how do you create a more effective board?

The Role of Technology in Creating a More Effective Board of Directors:

Using Board Portals Thoughtfully

Steven H. ShapiroPircher, Nichols & Meeks

Tom RacicotComputershare Governance Services

November 28, 2012December 12, 2012

www.cgs.computershare.com

Webinar Agenda

› Introduction

› Board Portal Overview

› Volume of Materials: What do directors really need?

› Delivering Concise and Timely Materials

› Questions & Comments


Steven H. Shapiro, profile

› In-house› Deputy General Counsel - FMC Technologies, Inc.› General Counsel and Corporate Secretary of:

› First Midwest Bancorp› eLoyalty (now MatterSight) Corporation › Cole Taylor Bank

› Private practice› Pircher, Nichols & Meeks (currently)› Before being in-house, 12 years of private practice in

Chicago


Tom Racicot, profile

› Global Head of Sales, Computershare Governance Services

› Responsible for full suite of governance products (entity management, SEC filings and board governance portals)

› Governance engagements at hundreds of Fortune 500 & FTSE 250 companies

› Managing teams in US, Canada, UK, Germany and Australia

› Director of Sales, Transcentive Corporation› Helped architect one of the first global entity

management systems in World Records› Early involvement with Sarbanes-Oxley interpretation

and implementations


Traditional Board Book Delivery

› Manual Indexing and Assembly of Board Books

› Locating Directors for Delivery

› Courier Delivery

› Unsecured Email Delivery of sensitive materials

› Stored on non-secured PCs if emailed

› Collection & Shredding after meetings


What is a Board Portal?

› Secure website (iPad) where directors and others can access board materials and other sensitive documents. Expiry and purge options.

› “Green” solution that replaces the arduous and expensive process of paper distribution

› Central location where one copy of the board book is uploaded to the site, ensuring that everybody is literally on the same page

› Turnkey solution for the corporate secretary to simplify the assembly process for board books

› Secure site designed for multiple layers of access, either by content or by role (e.g., audit committee member)

› Secure means of communication that eliminates the need for unsecure email communications among board members

› Alert mechanism that notifies executives of anything that requires their attention


Board Portals & Tablets: They’re Here to Stay

No longer “cutting edge” or “revolutionary”› iPad has changed everything › 50% of companies: have a portal or will implement in

2012


The High Level Advantages

› Immediate communication:› Follows retention policies

› Save money:› Copying› Shipping

› Save staff time and resources

› More portable: 1.3 lb iPad or 600 pages of paper?

› More secure: paper is not encrypted!


Efficiency & Security for Both Sides

Directors Administrators

Easy to access/iPad Simple assembly: drag & drop

All board materials in one place All board materials in one place

Immediate notifications Immediate notifications

Annotation capabilities Voting & surveys

Searching “Purging” & expiration

Calendar Collaboration

Elimination of paper Elimination of paper


Security is at the Heart of Portals

Security is at the heart of portals

› Risks of sending board materials by email

› Board books are encrypted (256-bit)

› What happens if a device is compromised?

› “Remote purging”

› Auto-deletion of board books

› Secure, in-system communication

› Board members tend to print what is sent to them


Put Board Portal Technology in Perspective

› Other similar technological developments:› Word processing› Overnight delivery› Faxes› Email

› These developments:

› Sped up process, but not without costs› And of course, all subject to “GIGO” principle –

garbage in, garbage out

› Materials do not write themselves


To Evaluate Technology, Take a Step Back: What Is Being Done?

› Board and committee meetings typically require hundreds or even thousands of pages of materials

› Containing some of the most sensitive and significant information about the company

› Providing for thoughtful board decisions by:

› Security of materials

› Timely delivered

› Of relevant information?


But…

› Are all of the hundreds of pages of materials generated for the board necessary?

› Will board portals increase the amount of reading for the board?

› Will an increase be more of a risk to obscure the most critical information that directors need to see?

› Will the decision-making process be affected?


And…

› Do directors have enough time to digest all of the materials?

› Will using a board portal reduce the amount time for directors to have to review materials?

› Want board members to have enough time to review this volume of materials:

› A week?› At least over a weekend?› If possible?› How and when do you notify?


What to Do About the Amount of Materials?

› How did we get to hundreds of pages?› Regulatory requirements› Historical reasons (always provided)

› Easier to let be› CYA

› How and what to delete?› Question each report

› On a rotating basis› Board assessments – formal and informal› Allow for more time

› More time-consuming to edit› Sunset provisions and rotating evaluation› “Tickler” system


What to Do About the Reduced Lead Time?

› Pick 1 person to have the authority to set (and keep)

deadlines

› Allow time for work to be done› Use board portal to post materials on current basis –

press releases, analysts’ reports, articles

› Why rush?


Ideal Solution – Thoughtful Implementation of Board Portals

› Prepare and disseminate necessary materials

› Deliver them quickly and securely

› With a minimum of resources

› Highest security possible

› Board portals help with the last two points› When used thoughtfully, board portals can significantly

improve board processes

What questions do you have?

Questions & Comments

Steven H. ShapiroPircher, Nichols & [email protected] 1 312 915 3175

Tom RacicotComputershare Governance Services

[email protected] 1 203 435 2950

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