A board’s corporate secretary, the general counsel or the lead board administrator is typically in

charge of creating the D&O questionnaire, sending it to the directors, and compiling and sharing

insights with stakeholders.

WHY DO THINGS GO BADLY?The traditional D&O questionnaire approach is usually a manual process, time-consuming for both directors

and board administrators, and, if done poorly, will not provide accurate insights. While some company

boards turn to digital technology to help with D&O questionnaires, there is only so much boards can do

with generic online surveys.

A Directors & Officers (D&O) questionnaire is simply defined as a questionnaire

sent to a company’s directors and officers to answer questions about their

background and experience, securities they own, insider transactions and

compensation. Today, however, there is a need to broaden the definition of

D&O questionnaires beyond just highlighting potential conflicts of interest and

insider dealings; in fact, D&O questionnaires can impact how a company and

its board can improve corporate governance and transparency. Both NYSE

and NASDAQ rules require an issuer’s board to consider whether the director

is “affiliated with the company, a subsidiary of the company or an affiliate of

a subsidiary of the company to determine whether such affiliation would impair

the director’s judgment as a member of the compensation committee.” 1

Part of the Diligent Module Series of White Papers

Best Practices for Directors & Officers Questionnaires A special look at the benefits of Diligent D&O Module

As a leader in Enterprise Governance Management technology, Diligent

is uniquely positioned to share strategic and actionable insights on the

rapidly changing digital and governance landscape. In this report, we

examine current challenges, provide best practices for D&O

questionnaires, explain why boards should use technology to help

drive compliance, and make the case for adopting the Diligent D&O

Questionnaire module.

CURRENT CHALLENGESTraditionally, directors will fill out D&O questionnaires to indicate

any potential conflicts of interest. Unfortunately, the current process

lacks efficiency and is not made for today’s evolving needs. Here

are reasons and challenges explaining why the old approaches are

not ideal:

Outdated Paper and Email ProcessesSurprisingly, many boards still create and mail (via the post or email)

40- to 60-page D&O questionnaires, which are quite long for directors

to fill out in one sitting. If a director prints out the D&O questionnaire,

they must carry the bulky document with them and then mail it back

to the board administrator. The general counsel, corporate secretary

or main board administrator must then compile all of these responses

and cross-check them manually. This presents numerous obstacles

that may impact accuracy.

In addition, email is not secure. Some board directors and board

administrators will send sensitive board materials – like D&O

questionnaires – via corporate email. A NYSE Governance Series and

Diligent report2 found that 60% of board directors use personal email

regularly to communicate with fellow directors and executive

management. Using email in this manner is inherently risky and creates

vulnerability to hacks and data breaches. D&O questionnaire responses

may contain highly sensitive and confidential information and thus

should remain confidential.

Generic Online Survey Tools Are LimitedOnline survey solutions are a step in the right direction, but are not

tailored specifically for D&O questionnaires. Many of these solutions

have limited features or support, and may lack stringent security.

Furthermore, using an online survey tool doesn’t always equate with

easy adoptability; this could be yet another tool for your already busy

directors and board administrators to learn, register and manage.

CURRENT CHALLENGESThe D&O questionnaire process should not be so challenging. First, as

covered, we need to broaden the traditional definition of D&O

questionnaires to include and ensure regulatory compliance and

governance. Here are some best practices for D&O questionnaires to

help better position your board for improved governance:

1. Secure the D&O Questionnaire ProcessThe first step is to move away from insecure email, which includes

third-party corporate and personal email, because email opens your

organization to data breaches and hacks. Security is vital to assuage

any concerns from directors and to keep confidential information safe

and secure. Directors typically share very sensitive info about their

assets and affiliations in these questionnaires; therefore, their responses

need to stay protected.

Consider selecting a board portal software platform with a secure

communications tool.

Questions to ask the vendor:

⊲ Is your communications solution a closed environment?

⊲ What security industry controls and audits does your

solution have?

⊲ How does your solution secure the sending and receiving of

D&O questionnaires?

⊲ How does your communications solution integrate with existing

products?

Boards need to be proactive with their security by evaluating the

communications solutions on the market, as not all providers are

created equal with respect to their level of security.

2. Simplify the ProcessBoard directors often feel that D&O questionnaires are intrusive

and the overall process tedious. As discussed, it’s common to have

40- to 60-page questionnaires. Remind your directors that the

process is necessary to ensure regulatory compliance while you

Best Practices for Directors and Officers Questionnaires: A special look at the benefits of Diligent D&O Module

focus on simplifying the steps. Making the receiving, answering and

submission of D&O questionnaires easier will drive higher

engagement and efficiency.

On the board administration side, workflow process is also critical.

Consider adopting technology to help create better efficiency and

greater simplicity. You want the technology to help make the sending,

tracking and compiling of responses to create a smooth process.

Questions to ask the vendor:

⊲ Is the solution accessible on laptops and mobile devices?

⊲ Do you offer a way for directors to save their responses and then

return to complete the questionnaire later?

⊲ Does the solution provide a way for board administrators to track

which questionnaires have been completed, submitted, etc.?

It’s wise to find a solution that integrates with existing technology

investments, such as board portal software, board meeting

management tools, communications tools and security solutions. A

more advantageous approach is looking for a single board portal

governance platform with complementary modules for seamless

integration. Providing too many different pieces of software can

obfuscate the process for both directors and board administrators.

3. Automate Tasks The general counsel and the corporate secretary face a mountain

of obstacles when manually sending and compiling the questionnaires.

If possible, automate processes to help improve efficiency. For

directors, this might include pre-filled forms and the ability to save

responses from previous years. On the board administrator side,

consider automating tasks such as tracking and compiling responses.

