Key Takeaways:

• Today’s organizations are being called to contribute positively as part of the greater ecosystem, which is compelling directors to embrace the role of change catalysts and “intraprenuers.”
• People, as our greatest assets, need board directors to oversee the creation of work environments that value employees to allow them to ‘bring their whole selves to work.”
• Assembling a board composition strategy today needs to begin with a robust review of the skills matrix to ensure attributes such as curiosity, digital savviness and enterprise risk management, among others, are part of the consideration of current and future directors.

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Patrick Gadson, Partner –Shareholder Activism and Mergers and Acquisitions at Vinson & Elkins, to discuss defense strategies for boards and management teams to consider when challenged by activist shareholders.

Key Takeaways:

• Boards of companies (all sizes) that are underperforming need to truly understand BOTH economic weaknesses in addition to other elements for improvement (e.g., ESG) that activists can use to promote their agenda
• To engage effectively with activists truly requires boards active in knowing and developing relationships with their shareholder base
• When put into an activist situation, directors need to understand the thick skin of and ability to go the distance in lengthy contests that activists possess that can often lead to “activism fatigue” in the boardroom that may affect good decision-making of directors
• Avoid the emotion and strategically scenario plan with an objective party who can truly survey relevant facts and circumstances through an unbiased lens

Key Takeaways:

• Leveraging data analytics for strategic decision-making: Use of data analytics in the boardroom to is becoming increasingly important to help directors make informed, evidence-based decisions that drive growth and efficiency. By incorporating data-driven insights, businesses can better understand their customers, optimize operations, and identify new opportunities.
• Overcoming challenges in implementing data analytics: Organizations need to be prepared to face significant challenges when adopting data analytics, such as data quality, integration, and fostering a data-driven culture. Listen to best practices and practical advice for overcoming these obstacles and ensuring a successful analytics implementation.
• Board’s role in promoting data-driven culture: The board can play a critical role in promoting a data-driven culture within the organization. By asking the right questions, setting expectations, and ensuring alignment with business objectives, boards can support management teams in harnessing the full potential of data analytics for the organization’s success.

Join BDO in discussion with Christine Heckart, CEO of Scalyr and Board of Director for 6sense and Lam Research.

Key Takeaways

• In order to add value to a board, needing to first absorb what is going on at the board level

• Taking time to listen and formulate good and meaningful questions/comments

• Seeking input on your performance

• Spending time with executives within the organization

• Investing in board training in advance of being on a board; continuing your education through board roundtables/forums

• Identifying your sponsors who really know your strengths and weaknesses and can advise you

• Having a broad perspective of what diversity can mean to a board

• Understanding the flow and quality of information that is coming to the board

Transcript

This transcript has been lightly edited for clarity.

Nicole: Hello everyone and thanks so much for joining BDO's podcast series, Getting to the Boardroom. I'm Nicole Ward Parr and in this series I have the pleasure of hosting some of the most distinguished executives currently sitting on public company boards to discuss their journeys and their paths to how they got there. Today I'd like to welcome C-Suite executive and public company board member Christine Heckart. Christine brings over 30 years of experience in the technology industry, holding a variety of roles including CEO, COO, GM, President, and CMO across many industries including: SaaS, network, security, storage, music, and video at companies ranging in sizes from 50 to over 100,000 employees. Christine's worked for such iconic brands as Microsoft, Juniper Networks, Cisco and NetApp, and she's currently CEO of Scalyr, a machine data platform for engineers that operate cloud services. Christine was also recently named one of the 50 most powerful women in technology by the National Diversity Council, and a 2016 Woman of Influence by the Silicon Valley Business Journal. She's a published author and columnist and serves on several nonprofit boards and teaches at the Directors Academy, which provides board training and prepares people for their very first public board positions. A lovely segue, I think. Christine, such an impressive background and so grateful for you to be able to join us today and share a bit about your board journey with us, welcome.

Christine: Thank you, Nicole. I'm a huge fan of BDO so I'm very delighted to join you today.

Nicole: Thank you so much and with that, let's kick it off and dig in a little bit with some questions. I would love to hear what were some of the early mistakes that you made as a first-time board member? If you don't mind sharing.

Christine: Well, honestly, I feel like I probably made every mistake in the book and I'm pretty sure I came up with a few new ones on my own to add value. So, from I'm guessing minute one I started making mistakes. I'll give you a great example which I never had considered might have been a mistake until years later when I was training at Directors Academy and James White said, “Make sure you don't make this mistake” and I was like, wow I made that mistake. And what he basically said is when you walk into a board, usually boards have a seating preference, like people generally sit in the same place and if you've seen one board you've seen one board, so there's not huge generalization, but chances are people might generally sit in the same spot, and I walked in and I sat down and I was one of the first people there, and so chances are pretty darn good that I took somebody's seat. And I never even considered that for a moment until years later and I'm like, hmm, I wonder whose seat I took, and rearranged the entire board around my presence. As a first-time member, which is really naive when you think about it, and probably indicative of a level of unconscious hubris that I wouldn't have thought to say, “Hi, since this is my first board meeting, where do you suggest I sit?” That probably would have gotten some great information about the board and I probably would have not made that mistake, so that's one example. I can give you a million other very subtle stories and examples like that, but board service, especially when you're a first-time board member and I think it's, you're trying so hard to be a good board member and it's easy to make mistakes without even realizing it and they might not be grating. They might be subtle, but the more you can be very aware of your surroundings and very tuned in to the tone of what is happening around you and the other board members, and really get to know them on a personal level, the fewer mistakes you're likely to make.

Nicole: All great points and I think it probably came from a place of wanting to add value, right? I mean the mistakes, not to overly assume, but a lot of times you’re focused on “How can I add value? How can I add value?” I would love to hear your thoughts on what that even means, right? Because, I think a lot of mistakes can come from that and not necessarily knowing when to balance sitting back and listening versus when to speak, etc. And when you are trying to add value, really recognizing what that truly means and how long does it take before you really can? Any thoughts on that?

Christine: Yes, I think that's a brilliant insight and I think it's very counter intuitive or almost oxymoronic. The more you try to add value the less you probably add, and certainly I believe when I came into board service, you're trying so hard to be worthy of that chair which everybody would love to have, and be worthy of the opportunity and the investment that, that company is making in you, and you want to “add value.” And the more you try to do that, I think the less value you add, 'cause it creates in many ways exactly the wrong mindset and behaviors. And every board is different for sure, but in my super limited nine-years’ experience with Lam, I feel like the times when I truly was able to add value are the times when I was asked. And so if you kind of think about it through that perspective, I think when you show up to a board, especially the first time, you have an impression of the way board members are supposed to act, and what you're supposed to be doing there, and you're there to “add value.” And so, you either want to share an experience which frankly most people don't care about, and so you're better off not doing that again unless you're asked. Or even if you approach it like we've all been told, ask questions. But if you're asking questions kind of in a veiled attempt to “add value” through the brilliance of your question, chances are that you're again probably not adding that much value. And if you really can take the time to sit back and absorb, which I would say I didn't do a good job of at first, like later, thanks to the patience and mentoring of a lot of amazing board members at Lam I got there, but I remember I think it was Eric Brandt, who was one of my fellow board members, made a comment, several board meetings in. We all kind of joined at about the same time and we were probably 3/4 in and he said, “I think I'm just now to the point where I know enough to ask a smart question,” and I thought, wow, how many questions have I asked in the last year? And so, what that told me is probably not a single one of them was smart, because he's way smarter than I was and he's a more experienced board member than I was at that point. And he was just kind of to the point where he thought he could formulate a smart question. So, one great way to add value is to not try to do that, and to wait to be asked whether it's in the boardroom or outside of it in order to give that value.

Nicole: Super helpful. And it sounds like he was one of the folks in your universe of the boardroom that helped you to become more effective. Were there others that helped you, or where did you go to seek guidance and mentoring so that you were on that path to becoming a more effective board member?

Christine: Yes, I was so incredibly fortunate to land on a board with amazing and very seasoned board executives: Cathy Lego and Abhi Talwalkar and Mike Cannon and Eric and Steve Newberry, who was Chairman. They were patient, for one thing, and they really invested in me. Some of the things that I did over time, and I was not great about this early on, like the first year, and I became much better later, is one: I really sought input. In fact, the Lam board did a great job of doing annual board reviews and I would sit down with the chairman and the lead independent director and really pull information from them about what I could do to be a more effective board member. I also had the chairman who had been an operating executive at the company for a long time and he had put a lot of the cultural foundation of that company in place and something they called the “Lam Management System” which was really important to the way the company operated. So, I asked him to spend extra training time with me to train me on the Lam Management System in the same way he would an executive there. Then I had a much clearer lens about how that company operated and what they expected. I also had the incredible sponsorship of Cathy Lego, one of my fellow board members and some others to get plugged into board roundtables outside of my direct board experience. So BDO runs a fabulous board roundtable here in Silicon Valley. Hitesh Shah started it. He plugged me into that. Once a quarter, I have a chance to meet with other board members and get training and enrichment. Cathy Lego started a board roundtable with 15 members. We rotate houses and go to different peoples’ houses and have a set agenda and a topic once a quarter and so through those extra developmental efforts I was able to learn from experiences of boards beyond the board I was on and that was amazingly, and still for me is amazingly, helpful.

