By: Lindsay Frost
Board directors spend an average of 248 hours per year on board-related matters, according to the National Association of Corporate Directors (NACD), and this time commitment is only increasing as directors’ responsibilities expand to areas such as strategy and shareholder relations as well as the oversight of new risks such as cyber security.
Agenda spoke with several board directors and governance experts to weigh in on how to balance these responsibilities and manage time effectively, and the consensus was:
It’s not easy.
“To be a really engaged and productive board member, the workload has increased dramatically,” writes Betsy Atkins, director at SL Green Realty Corp. and Wynn Resorts, among other current and former boards, in an e-mail.
When asked about tips or advice for managing the workload, she writes, “Do more work.”
Timothy Bernlohr , director at Atlas Air World Holdings and founder of TJB Management Consulting, says the amount of dedication directors give to their roles hasn’t changed much over the years, but the priorities have.
“Governance in general has always included the same mandate: Make sure prudent and proper practices are in place,” Bernlohr says. “I think boards are generally more engaged on why things are happening, not just acknowledging that they are happening.”
However, a number of factors are shifting priorities and driving increased director workload.
“Board members should expect to be busier, and should be busier,” says Cathy Allen, a director at El Paso Electric and Synovus Financial. “What is driving this is the complexity of the world we are in and the velocity of change. There are so many more risks, whether operational, reputational or compliance risk, than there were even five years ago, and boards have to have a high risk appetite.”
“This takes a lot more time than it used to,” Allen says.
Atkins writes that expectations about the board’s involvement in crisis management are also increasing.
Similarly, environmental, social and governance issues are playing a more prominent role on board agendas, driven by “more outspoken and direct” investors, says Paula Loop, leader of PwC’s Governance Insights Center.
According to PwC’s annual survey of corporate directors published late last year, 49% of respondents said a member of their board other than the CEO engaged directly with investors in the past year, up from 42% in 2017. A minority (6%) of respondents said there isn’t enough time in a director’s schedule to engage with shareholders, down from 19% in 2014.
Finally, strategy is continuing to be a large part of the board’s responsibility. Management increasingly wants the board’s input, and Atkins says strategy sessions have “become much deeper.”
These sessions can often involve global travel over the course of several days, she writes.
The majority of S&P 500 boards (52%) are meeting six to nine times per year, according to Spencer Stuart’s 2018 board index, with 22% meeting five or fewer times a year. Board meetings are longer, too, sources say. Allen says committee meetings can go on for as long as four hours in some cases.
Given all of the different responsibilities covered both in and outside of meetings, boards are inundated with materials these days, sources say. Hundreds of pages of information, even if given via portal, can weigh on directors. Loop says companies often come to her to talk about how to make board materials more efficient, and that meeting materials have increased, due not only to responsibilities but to the fact that portals can hold more information.
According to PwC’s survey, 44% of respondents said they would like to see management reduce the volume of board presentations and materials or use more executive summaries, while 41% said management should send out materials earlier.
“Boards should ask themselves if there is more they can do to challenge management to provide information to a board so that it is quicker and easier to get to the primary focal points,” Loop says.
Overall, Allen says management should be ensuring that individuals making presentations to the board are prepared as well.
“[Those presenting] need to make sure the information is relevant, succinct, and that the business language is aligned with the strategy,” Allen says. “There is so much coming at you as a board member, so it is hard to know what is important or not, so it would be helpful for management to trim that up. If there is too much on a PowerPoint slide it’s like an eye test — you can be overwhelmed.”
Directors themselves also need to be prepared. Allen says she spends at least one day per week reading up not only on topics that will be discussed at a board meeting, but also on industry news, new studies and governance information.
Mylle Mangum, chairman and CEO of IBT Holdings and director at Barnes Group and Express, among other boards, says she prepares a work plan ahead of time for each board and committee she serves on. There is a cadence to preparation, she says, and it relies on timing. For example, compensation decisions are made at the end of the year for calendar year-end companies, and yearly audited financials come out around the same time, so workload increases at that time of year for compensation and audit committees.
Getting to know the way the specific board operates, along with people dynamics, also helps the preparation aspect, Mangum says.
Education — whether completing courses or attending industry group meetings — is also key to staying on top of responsibilities as a director, sources say.
According to the PwC survey, 90% of directors said their board received some form of continuing education over the past year. Some 43% said their board would be willing to institute a mandatory continuing education requirement, while 17% said they already have this requirement.
“I don’t think [being a director] is as much a balancing act as it’s a dedication act and a commitment act,” Bernlohr says. “In my opinion, it’s a privilege to serve on boards, so it’s important to show commitment to your fiduciaries and responsibilities.”