4. Make the Digital SwitchAs covered in the “Challenges” section of this report, paper and

manual processes present myriad obstacles. It may be better to

move away from paper and select digital technology. Some

organizations may go with a basic online survey provider, but,

unfortunately, basic is all that you get. Limited features, support and

security can create more challenges, rather than solve problems.

Not all D&O questionnaire providers are the same. If you’re making

the digital switch, you are heading in the right direction, but you must

be judicious when evaluating the possible solutions.

HOW THE DILIGENT D&O MODULE PUTS THESE BEST PRACTICES INTO ACTIONDesigned specifically for D&O questionnaires and seamless

integration with Diligent Boards™, the Diligent D&O Questionnaire

module helps board administrators overcome the challenges covered

in this report and puts the recommended best practices into action.

Here’s a look at the features and benefits of the Diligent D&O

Questionnaire module:

Rock-Solid SecurityUsing the same advanced security technology as Diligent Boards™,

the Diligent D&O Questionnaire module enables directors to respond

securely to questionnaires while empowering board administrators

to keep sensitive information safe and secure. As discussed, email

is insecure and presents security risks. Unlike vulnerable email

systems, the Diligent D&O Questionnaire module is a closed

environment backed with high-security standards.

Key security attributes include:

⊲ ISO 27001 certified for its Information Security Management System

with SSAE 16/ISAE 3402 (SOC 1, Type 2)

⊲ Security controls audited for nine consecutive years

⊲ Advanced data encryption & data hosting to secure and protect

user information

Ease of UseThe Diligent D&O questionnaire module eliminates the clutter of

email- and paper-based questionnaire packs. Users can easily

adopt them with their intuitive interface that is familiar, innovative

and simple to use. Realizing directors, general counsels and

corporate secretaries are often extremely busy and on the go,

Diligent designed its D&O questionnaire module with mobility and

accessibility in mind. The module works on laptops and on other

mobile devices.

Features include:

⊲ Intuitive interface – elegant interface makes answering

questionnaires quick and painless

⊲ Pre-filled questionnaires – questions can be answered on your

behalf, so all you have to do is verify your answers and submit

⊲ Access anywhere – compatible with both iOS and

Android platforms

⊲ Glossary built into the module for quick reference

Best Practices for Directors and Officers Questionnaires: A special look at the benefits of Diligent D&O Module

“Diligent” is a trademark of Diligent Corporation, registered in the US Patent and Trademark Office. “Diligent Boards,” “Diligent D&O,” “Diligent Evaluations,” “Diligent Messenger,” and the Diligent logo are trademarks of Diligent Corporation. All third-party trademarks are the property of their respective owners. ©2018 Diligent Corporation. All rights reserved.

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⊲ Electronic signature function – easily sign and submit

questionnaires digitally with just a click or a tap

⊲ Seamless integration with Diligent Boards™

Diligent specifically created the D&O Questionnaire module for the

entire D&O process, thereby eliminating the obstacle of trying to

use a solution that may not conform ideally to the D&O questionnaire.

Automates TasksThe D&O Questionnaire module increases efficiency and workflow

by automating traditionally time-consuming processes. As mentioned,

the manual creation, sending and compilation of the questionnaires

creates challenges for the board administrator. The D&O Questionnaire

module automates tasks in order to free up vital time for both directors

and administrators.

Features include:

⊲ Ability to save responses from previous years for pre-filled forms

⊲ Automatic reporting of averages, mitigating the need for

hands-on data manipulation

⊲ Easy import and export of questionnaires

⊲ Submission monitoring provides you with automatic tracking

and visibility

What was once a traditionally laborious and time-consuming task is

now automated and simplified with the D&O Questionnaire module.

Backed by World-Class SupportThe D&O Questionnaire module integrates seamlessly with Diligent

Boards™ and other innovative modules, such as the Diligent

Evaluations module and Diligent Messenger, which are supported

by Diligent’s award-winning customer success organization. Adoption

of Diligent technology is simple, but you may still have some

questions and can easily request module training. Diligent delivers

stellar customer support with 1:1 training from our Customer Success

team members, who also offer 24/7/365 support in more than 10

languages.

CONCLUSIONThe D&O questionnaire process doesn’t have to be so difficult for

directors and board administrators. The common thread among the

best practices covered in this report is the need to move away from a

paper-based, manual process and toward a digital solution. However,

not all digital solutions are the same. The Diligent D&O Questionnaire

module was specifically designed for the D&O questionnaire process

and to meet the evolving needs of the modern board director and board

administrator. The D&O Questionnaire module is seamlessly integrated

with Diligent’s full suite of corporate governance tools, including Diligent

Boards™, Diligent Evaluations, Diligent Messenger, Diligent Minutes, and

other Diligent resources and tools – all accessible via a secure, single

log-in. Diligent empowers all users with intuitive technology for improved

efficiency, security and governance. Overall, Diligent is committed to

listening to the changing needs of customers, and to adapting and

improving the technology to keep boards – no matter what size, industry

or location – better informed, compliant, secure and engaged.

1. Dodd-Frank.com, “Changes to D&O Questionnaires to Implement NYSE and Nasdaq Compensations Committee Independence Rules”. http://dodd-frank.com/chang \ es-to-do-questionnaires-to-implement-nyse-and-nasdaq-compensation-committee-indpen dence-rulees/2. NYSE and Diligent, “The Price of Convenience” https://www.nyse.com/publicdocs/Diligent_ Board_Comm_Report_2017.pdf

Tel: +1 877 434 5443 E-mail: info@diligent.comVisit: diligent.com

Watch the Diligent D&O Questionnaires Product Demonstration Video

Visit: https://diligent.com/products/d-o

For more information or to request a demo, please contact us by:

Best Practices for Directors and Officers Questionnaires: A special look at the benefits of Diligent D&O Module