Nicole: That's fantastic and thank you for the BDO plug by the way. Unsolicited everyone but thank you so much and I think your obviously, your voracious quest, and innate curiosity about how to be effective, how to learn, how to get mentoring, and to put yourself in a space surrounded by people that could support that process for you was, It sounds like, a great part of your path and one that I think everyone can learn from. That's great, and so on that note what advice would you give to someone who is looking for their first board role? What would that look like?

Christine: Boards are really tough to land. I mean any first thing is tough. My son just graduated from college. Finding that first job is tough, right? Getting that first promotion for the executive suite is tough.

Nicole: I vaguely remember that, Christine.

Christine: Right? Exactly, me too. Like back when dirt was young. Becoming a CEO for the first time, for me last year, super tough. People have to take a bet on you, and it's the same with board training. So, what you need more than anything else is, one: you need a lot of luck. And let's just not be naive about that. A big part of success for any of us at any time in our life is just luck. 99% luck, 1% what you make of it. Then you better be ready to make something of it when that good fortune comes along. You need sponsors and there are lots of places that you can find your sponsors. People who you know who sit on boards are obviously the best place 'cause they get the deal flow. Companies like BDO, or any company who deals with a lot of boards and is plugged into a lot of board members and knows you and your strength are a great source of sponsorship. And anybody else in your career. I mean, if you're looking for a board, it will take probably three to five years to get your first board. I'm pulling that out of the air, but from what I understand it's a long process. You have to start telling everybody you know that you're interested, and you have to start preparing yourself. And if you can find people who are very active sponsors, it's something that I personally spend a lot of my own time on now because I am very passionate about helping people, especially people of diversity, but really, anybody who's worthy and has a lot of value to add to help them land that first public board seat. So, I spend a lot of my own personal time trying to help women and engineering executives get on boards. And I run a board training class once a year for these people. In fact, you guys often participate in that, but wherever you can find a source of sponsorship, and probably more than one. If you want on a board, it's just like finding a job, you have to put a lot of effort into it and you have to meet and rub elbows and shake hands and get to know people on a personal level and give them a chance to know you and really make an investment: investment in yourself and getting ready and board trained. I wish I would have had board training before I sat on a board. I may not have made at least as many mistakes. I'm sure I would have figured out a few to make, but I could have saved Lam and my fellow board members a lot of aggravation had I just invested in my own board training before I took that first seat. And then you gotta get out there and really ask for it.

Nicole: Takeaways there you said, sponsorship, essential, working your network. Nonprofit board? Is that something that you saw as good experience that prepared you or not so much? Because I know that you have been and are on several nonprofit boards. Was that something that helped?

Christine: For me it wasn't, but I do a board training class. I teach at Directors Academy once a year and then I put on board training for engineering executives once a year. And so, I go to that training multiple times a year as a result, and what I have the opportunity to do is then hear all these other sitting public board members and their experiences. And I learn an enormous amount every time I do this, and one thing I've learned is there are so many paths into the boardroom. And there are people who believe and who have had success by sitting on nonprofits and/or private boards of some sort and using that as a stepping stone. Where it seems to be the most useful, is when that nonprofit board consists of members who also sit on public boards, because then they become your sponsor. It's like, oh, I've seen how you operate in a board setting and I think you would be good for this other board that I either sit on or this person that I know about, because so much of board activity, unfortunately, still is who you know and who knows you, and getting in that deal flow.

Nicole: That is great. That's a great tactic, like you say, really evaluating that nonprofit board for what the board members are like and seeing that as potential leverage, and like you say that sponsorship. That's fantastic. And so, you've mentioned a couple of times, diversity in the board and your own commitment to that as you sponsor others. What is your philosophy around board diversity and how, in your opinion, has the boardroom changed? How is it changing?

Christine: One thing that I don't resonate super strongly with is a narrow interpretation of the word diversity. And by that, I mean when people say “diversity,” and what they really mean is: we need a female on the board, or they say diversity, and we mean: a person of color on the board. I do think those are enormously important, by the way, I'm not minimizing the importance of that in any way and I don't believe that, that really makes a diverse board. When boards are made up primarily of people who have had the same entitled upbringing and experience i.e. CEOs and CFOs and that is 70 to 100% of the make-up of the board, then they could be equally balanced, male, female and people of color and caucasian, and in my mind you still would only have a partially diverse board. So, what I look for and what I advocate for is diversity of titles and experiences. So people who represent both the customer base: where they are in the world, who they are, and/or the titles in the company that you get people who came up through a technical background, a marketing background, a sales background, a finance background, an engineering or HR background, whatever the set of experiences are. If half of the board has those diverse experiences and the other half is CEOs and CFOs, then you probably will get other kinds of diversity as a byproduct and you will have a more valuable and diverse set of perspectives around the table than if you have people who have all had the same title, but maybe have different external packaging which matters less.

Nicole: Absolutely. It's an excellent distinction. Fantastic. And last question for you about innovation in the boardroom, and how you are innovating in the boardroom. I would love to hear more about that. Have you done things that you felt were innovative or do you feel that, that's a priority for someone who's on a board?

Christine: I don't feel like I have done something innovative in the context of a boardroom, and I've done plenty of things that I consider innovative, and I have helped, but certainly not lead transformation in the boardroom. And I, as a first-time board member, I don't think I would have had the credibility to lead much of an innovation at my previous boards and I don't know how quite to interpret the word innovation in a board. But what I believe fundamentally in, is good governance in the on-going, striving, the continual striving for better, more holistic governance within the board. I do think boards are under more pressure than ever before, not just some things like diversity, but to answer the question, what should we know? And how can we know it? And things like Wells Fargo I think have brought that to the forefront. I think Wells Fargo made everybody question: What is a board's role in culture? What should it know about the culture and how can it know that? Because so often the information flow into the boardroom is quite controlled. So how do you find these things out? And if there is innovation to happen, then that innovation in my mind is best spent around this governance topic and specifically around the accurate and holistic flow of information from a company into the boardroom, in a way that's productive, 'cause it could be very unproductive as well. So how do you have a healthy balance, and a healthy flow of information so that the board can be effective in its governance role?

Nicole: Right. Effective governance. And there's so many competing priorities, obviously, that a board faces, right? How does that stack rank against those? Right? Very interesting, great perspectives.

Anything else Christine, that you'd like to share that you think would be meaningful for either current board members or aspiring board members to know?

Christine: You know, I think I'll share one other story. It's kind of a, it's a mistake and a learning, but it's something that definitely stuck with me. Over the course of my own board service one of the things that I stumbled on, and I thought I was stumbling on it, not a survival tactic, because I never felt threatened…I loved my board service, but it became an adaptive response to how to effectively influence in the board. My experience was very diverse, and I would ask questions that later, one of the executives told me, “It's not that we didn't want to answer your question, it's that we really didn't understand it.” So, I would ask questions around monetization of data: How are we thinking about monetizing our data? Or questions around the move to SaaS very early in the evolution of that movement. I was making an attempt, a poor attempt, to add value and I was making an attempt to influence, and to influence strategy, and I was doing it in the boardroom by asking questions, and I wasn't being terribly effective, and what I discovered is, I became more effective in that influence by having dinners and conversations with people on the board and in the executive team outside of the board meeting, and to really have a conversation. “Well I'm curious about this, how do we think about this? And are we doing this here? This there? Why not?” And so, a lot of my time investment ended up happening outside of the boardroom. And like I said, I thought that was just because within the context of the boardroom I always considered myself kind of the least significant bit in the 8-bit byte, because I didn't have the semi-conductor experience that everybody else had, and I didn't have the seasoned board experience everybody else had. I was there just to be a sponge and learn. And so, it was kind of an adaptive response for me. And later again at one of my many training courses that I was teaching at, but I was also sitting in the class to listen and learn from others. A very seasoned chairman said that the way he influenced in the boardroom was to not do it in the boardroom, to do it outside of the boardroom. And he described this process of meeting with people and having breakfast and lunch and dinners and conversations throughout the year, and not waiting for the board. And, in fact, not relying on the board meeting to introduce ideas or to try to influence. And I thought, “Oh my God, that's what I've been doing!”. It was an adaptive response and here's somebody that's chairman of the board of several different companies and this is his practice. It's like, maybe this is the way everybody is doing it and that's why trying to do it in the boardroom is really not even that efficient. It's all these very subtle things that nobody writes down in a handbook, actually that would a be great thing to have, a handbook for how to be an effective board member.

Nicole: “How to be a Board Member for Dummies,” or something?

Christine: Right! Exactly. If somebody would just write . . . that is probably out there. And if I just go look for it, I could've been a more effective board member from day one.

Nicole: Not at all. I think your willingness to share some of the stumbles and/or mistakes, that is so beneficial and helpful to anyone who's trying to navigate getting there, right? And there's, probably a crass adage but I'll share it, that my great grandmother used to say and that was, “Poop makes great fertilizer.” And I think as tacky as that may sound, if we choose to look at those mistakes as real opportunities and the growth that comes from those, then it's a win. So, thank you for your willingness to share some of those, for everyone that's listening to learn and benefit from, and I can't thank you enough for your time, Christine. This has been invaluable and BDO thanks you so much for your willingness to share. And, certainly, we look forward to staying in touch and having you on again in the future.

