates to disseminate to executive officers and board members.
“I search the board members and their companies. I get to know their corporate secretary or general counsel … because of board dynamics, people in a group will act a little differently,” Foran said. “Do your homework so you can understand them and understand what their industry is so you can understand what their issues are.”
Culture is another area where GCs need to understand, according to Paula Cholmondeley, an independent director who sits on the board of Terex.
“Get to know the culture of your board. They are the highest self-directed part of the team. Those positions are at best the first among equal,” Cholmondeley said. “Understand where you company fits on the scale of best practice within corporate governance. At Terex, we have an open forum on compensation just before their annual meeting. Really understand what are both the written and non-written best practices of that company and where are they on the scale of leading edge.”
Edwards added, “If you think about what it is like to govern a company you realize how important it is to work on the culture and that is to work on relationships with one another. Shareholders are the ones that elect new directors, but it’s also an opportunity for directors to say ‘we need a new process.’ You have to think about what is the right governance profile.”