Christine: Thank you so much. I, first of all, I wish I would have met your grandmother. I feel like I love her adage. I should be growing like a bad weed at this point and delightful to have been part of your podcast.

Nicole: Wonderful, thank you so much Christine. Appreciate it. Have a great rest of your afternoon.

Key Takeaways:

• Be mindful of identifying material impacts of climate risk and whether you are satisfying current disclosure requirements
• Don’t be lulled into complacency or the belief that mid-term elections may derail final rule-making
• Review carefully current financial risk disclosures in line with other information being disclosed by the company
• Consider the resources you will need to implement expanded disclosures and leverage advisors to help you navigate the complexities of climate-related disclosures
• Remain abreast of developments – not only I the U.S. but globally, particular if your organization has significant international operations

Resources:

• SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors
• The Enhancement and Standardization of Climate-Related Disclosures for Investors – SEC Comment Letter

Key Takeaways:

The basic tenants of succession planning require continuous focus and consensus and can provide an outline for preparation and vigilance. These include:

• Agreement on short- and long-term company goals
• Needed skills for the position - Keeping the job description of the upcoming vacancy current
• Keep a pipeline of candidates that span an array of various disciplines and experiences

Boards should build in process and policy around board refreshment.

Board composition should be built for purpose - Consider directors with multiple skills and experiences so there is overlap existing in the boardroom.

Succession doesn’t end with appointment – it further requires a robust onboarding system for the new director.

Expanding the board to accommodate new board members before the departure of a retiring director can efficiently provide transfer of institutional knowledge and avoid “reinventing the wheel.”

A board member with shareholder engagement skills and investor understanding that can help management articulate their story is the best defense against activists.

Resources: 

• “What ‘Succession’ Gets Right (and Wrong) About Business Continuity Planning [Spoilers]
• Think Like an Activist

To put a damper on hacker activities as we all continue to get comfortable in working remotely, some common sense advice from seasoned tech executive and public company board member Nora Denzel to help protect you, your colleagues and your company’s reputation when accessing and sharing sensitive information.

• Re-boot your routers regularly

• Question which email you use

• Turn off listening and camera devices

• Always use a VPN

• Choose to use virtual or generic backgrounds for online meetings

Join BDO's Center for Corporate Governance Amy Rojik as she discusses the ins and outs of small- cap corporate governance and the important role of the board with Adam Epstein, former institutional investor and founder of Third Creek Advisors, LLC.

Key Takeaways

• Governance is not a one-size fits all approach, education for directors shouldn’t be either

• Board members need to be as “expert” as possible in the industries they serve and learn cost-effective ways to understand the competitive landscape, this includes keeping current on growth financing terms

• Encouraging individual directors to accompany the CEO in meeting with the organization’s largest investors at least annually provides insight to be shared with the full for directors as to the effectiveness/direction of the corporate strategy

• For aspiring small cap directors, do your homework - customize your board search and focus on the handful of small cap companies that align with your unique skillset and experience and focus your outreach to those who can directly aid you in engaging with those companies

Key Takeaways:

• Pillar Two comes in effect for accounting periods beginning on or after 1 January 2024 for multi-national companies with global revenue in excess of Euro 750m.
• Complexity will arise from both the detailed calculations involved as well as timing related to the phased-in approach by jurisdiction as to when each country will require implementation of global tax rules.
• Immediate steps to be undertaking by multinationals include an impact assessment and inventory of entities in different jurisdictions to determine potential increase in effective tax rates or cash tax increase, as well as financial statement and tax return compliance.
• Establish a strategic roadmap that considers accounting, systems, policy choices, resources, controls, disclosures and reporting requirements.
• Create the proper governance structure to properly monitor and drive accountability in both current and future decisions impacting the business.

Resources:

• OCED Releases Additional Pillar Two Guidance

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Melissa Means, Managing Director at Pearl Meyer, to talk about how today’s board directors are navigating critical compensation questions for leaders as companies emerge from COVID and face increasing attention and scrutiny related to both financial and nonfinancial strategic decision-making and performance impacts to their business.

Key Takeaways:

• Notable trends relative to ESG impacting the compensation committee include (1) expanding compensation charters to focus on HCM, DEI and other “S” issues and (2) considering whether and how to incorporate related metric(s) in either short or longer term incentive compensation plans
• Expansion of compensation committee charters are focused on tactical board HCM responsibilities - e.g., succession planning; “bench strength” talent development; review of DEI metrics within the organization; etc.
• Key incentive plan design questions relative to ESG boil down to strategic execution considerations:

- What are you trying to measure?

- Should it be over a long or short term? (i.e., how long will it take to show improvement for that area of focus)

- How much of an incentive should it be? (i.e., modifier vs. weighted component)

• Companies are in all different phases of this exercise and may have very limited comparative information from peer groups to rely on
• For companies just starting the conversation, begin with an agenda item that defines what HCM means for your organization and helps the board understand what management may already be doing (or not doing) in this regard

Key Takeaways:

• Culture is a team sport that requires the right data for the right stakeholder (including the Board).

• Protecting culture is just as important as strengthening your culture.

• There is a measurable ROI to culture.

• A proxy for culture is measuring organization effectiveness.

Resources:    

• Nominating & Governance Committee Priorities for 2024: Excelling in Board Leadership

• CalPERS, Schroders Launch Framework Tying Human Capital Management and Value

Join Amy Rojik, director of BDO’s Center for Governance as she shares some timely considerations for directors to consider with respect to board composition refreshment strategies.

Key Takeaways

• Board composition, succession and refreshment planning should be treated as a priority and normal part of oversight responsibilities

• Refreshment is underscored by having board members recognize that board appointments are not life tenancies and a director’s usefulness should be viewed from the stakeholder lens…ALWAYS

• A good strategy provides for regular and intentional use of skills matrices that align board composition with both current and future strategic needs of the business and allows for periodic adjustments as the business evolves

• Clear expectations should be outlined for directors about tenure, capacity, and participation

• A refreshment strategy should include a longer-term, multi-year view that anticipates departures, leadership changes, illness, and tragedies that can strike and hit companies unaware

• Director candidates should be continually considered through the lens of prioritized skills and attributes that allows for the development of a sustainable talent pipeline for future

Join BDO in discussion with Alexa King, Board of Directors at Vocera Communications and EVP, General Counsel and Corporate Secretary for FireEye.

Key Takeaways

• Change director recruiting perceptions from seeking traditional, tangible “roles” to recognizing and valuing broader skillsets, capabilities and characteristics

• Seek out sitting directors as champions and pay it forward by mentoring others

• Proactive thinking about ways to introduce more diversity to your boardrooms

Transcript

This transcript has been lightly edited for clarity.

Nicole: Hello everyone and thanks so much for joining BDO's podcast series, Getting to the Boardroom. I'm Nicole Ward Parr and in this series, I have the pleasure of hosting some of the most distinguished executives currently serving on public company boards to discuss their journeys and the paths that got them there. Today, I'd like to welcome C-Suite executive and public company board member Alexa King. Alexa has served on the board of directors of Vocera Communications Incorporated since July 2016, where she sits on the compensation committee, and chairs the nominating corporate governance committee. A frequent speaker on cybersecurity, Alexa leads the legal, stock administration, and privacy teams at the premier cybersecurity company, FireEye, as its executive vice president, general counsel, and corporate secretary. Before FireEye, Alexa was general counsel and corporate secretary of Aruba Networks, a provider of enterprise wireless networks. Alexa graduated magna cum laude from Harvard College with a degree in Eastern European studies and received her J.D. from the UC Berkeley School of Law, where she was named to the Order of the Coif. Alexa, what an impressive background. Thank you so much for being here. Welcome.

Alexa: Well thank you. It is a pleasure to be here and I'm super excited to talk about this topic. It's very near and dear to my heart.

Nicole: Wow wonderful, wonderful. Well let's jump into some of the questions then. I would love to know as you thought about board service and participating on a board that, that was going to be your next step. Tell us a little bit about this strategy or the approach that you used, and if indeed you leverage your network, how might you have done that?

Alexa: Absolutely. So, given my background and my experience, I have been in many, many boardrooms and board meetings for over 10, 15 years. At the point that I decided I would love to join the board, and so given that experience, I knew that sitting directors are often the first people called for new opportunities, frequently by people with whom they sit on other boards and the directors with whom I had worked had seen me in action and knew what I might be able to bring to the table if I were given the chance. So, my first step was to reach out to them, and I told them that I aspired to serve on a company board and asked them to please keep me in mind if they heard of any opportunities; . . . for which they felt I was suited and could add value. And then I had the same conversation with my CEO, because I knew that he was on several other boards as well and had a lot of those same types of contacts.

Nicole: Excellent, and when you approached them, were there certain pearls of wisdom if you will, or things that they shared with you in terms of preparedness or things that you might do to prepare for being on a board?

Alexa: Not specifically, they knew that I had been in enough board meetings to know how it worked. What was really heartening is that they were initially surprised. I think oftentimes corporate board members don't necessarily think of “the attorney” as someone who would be interested in sitting on a board, but once they were over their initial surprise across the board, no pun intended, all of the directors with whom I spoke were very supportive and said, wow, that's a great idea. I do think you could add value. You’ve sort of seen the movie a million times and a lot of companies could benefit from that. I'll keep you in mind and then what was really, really heartening for me is that many of them did recommend me for board opportunities and that meant a lot to me. You know that they did think highly enough of me to put their names behind me.

Nicole: Yeah, that's terrific. And that mentorship, right? That's huge and tell me a little bit about a particular champion or a mentor that really pushed for you and how they helped you attain that board role.

Alexa: Well one of the directors that I had approached, the only woman on my company's board at the time, went the extra step and she was someone that a lot of boards reach out to. I think a lot of boards at the time were interested in diversifying and looking to add qualified women, but only had a very small network for them to pull, and so they reached out to her and she went the extra step of not only saying, no, I'm really busy, but telling them that she knew someone who was very strong and could be a great add if they were willing to be flexible on what they thought they were looking for. And so, she really went to bat for me. She really talked with them about who I was, and what I could bring to the table, and why it could add value even though it was different from the profile they had initially put together. And luckily for me (and going back to the idea that oftentimes when looking for a new director, boards will draw from their network) that same board then reached out to my CEO, who knew that I was interested in joining a board, and knew what I could bring to the table, and backed me. You know, I think the lesson learned is it's a very small world and for that main reason it matters a lot that you tell people in your network what your aspirations are. Hopefully you've made a good impression on them, and that hopefully they will champion you. I believe in that very strongly. I've been a mentor throughout my career to up-and-coming attorneys, and business folks alike. It's important to do that and to pay it forward. And I will tell you once I did get appointed to the board, I did my absolute best. And of course, I would have anyway, because I wanted to show up and give it my all, but also because it was so important to me, and continues to be so important to me to reflect well on the people who were my champions and had backed me and put their names behind me. That means the world to me.

Nicole: Absolutely and you know, you said something really interesting about changing the minds or the perception of your background as it related to someone to be considered for a board role and I think that bakes into the whole idea of diversity and this has come up as I've spoken with people as a part of this series, is really rethinking that notion of diversity. It's not gender, just gender or color, but also background and that someone that doesn't have a traditional board background could actually be a wonderful value add, right? And it sounds like that was your experience.

Alexa: Absolutely and I think I benefited a lot from the fact that I had been in the boardroom with directors who had seen me in action, and I wasn't just a piece of paper to them that said, oh look, you're an attorney. There's a reason why there's a lot of lawyer jokes, and people just have a prejudice about attorneys not being business oriented, not being flexible. I mean fill in the blank. So, I was very lucky that the door opened for me and that I was able to hopefully prove that an attorney can bring a lot of value to the table, because we really sit in the middle of every other business function at our company. So, if we do our jobs right as coordinators and communicators and problem solvers, and I think once people start thinking about the general counsel role in that way, it's much easier to add to a board, and to your point, truly adds to the diversity of perspectives. In my role as chair of non-corp gov at Vocera I've spearheaded three searches and appointments in my time of new directors and diversity has always been very important to both Vocera, and the definition of diversity has evolved even over the three years that I've been there. To your point, of course gender, of course race and ethnicity, also geography, also the type of experience someone has had: What type of company. What type of industry. Vocera for example, is a medical communication company. We've got a lot of folks on the board who are from the healthcare, medical industry, but more recently we've also added folks from Silicon Valley, and other technology companies, because there was an interest in faster moving, faster growing, faster scaling experience, and so there are a lot of different ways to think about diversity, and I think it's important to be diverse in that definition, so to speak.

Nicole: Absolutely, it's so important. That's a great example, and it sounds like great work that you've done on it. That's fantastic, and so going back to, again, when you were first getting on a board, there's what we know we know, and what we know we don't know. And then there's your ability to sort of self-identify those areas of expertise or value that you uniquely can bring. So how did you do that? How did you sort of go, wow, I'm in the boardroom and it looks like I've kind of got a gap over here. Was that a process you went through?

Alexa: Absolutely, and I think it's a good process, right? I mean to your point, I think the most important thing is to know what you know, know what you don't know, and know who to ask. And, so I was lucky again, because I have seen so many board meetings before. It did help me feel comfortable walking in on the first day in terms of the process. How does a board run? What are the expectations of directors? What's the difference between a director, switching sharing duties, and an executive's daily job duties? So, I was comfortable in those areas. I was very comfortable being a cybersecurity expert and the board did ask me at my first meeting to give a cybersecurity update to them on board duties related to cybersecurity. What I did to get comfortable with the parts that I did not know, for example, the industry of Vocera is very different from my day job company industry. I took a page out of a playbook of one director I particularly admire, and what she does is she sets up meetings with all members of the executive team after she is first appointed to a new board. And I did the same so that I could hit the ground running both in terms of understanding the company's industry and business model, as well as starting to build relationships with management. And I felt that was very valuable, because by my first board meeting, I knew a little bit about how the company was run and who was running it. I thought that was great and I've continued to do that during my time at Vocera. In addition, you know one thing you have to tell yourself is: I'm not here to be the healthcare industry expert. There are other people around the table who bring that, and the best thing I can do during those conversations is listen and learn and not necessarily feel the need to add my voice, unless I've got something very valuable to say. And knowing that there are other people who have certain experience and expertise, and we've got other areas of expertise, I think it helps you be a lot more comfortable in terms of the value you add and not needing to be able to touch on every single topic.

Nicole: Great examples there. And how did you prepare before you stepped into the boardroom? It sounds like you were able to self-identify some areas, and lend expertise, and add value in different ways. Were there any classes? Any trainings that you took? Any sort of board preparedness?

Alexa: I didn't take formal trainings, because I had on the job training for over a decade. But what I did do, as I mentioned, is speak to each member of the executive team. I sat down with the CFO in particular and went over the financials, because that's not necessarily the area I was closest to. I did sit down with the general counsel and the first thing I said to him was, I am not interested in your job. I'm not interested in managing you. That is not my role as a director. I wanted him to feel very comfortable from that front and I think it was helpful, but I did that on day one. On the other hand, I can be an advocate for some of the initiatives that he's bringing forward at the board level around, for example, when GDPR was being enacted or around some other issues more recently, I think I've been able to partner with him and advocate for him in a way that maybe other board members haven't been able to. So again, I think it's getting to know the management, getting to know the business, understanding the areas you can add value. Educating yourself on the areas where you're not as knowledgeable. Another thing I would mention is that it's important to build the relationships with your fellow board members. When I joined the board, many of the board members had been on the board for several years and I would be a fool to not invite them to coffee, invite them to lunch and get to know more closely the dynamic of the board, the way the board is run, what works and what doesn't. I spent the first year having quarterly coffees with the chairman of that board and he was a great mentor to me, and really coached me in terms of how to be the most successful board director I could be for that particular board, with that particular dynamic and group of folks and I'm very grateful to him.

Nicole: Excellent and you mentioned that you've had the opportunity to bring diversity to the board and boards on which you've sat. Can you talk a little bit more about that, like what you're currently doing to facilitate further diversity on the boards with which you're involved?

Alexa: Absolutely. Well, I was very lucky, because one of the reasons Vocera reached out to me in the 1st place is because they were proactively interested in adding another woman. They already had a woman board member. They reached out to the woman who was on my board, and she in turn, turned them on to me. So Vocera already was very focused on diversity. In the time I've been on that board, as I mentioned, we added 3 new board members and so one of the things we've talked a lot about as a board is diversity of tenure, and every company will be different, but for Vocera we've really landed on, it's good to have board members in each trimester, if you will. You know, folks who are there from zero to three years, folks who are there from four to six years, and folks who are there from seven to ten years. We don't have a board limit, but that sort of feels like a nice life cycle of a board member. And I think that diversity is one that should not be overlooked, because people bring different things to the table. Depending on their tenure on the board, you know, folks who have been on the board longer bring more similarity, more longevity, more of a deeper understanding of the background, whereas a new set of eyes brings a new perspective and can be freed from some of the background, if you will. So that's been something that the Vocera board has actually been quite focused on over the last year, but as I mentioned, you know we've also thought a lot about industry experience. We don't need everyone on the board to be from Vocera's industry. In fact, it's useful to have some tech executives who for example maybe do more M&A. That's something that Vocera has done more of since I've been on the board. So, I think just really being open minded about what diversity means and how to be the strongest board we can be. That's really the name of the game is just, you know, with a diversity of opinions and outlooks we can be a stronger board and more valuable to management.

Nicole: That's just an exceptional point you've made about tenure being a part of the diversity and one that I have not heard before and I think your awareness of that and the different stages, or trimesters as you mentioned, and the value that people can add with that different perspective is huge. And speaking of expectations, I would love to get your sense, because you have had such a tenured board member, I would love to hear what your thoughts are on how boards have changed and sort of the expectations around being a board member. How they're different now than they were, say, even 10 years ago, right? And let alone if we think back to the 20th century, right? Do you have a sense of that or could you, can you weigh in on that at all?

Alexa: Yeah, I can certainly talk about what I've observed in my own experience. So, I don't say even ten, fifteen, twenty years ago, not to date myself, obviously board members were very engaged and focused on their fiduciary duties. My sense is, there's been an increased commitment to fulfilling those duties and to being as helpful to management as possible without taking on the role of management. I feel that for me, my board duties inform my day job and vice versa and it's a very important line that I draw in a board. I'm not there to run the business. I am there to help management be strategic and make the right decisions. Whereas in my day job, obviously we're there to do the operational, tactical work of running the business and so I have seen board members really focus on: What is my fiduciary duty? How do I be the best board member I can be? Take cybersecurity for example. That was not anything the board spoke of, in my experience, prior to about three or four years ago. Whereas, now more and more boards realize, this is a board level issue and are educating themselves on what is the board's fiduciary duty around cybersecurity, and how does that differ from the CFO or CEO's duty? And so there's, I think more interest in what other duties, how do I fulfill them in the right way? And how do we really support management and be the best directors we can be?

Nicole: Fair enough, would love to hear any sort of additional advice or recommendations or insights for our listeners about getting to the boardroom that you might want to share, anything I didn't ask or that I missed?

Alexa: I wish I could give you more pearls of wisdom, but I think really, the answer for me and I think for most board members now that I've had a chance to be on the other side as chair of non-corp gov is, be really clear about your aspirations, and say it out loud, and say it as often as you can to whomever will listen, because although we now have more resources and bigger pools of more diverse candidates at the end of the day, there's always going to be a backchannel. There's always going to be a network. There's always going to be people that you know and trust that you go to 1st, and so the more people in your own network that know you would like to be on a board. Do you actually have bandwidth for a board? One of the questions I often get asked is would you have bandwidth to do a second board? And I would always say, of course I do. My board work inspires me and energizes me, but that might not be what people would assume. So, my advice is, say what you want, say it out loud. Tell your network and, just try to keep asking your champions to look for opportunities for you. Keep looking for opportunities to champion others, and hopefully at the end of the day the door opens and you can walk in and do the best job you can do.

Nicole: Fantastic advice, Alexa. I can't thank you enough for sharing part of your journey and for all of the work that you're doing and the commitment that you show to bringing more diversity to the boardroom and clearly adding the value that you do. It's so important, so thank you very much and certainly wishing you well. Thank you so much for joining.

Alexa: Well, you too. Oh, thank you. It's been an absolute pleasure and I really appreciate the opportunity. Thanks, Nicole.

Join BDO in discussion with Betsy Atkins, three-time CEO and serio entrepreneur, board of director of numerous corporations, founder of Baja Corp and author of Be Board Ready and Behind Boardroom Doors, as she shares her thoughts on:

• Defining your strategy in seeking board service and ask yourself “why not me?”

• Pay forward value and receive value in return

• Prepare yourself and where you may have gaps to fill, seek resources to fill them

• How to contribute meaningfully and bring new ideas into the boardroom

Transcript

This transcript has been lightly edited for clarity.

Nicole: Hello everyone and thank you so much for joining BDO’s podcast series, Getting to the Boardroom. I'm Nicole Ward Parr and in this series I have the pleasure of hosting some of the most distinguished executives currently serving on public company boards to discuss their journeys and the paths that got them there. Today, I'd like to welcome C-Suite executive and public company board member, Betsy Atkins. Betsy is a three-time CEO, serial entrepreneur, and founder of Baja Corporation. She has cofounded enterprise software companies in multiple industries, including energy, healthcare, and networking. She's an expert at scaling companies through hyper growth and leading them to successful IPO and acquisitions. Betsy is a corporate governance expert with an eye for making boards a competitive asset. Her corporate board experience is vast and covers multiple industries, including: technology, financial services, healthcare, retail, automotive, manufacturing, and logistics. As a corporate director, she brings an operational perspective which focuses on taking friction out of the consumer experience. She leverages broad, contemporary knowledge of digital technology to reduce costs and drive efficiency and productivity while using AI machine learning analytics to streamline processes. Betsy has written three books on corporate governance. Her most recently published book is titled, "Be Board Ready: The Secrets to Landing a Board Seat and Being a Great Director." She currently serves on two public company boards: Wynn resorts, and SL Green Realty. She's also a member on the board of Volvo Cars. Betsy, such an amazing background and we are so grateful to have you join us to share about your journey to the boardroom today. Thank you so much, welcome.

Betsy: Nicole, I'm delighted to be with you and the audience.

Nicole: Wonderful thank you so much. Let's dive in. Let's start at the beginning. Going back, right? Would love to know when you were considering your first board role, did you have a strategy, a thought process, or specific approaches that you used?

Betsy: Well, my first board role was on a company that I co-founded and wrote the business plan and negotiated the venture investing, and I said to the venture investors, a condition of their investing was that I would be able to be on the board. So, my strategy was if you want me to take your money, you have to take me along with it.

Nicole: That's fantastic. I love that tactic. That whole negotiating approach there. Way to go! That's pretty powerful. That's terrific. And so, how did that play out for you? And did you leverage that board role into another or your 2nd?

Betsy: Well, my belief was, and I think it's true for everyone listening, “Why not me?” My ideas are good. I think and problem solve as well as anyone else. Why shouldn't I be part of this board process? So, I deliberately set out with a conscious plan that I wanted to join other boards. So I talked to colleagues in the venture capital world, and my first boards were a series of private venture backed corporate boards. And then of course, some of them went public, and I was kind of on my path pursuing public boards and I have always, still, and do now pursue private boards as well, both venture, and private equity backed.

Nicole: Got it. So, you have the range clearly of doing both private and public company boards. I'd love to come back to that a little bit later, just to get your perspectives on that further. But in terms of actually getting those roles, what were some of the specific tactics? Or how did you leverage your network to get access to those other board roles?

Betsy: So, with venture investors, and the same would be true of private equity, what they're looking for is: How are you going to help them make the portfolio company, the businesses be more successful? And if you look through that lens, and my approach was to try and forward invest and prove to them that I was an asset. So what I did was, I asked, can I help coach or mentor some of your portfolio companies? Here's where my experience would be relevant. So, you look at your own experience. If you're a technical person, a finance person, a marketing person, you know where your experience is relevant to the portfolio company, and by offering to just give help for free. Then I evolved it to: How about if I become an advisor to these companies? Let me do an advisory board gig and so you show that you're adding value. And if you do that a few times, then it's reasonable to say, I think that I could be a great asset for one of your boards. And here is where I could fit, and why I'm different, and how I could help that business grow. So if you look through that lens, that's a receptive audience.

Nicole: That's a fantastic takeaway for our listeners, is focusing on where you're going to be able to add value and then doing it in a complementary fashion, initially. Like you say in an advisory capacity and then you're able to point to a track record. That's a great takeaway. I think, very good. And did you have a champion or a mentor? Someone who was senior to you in experience, but that could give you guidance and insight along the way as unique journeys and sort of learn the ropes.

Betsy: You know everybody today has mentors, sponsors, champions. When I started it just wasn't a thing, and I didn't. But I had a great advisor in my mom who basically said to me if you pay it forward, and if you forward invest, and if you forward deposit into the bank then you can withdraw. So, if you do things for these venture and private equity investors where you're helping them, and you're not asking for anything in return, you're just forward depositing into the bank: proving credibility, follow through, execution, value add. If you're doing that in advance, then it's reasonable to come back, some number of months later, after you've made a considerable deposit, not like one little favor. You've got a pattern and they see that you're reliable. You're there, you follow through, you execute. Then it's reasonable to go back and ask and say, I think that I'm adding value and here's why you would want me. So, it was my mom's advice of forward invest, be generous spirited, pay forward three to five favors, or ways of helping before you ask for help.

Nicole: I love that concept, forward investing and paying it forward, and adding value. Almost altruistically, knowing that on the back end it will speak for itself and that they would welcome the opportunity to help you further right? As a token of all the value that you have added along the way. I think that's brilliant.

And through the process of your early board experience, how did you self-identify areas where you thought, whoops, I don't know about that and I should, or wow this is an area I'm going to need to improve upon where I could be adding more value, because we all have those blind spots. How did you self-identify those? And then how did you speak to those to further prepare?

Betsy: I think that, first of all, boards will look at you as having certain domain strengths and expertise that you're going to bring. So, evaluate yourself and what are your core strong areas. If you're a finance person, then maybe it would be valuable to learn more about product strategy, or be more conversant on marketing, but your main power alley is always going to be finance. So I think, in terms of how you message yourself downstream, it's going to be where your power is. You do need to be more well-rounded and there's a lot of great business books and YouTube info out there and colleagues will mentor you and I think that, that sets you up to go to your boss, and your boss’s sideways peer and work through the organization and find somebody who you connect with who you think has the orientation to be helpful. And that's the way to ask for mentorship to say, I'm a super talented finance person, but you could then go to the CMO or the chief revenue officer. Let's say you're in an organization and you’re a vice president of Finance. You're not the CFO, but you could then go to those other peer CMO, and CRO and say, “Tell me about how you do revenue forecasting, how you think about which geographies and territories to go into, how you look at productivity of the sales organization,” whatever it might be. Because they're happy to mentor you when you're interested in their area and, assuming you've selected somebody who's oriented to be receptive. So, I think that's how you round out your general business knowledge.

Nicole: Great, that's excellent points there and I'd love to know what mistakes you made when you were in the boardroom. What were some of the unforeseeable’s and the “whoops” that you encountered as you came up?

Betsy: I think that the mistakes that I made are natural ones that everybody makes, which are in the beginning you contribute too much, over contributing, talking too much, just agreeing with others. You don't need to agree if you don't have something unique and different to contribute. Don't just chime in and chirp up, “Oh, that was a good point so and so. Nice idea!” No, don't do any of that. The way you ought to think about boardroom communication, or how much you talk is like baseball. Nine innings. Three at-bats. You don't need to speak more than three or four times. Make it meaningful.

Nicole: That's great. That's a wonderful share and I think, like you say, sometimes when we're nervous, when we're unfamiliar, we can try to fill in the blanks and it's not necessary. That's fantastic guidance. And in terms of preparing, what type of preparation do you do when you're going into the boardroom, and is there a certain agenda that you drive, certain questions that you go in prepared to ask? Is there a formula that you use or is every situation different?

Betsy: There is a formula in an approach, so preparing either for a board interview or a board meeting is sort of the same in terms of research. I look at, of course, the material on the company, what you can find online and really valuable on YouTube and I look at the CEO's earnings report that they do with the analysts, which is recorded, and you can get the whole transcript. So that gives you good frame of info on the company. The second thing is to look at the industry and look at the peers and there are reports from Morningstar and the banking financial analysts, but there's also industry reports which you can get from Gartner or Forrester or IDC. Those are big industry research that will give you everything going on in the financial services industry. What are the innovations in online payment? And whatever it might be. And then I look at McKinsey, Accenture, Boston Consulting Group. I look at those macro trend reports that talk to you about, what are the emerging trends in each vertical industry. I feel to be a valuable director, you need to do your homework and bring a new frame of reference, not just what the company gave you, which is important and you have to study it and know it, but that's their lens on their industry and you're supposed to be bringing a new perspective. So you got to do a little more work.

Nicole: I think that's a wonderful segue to my next question, which is really about diversity in the boardroom, and the value . . . and the different perspective which you just shared that's so important for you to bring, to contribute, to add values. So, talk to me a little bit about diversity on the boards on which you sit.

Betsy: So I think we should think of diversity as cognitive diversity, because if everybody is exactly the same, we all see the same opportunity, and then we all have the same stigmatism. We all miss the same risk. You're looking for a range of thought, and obviously if you're not including women, that's half of the entire people on the planet whose perspective you're not getting, so you certainly want gender diversity. But I think it's a lot more. I think you want generational diversity. If I'm a direct to consumer business, I want to know what gen zero and millennial consumers are thinking, especially as their outside influencers don't have the brand loyalty of gen X and baby boomers. So, I want generational diversity. I want ethnic diversity. I want geographic diversity. You know, large public companies in America typically half the revenue is outside the US. So where is the viewpoint on Europe and Asia? We need that in the boardroom. So, I think that it's a range of diversity, of thought that you're looking to have, because that gives the best discussion, debate, and the most thoughtful outcomes.

Nicole: Excellent points and I couldn't agree with you more. And in terms of the boards that you're currently on are there certain ways, tactics, things specifically that you've done to encourage the diversity that you just outlined?

Betsy: Yes, actually, I will share a little story. I was on the board of a wonderful company. I was the lead independent director and governance chair at Home Depot Supply, and they’re a stocking, distributor for the Home Depot you know, but for the professional, for the big construction worker, the facilities manager, somebody running an apartment building, whatever. And we were talking about our e-commerce, our website and digital transformation, and I'm from the tech industry so it's a buzzword everyone's heard, but nobody knows what it is, and I said it, and I looked and everybody was like, “Digital transformation, what’s that?” And I realized we were not all at the same understanding of what digital transformation is. Our CEO is terrific, so we had working dinners instead of going out to a restaurant, eating another fattening meal and just socializing with your colleagues. We went to the training room of the company. We brought in a speaker from McKinsey, followed by a speaker from Boston Consulting Group, followed by a speaker from Accenture and we had the leadership team of the company there, and each of the three speakers from the big consultancies talked about how they defined digital transformation, what it meant, how you did it. How did you operationalize the concept? And after we heard the third speaker in a row, because we started at 5:00 and each speaker we left an hour - so, 5:00, 6:00, 7:00 and we had pizza and salad on the side board. You know we really had a pretty good appreciation of, “What did that mean?” And it was such a great model that I've done it ever since on my other boards. We bring in the speaker on cyber. Whatever the topic is, robotic process automation, disruptive business models, the gig economy, marketplace models, whatever it might be, and that really has proven to be a great way to get more, different thought into the boardroom and more perspectives.

Nicole: Yeah, that's truly innovative, and what a great approach. That's refreshing, right? And, you know, it leads me to the thought, and I'd love to get your perspective on this, just how much the boardroom has changed and how much innovation is talked about but also expected, on behalf of the board members, right? There's so much for you as a board member to stay in front of, to have an understanding of, right? All the things that are now real responsibilities for board members. I'd love to get your thoughts on what is innovation in the board room and how has the boardroom changed? Even just, you know, 20 years now into the 21st century.

Betsy: So, the boardroom model of engagement is very different. In the past, in the 1990s, boards were more formal and more oversight, and we saw the whole board engagement model change post Enron and WorldCom, where you had these catastrophic meltdowns, and the first thing that came out of that was this thing called, “the executive session” where at the end of the board meeting management leaves, the CEO leaves. They're always all nervous, especially the CEO that we're going to talk about him or her. Which we are and we do, but it allows for the board members as a group to talk about opportunities, concerns, and that evolved the next change in the boardroom, which was the strategy offsite, which now is a best practice. Most companies once a year, do a three-or-four-day board meeting, a deep dive into the company's multi-year strategy. And as board members got to understand the underlying assumptions, the next big change was, boards are more interactive. They're not just doing oversight, approving the annual plan. There's more time left for discussion and dialogue and engagement. And I think now we see the view of the board as more of an asset to help the company anticipate risks. Because the rate of change, as you said in your question, innovation is at a geometric pace, so your competitors change quickly, business models change quickly, and so the engagement is more interactive, and I think that's all a positive. So that's been the kind of change of the board engagement model, as I've observed it.

Nicole: Excellent examples for sure, and I would love to get any other thoughts or comments, advice for the listeners, that you think would be particularly meaningful. What are the questions I forgot to ask you, Betsy?

Betsy: I think the question of, “What should be my process to get my board opportunity? How do I go about it?” And I wrote a book that actually gives you the road map of all of the different avenues to the boardroom, and the tools and the specific sort of playbooks to go after each of the avenues to the boardroom. Because there are multiple avenues. There are your peers in the company who would recommend you. There are the search firms. There are the outside accounting firms who advise boards. The outside law firms who advise boards. The outside bankers. There is, you know all the governance watchdog agencies. For the women in the audience, there's a lot of great women's groups that will help promote you. So, there are many pathways which I described in the book, because I'm assuming people are listening because they're interested to get an opportunity to get on a board. And that's what I lay out in my book, Be Board Ready. How do you “be board ready,” and how do you get there?

Nicole: Fantastic yeah and just to say that title again for you it's, Be Board Ready: The Secrets to Landing a Board Seat and Being a Great Director, by Betsy Atkins. Betsy, very excited to get all of your thoughts and your perspective on all things board related and I can imagine the book is just another wonderful journey, and full of lots of great insights. So very much appreciate that. And are there any last thoughts you'd like to share?

Betsy: Yes. You can all do this. There's no reason why you're not smart enough, hardworking enough, clever enough, valuable enough and you should aspire to get to the boardroom. You absolutely will add value. Go for it. Don't ever short change yourself. You'll do great and you'll be a terrific contributor.

Nicole: Oh, I love that and I'll go back to what you said at the very beginning which is “Why not me?” Why not? Right? Which is wonderful. Betsy, all of your thoughts are so appreciated and such a great perspective, with so much insight. Truly grateful for you to spend the time with us that you did this morning and many thanks. Be well and thanks so much.

Betsy: My pleasure.

Join BDO's Center for Corporate Governance Amy Rojik and Paula Hamric and Meghan Depp of BDO’s National SEC Practice office as they discuss the financial reporting and accounting considerations that audit committees and boards need to understand when contemplating special purpose acquisition company (SPAC) transactions.

Key Takeaways

• Don’t underestimate impact considerations – both on the front end in understanding accounting treatment and reporting obligations of the transactions but what may come next from a public company filing perspective

• Understand the process - Seek advice throughout the process as timelines can be very tight and there may be significant determinations, consultations and information that will need to be provided for the transaction to be approved

• Ensure management has the ability to provide audited financial information that may be needed at each juncture of the transaction and post-transaction internal control documentation that will be expected

• Structure the entity for success as public company - Accounting and reporting are just one aspect

Additional Resources:

BDO Knows SPACs Series available on www.bdo.com and listed in the Podcast write up that covers:

• BDO Knows SPACs Part 1: Special Purpose Acquisition Companies as an Express Path to IPO

• BDO Knows SPACs Part 2: Accounting Considerations for SPAC Sponsors

• BDO Knows SPACs Part 3: Accounting Considerations for Target Companies of Special Purpose Acquisition Companies

BDO’s Accounting & Reporting Advisory Services team lead by Mike Stevenson

Join BDO in discussion with Don Springer and Dennis Cagan, the Managing Directors for GovernX.

Key Takeaways

• Boards provide important checks and balances that can foster sound governance within an organization

• Boards should be formed with the organization’s needs in mind in advance of significant transactions

• Board members can be thought of as affordable consultants and may provide first class advice and unbiased perspectives to management in helping meet strategic objectives

• Board assessments highlighting skills/experience gaps should inform board member selection and bring differing and fresh perspectives

• High caliber board members can provide credibility and competitive advantages with stakeholders

Join BDO in discussion with Erin Dwyer, Deputy Director & Stakeholder Liaison at Public Company Accounting Oversight Board (PCAOB).

Key Takeaways

• Audit committees continue to seek more education about the PCAOB inspection and reporting process and the PCAOB is continuing to provide more transparency and timely reporting in this area.

• Investors are becoming more focused on accounting and reporting as a governance issue and are highly interested in understanding audit committee oversight and there is an opportunity for audit committees to become more engaged in dialogues with investors.

• The PCAOB views engagement with investors on international activities, including understanding audit failures and specific country restrictions on PCAOB inspections that may impact audit quality, as an increasing area of importance

• Critical Audit Matters (CAM) is an additional area that all three stakeholder groups are continuing to understand and form opinions on with regard to the value of the information CAM disclosures within the auditor’s opinion may provide

• PCAOB is open to and welcomes engagement with audit committees, investors and preparers on a broad range of issues impacting audit quality

PCAOB Resources:

• PCAOB Audit Committee Resources

• PCAOB Investor Resources

• PCAOB Preparer Resources

• PCAOB Webinar for Audit Committees (July 2020 Replay)

• Conversations with Audit Committee Chairs: COVID-19 and the Audit

Key Takeaways:

• Stakeholder-Centric:

• Ensure a communication strategy is developed around sustainability reporting that is driven by stakeholder needs

• Don’t neglect the passive or potential investors

• Depth and Frequency: Don’t just stop at the launch date plans, have a plan for targeted communications specific to multiple audiences year-round
• Multi-Channeled: Leverage multiple communication and media platforms, as stakeholders consume information in different ways
• Spokespeople: Identify and educate, from employees to the board, on how to tell your ESG story
• As ESG should be part of your sustainable risk strategy, so should the approach to ensuring consistency in public disclosures within and external to your financial reporting

Join BDO's Center for Corporate Governance Amy Rojik as she and her colleague Dan Fuller, Managing Partner Tax ESG Strategy and Services Leader, discuss opportunities to align the board’s oversight of ESG strategy with taxation considerations to be truly impactful in corporate decisions-making in this evolving area.

Key Takeaways:

• Where is the “T” in ESG? – Given that the majority of business transactions, including those involving ESG factors, have related tax impacts to consider, tax directors want to be included in the company’s evolving discussions around ESG and can be highly valuable to the board.
• For those companies outlining or updating their integration of tax into their ESG journey, three critical steps need to occur:
• Outline your approach to tax by defining regulatory compliance and interaction with tax authorities
• Establish a robust tax governance, control and risk management framework to support the company’s sustainability strategy
• Quantify and provide qualitative context around an organization’s total tax liability to meet demand for transparency

• From a governance and risk management lens, proper tax governance can ensure that there is appropriate oversight over an organization’s tax strategy and decisions, ensuring they align with overarching business objectives and stakeholder communications around tax reporting.
• Leverage the BDO ESG Tax Cipher to strengthen risk awareness, improve decision-making on risk mitigation, and increase transparency, accountability and strategy.
• Tax strategy can often be a “solution” in the ESG space – through credits, mitigation strategies, etc.

Resources:

• Navigating the Intersection of Tax & ESG
• BDO Center of Excellence

Join BDO in discussion with Bob Tirva, Audit Committee Chair of Resonant and CFO of Sonim Technologies.

Key Takeaways

• Proactively seek out opportunities to continue education and expand your existing networks in meaningful ways

• Be patient and open to positions that play to your strengths – including skills and industry experiences

• Adjust to sitting in the role of oversight versus the role of management

Transcript

This transcript has been lightly edited for clarity.

Nicole: Hello everyone and thank you so much for joining BDO’s podcast series, Getting to the Boardroom. I'm Nicole Ward Parr. And in this series, I have the pleasure of hosting some of the most distinguished executives currently serving on public company boards to discuss their journeys and the paths that got them there. Today, I'd like to welcome C-Suite executive and public company board member Bob Tirva. Bob has served as a member of the Resonant’s board of directors since October 2018. Additionally, Bob serves as the chief financial officer of Sonam Technologies, a leading US provider of Ultra Rugged Mobility Solutions. Prior to Sonam, Bob was the Chief Financial Officer of Intermedia, a leading cloud SaaS and business application provider, where he was responsible for all of Intermedia's global finance functions. Prior to Intermedia, Bob was Corporate Controller at DropBox from 2014 to 2016, where he was responsible for developing the company’s accounting organization. Before Dropbox, he spent nearly 14 years at Broadcom Corporation, where he held a range of financial roles of increasing responsibility, including: Senior Vice President, Principal Accounting Officer, and VP of Finance. He also has career experience with IBM Corporation, Navistar Financial, and Ernst and Young. He holds an MBA from the Yale School of Management, and a Bachelor of Business Administration degree in accounting from the University of Notre Dame. Bob, that is a great background. So grateful to have you join us today and come on-board to share with us a little bit about your journey to the boardroom. Welcome and thank you.

Bob: Thanks Nicole, it's great to be here.

Nicole: Absolutely. Good. So, I would love to understand when you were considering joining your first board. Did you have a strategy, a thought process, or an approach that you took? I would love to hear a little bit about that.

Bob: Sure, sure. Well I'd like to say I had a well-planned, well-reasoned strategy, but those things are not often happening the way people think they'll happen. Sometimes they just stumble into things. And for me, my first move towards a board was joining an organization in Orange County, California, called the Forum for Corporate Directors. That's a nonprofit group that provides education for corporate board members and I thought it was a great way to meet and get advice from existing board members. And it just so happened that the FCD, as it's known, was looking for corporate experience on their own board, which at the time was made up mostly of lawyers, accountants, and other service providers. So, I ended up joining the board of that nonprofit forum for corporate directors and it was a great experience for a few years and that's what ended up being my first board.

Nicole: That’s a great story, because I think a lot of times getting on a not-for-profit board can give us some great experience and exposure to others that can be really beneficial in the long term.

Was that some of your thought process as well and if so, how might that have been the case?

Bob: Certainly, I mean networking with other board members was key to moving into that area of serving on boards and I learned a lot from being at FCD. I'd say that one of the things that I learned was that board positions are pretty rare, so it's important to get the word out to as many people as possible that you're interested, and that is usually what leads to eventually finding something that falls in place.

Nicole: It's a great path to try to do just that, right, through the nonprofit route.

Excellent, and so that was your first board experience. So, I'm assuming you continued to sort of leverage your network? Or those that you knew to continue on your path to obtaining more board roles?

Bob: Yes, that's correct. I mean, for me, I know that looking for key attributes that would be helpful to a board, in my own case, being a CPA, being a chief financial officer, having that kind of financial expertise fits in with the requirements of an audit committee, which is a key component of a public company board. But I don't think that in and of itself is enough to qualify. There are many people who have that in their background. My other experience with technology companies was also something that played a major role in finding the board position at Resonant. Resonant is a technology company that is developing new 5G cellular technology, and I had spent many years at Broadcom which is also in the cellular wireless space and so that fit, plus the need that Resonant had for an audit committee person was kind of key to that search.

Nicole: And it happened to be right combination of your skill set that makes a lot of sense. Was there someone that identified you and said you would be great for this? Or did you have, someone who headhunted for the role? I mean, how did it materialize that you found out about it and then went through the process?

Bob: Sure, well actually in my case there was a little bit of luck involved, because Resonant was looking for a CFO and they called me, because of my CFO experience and I actually ended up talking to the company, in that sense of possibly becoming the CFO. And that ended up not working out, but at the same time their audit committee chair resigned for another role and so they had an opening on their audit committee, just as I was interviewing with the board for a CFO role and it just so happened that they thought, well, if it's not going to work out on the CFO side, why don't you become our audit committee chair? Actually, everybody on the board thought you would make a good addition to the team and we’ll just move the chair over to this other side of the table.

Nicole: Great timing. Yeah, absolutely. Now that makes a lot of sense and so the saying goes, “we know what we know, but sometimes we don't know what we don't even know we don't know,” and I would love to know as you stepped into that position, what were the unforeseeables? What was the, you know, 'cause clearly you had some very particular expertise, which resonated - pardon the pun with Resonant, but which resonated with the board, and why you would add value in an obvious way. What were some of the areas that were gaps in your experience that you identified once you were on the board and you're like, wait, whoops, I'm going to need to know that that's an area of opportunity of growth or development. What was that? Or if you can speak to that at all.

Bob: Sure, yeah, I had the experience from being on the corporate side, so I presented to boards. I've been part of board meetings and audit committee meetings through the years wearing my corporate hat, and I'd always approach these meetings in a sense of having to prepare for them and bring something to the table for the board to review. And so, doing the opposite of that where you kind of sit back and wait for someone else to come in with something and you're trying to give advice, or trying to sort of review the material that they send and give them feedback is really challenging if you haven't done that. I mean, it sounds simple, but in reality, [you] kind of want to reach in and help create some of the material yourself and becoming a reviewer and an advisor is, it takes a little bit of practice, so I'd say that that's one thing.

Another thing is, as I said, my experience was in the broader, board meeting with many participants and presenters and then after that, the management team leaves and the board talks among themselves, and so that's the part that was interesting to me. I hadn't been used to that. And there's certainly discussion around the effectiveness of management: how good of a job they're doing. Do we need to replace the CEO or the CFO? And that to me was something I hadn’t experienced . It was kind of funny because, it made me think back to my days of walking out the door thinking I did a great job and wondering, now, if the board was talking about replacing me as soon as I left the room.

Nicole: And so, yeah, that's an incredibly different perspective that you get when you're in the board seat versus when you are, like you say, in that CFO role, right? Eye opening for sure. And so, any mistakes? I know that’s sort of a vulnerable question, but because I think we've all made them at times, but were there any mistakes that you made that were really great learnings by chance that you could share?

Bob: Oh, I don't know about mistakes, it's more of being able to fit in with the cadence of the board that you're working with and it could be very different. Some boards are very, very focused on procedure and proper minute taking and motions, and all the other things that you would see in a carefully scripted board meeting, and other boards kind of just relax on that. They like to communicate amongst themselves. And there's kind of an assumption that they've approved all these things during the course of the meeting, even if they're not formal votes that are taken. It's kind of a group consensus, so I think coming in and trying to force order where there is none can be a mistake. It's more of, if you're the new person on a larger board, you have to follow the lead to some extent and so you establish yourself.

Nicole: Got it. Fair enough. And in terms of the conversation around diversity right now. You know, there's a lot of that as it relates to boards and I would love to know if there are specific measures, or things that you've done to facilitate further diversity on the board, or to be a proponent of that diversity and how important do you think that is? All of those things, if you will.

Bob: Sure, I think it's very important. I think that boards have this historical view of just being a room full of insiders that are friends with the CEO or the founders or some of the ownership group, and are not really diverse enough to provide different opinions and views, and I think today boards are actively seeking that and in return they, the companies, need to take the advice of the people that they recruit to their boards, because otherwise it's somewhat of a waste to do that if the diversity isn't appreciated both ways. So I think you can see that changes are being made every day to move away from an old-fashioned board and into something that's more modern where you have a wide range of opinions and views.

Nicole: It's a great point that you make, and I'd love to hear a little bit more, because it sounds like you have presented to boards and audit committees for many years and now sit on the other side as a board member. How has the boardroom changed in the time that you've been exposed to being in that room, how is it changed? How is it different now?

Bob: Well, I think really recently it's interesting to see how boards are meeting virtually, and that is important given the current work at home, COVID meeting restrictions. Boards like to meet in person and it's a bit of a social event as well as a governance event and that has changed dramatically, and so people are getting used to video conferencing and virtual board meetings. I think that actually helps to create diversity in boards, because then the sky's the limit as to how far slung the board members can be in terms of participation. So I think the move towards more technology, even though somewhat forced recently because of the pandemic, is a positive in the long run.

Nicole: Right. And do you think the expectations of board members on an individual level have evolved or changed? I mean there's different conversation, certainly now in a boardroom, then there was even 10 years ago around things like risk and cyber, right? Do you think the expectations of the individual board members, do you think it feels different now?

Bob: I think it does. I think just getting back to the point around old-fashioned boardrooms and kind of rubber stamp boards. I think board members today expect to provide input, real input and they expect the companies to take that input seriously. And it's not just simply approving or ratifying what management brings to the table. It's something that should provide value in both directions.

Nicole: Very good, and in terms of when we think of innovation. I think especially in the Bay Area for example, I know you reside as do I, we think of innovation in terms of technology, etc. But I think there's an opportunity to innovate in the boardroom as well, based on all the things we just chatted about. The difference now of the role that the board plays compared to what it was even 10 years ago. Are there things that you've brought from an innovation perspective to the board or to the conversations that you're having with fellow board members?

Bob: Well I don't know if I brought those to the current board that I sit on. I think that's a very innovative board to begin with, so I'm happy to be a participant there versus an innovator, but I think that some of the things that I've learned, I think, to be well received in other future boards. Maybe, as you said Nicole, we live in a high-tech area and there's a lot of innovation here. There are many companies throughout the country, in the world, that they're not as far along the curve on innovation and technology, and so bringing in that type of diversity onto their boards can only help and help them get advice in getting a little bit further along in advanced technology into their own companies. Whether they're a technology company or not.

Nicole: Yeah, fair enough. I think that's a great point. And are there any other thoughts or comments or advice you might have for other folks that have not gotten the public company board seat that are still aspiring to do so? Any other last comments or thoughts, advice, pearls of wisdom?

Bob: Sure, sure, I would just say to be patient and persistent and get the word out to as many people as possible that you're interested in doing this, and you never know where an opportunity would come from. As I mentioned, my own opportunity really came from a CFO search that morphed into a board search on the fly and so it was something that was unexpected, but the openness to talk to another company just to find out more about them is what will lead you down the right path. And I do remember, before I had become a CFO, I had gone to BDO and other roundtables about how do you become a CFO, right? For aspiring CFO's, and it's sort of the same story. You keep pushing and pushing and somebody has to give you the opportunity eventually, but it's probably not as easy as it's just the first door you knock on. And so I think it's important to, as I said, get the word out as far and wide as possible and be prepared for some rejection and people saying you don't have the right experience. And then eventually, once you get that opportunity take advantage of it.

Nicole: Great words of wisdom and advice there, Bob. That's super helpful and thank you. Anything else on your side? Any questions that I didn't ask you that I should have?

Bob: No, I think you covered it. I think this is a great chance to chat about this.

Nicole: Well and your background, obviously, and your path is great experience to share. Lots of great takeaways there. And like you say, you never know where something is going to lead. You're interviewing for a job and all of a sudden it flips into a board seat. So, I think it's a wonderful story and some great advice for our listeners. And Bob, I'm just grateful for your time and thank you so much. Best of luck with all of your endeavors and be safe. Thank you so much.

Bob: Great, thanks a lot, Nicole.

Key Takeaways:

• Use of technological automation in the audit can yield increased efficiency, improved accuracy, consistency and quality.
• Complexity, data quality, lack of flexibility, resistance to change and over-reliance on technology are challenges to automating auditing procedures that need specific consideration.
• Auditors are intentionally and systematically focusing on automating aspects of the audit that build capacity and streamline systems but that also focus on feedback and enablement of adoption.

Board members should be asking auditors about automation use cases and recommendations for improvements to apply to their own financial accounting, reporting and controls areas.

Key Takeaways:

• Using AI and predictive capability is not new but generative AI brings AI to the mainstream due to its human-like communication and ease of accessibility to companies of all sizes.
• For boards to properly oversee AI risk, they need to require management to establish a model risk management process along with a model risk governance framework around AI implementation that includes standardization of algorithms, governance and ethical considerations as well as validation of data inputs and outputs.
• Moving to AI changes the human role and underscores the need for a strong risk culture and exercising of healthy skepticism to contend with potential bias, complexity and lack of integrity within both data sets and AI algorithms.
• Underlying data sets must be of high quality and representative of population they are intending to serve – free from bias, properly labeled and annotated.
• Boards, management and auditors will need to continue to stay apprised of what is sure to be a continually evolving standard setting and rule-making environment as technologies continue to evolve.

Key Takeaways:

• The discipline of modern governance today is really in a global realm – can no longer be thought of in simply local or regional terms.
• Governance should be viewed as a discipline and thus, your individual board “packaging” is critical to you being identified as a serious board candidate.
• Board Documents are not comprised of a resume or CV but rather are highly structured and specific tools and should be reflective of your core leadership traits, your “major” and “minors” with respect to the depth of your experience and your governance skills and how these link ethics, values, and culture to strategy and risk oversight. The time and energy put into crafting Board Documents is an important exercise for your board journey.
• The Board interview is a two-way dialogues and vetting process that allows: (1) the company to understand how well you understand the particular linkage of values, culture, risk and strategy to governance and (2) specifically, how well you will fit into the board and whether your depth and experience will enable you to be accretive to the board’s operations. Don’t be afraid to ask thoughtful questions and be intentional in developing linkage between yourself and the board dynamics.

Resources:

• Becoming an Exceptional Board Director Candidate Education & Certification Course
• Across the Board: The Modern Architecture Behind an Effective Board of Directors

Join BDO's Center for Corporate Governance Amy Rojik as she discusses the significant transition senior management undergoes when leaving the C-suite and stepping into the boardroom with Cindy Fornelli, current board of director at TriplePoint Venture Growth BDC Corp (NYSE: TPVG) and former Executive Director of the Center for Audit Quality.

Key Takeaways

• Gaining an understanding of the business is a must but as important is being able to exercise the attributes you were chosen for to enhance the board

• Board members need to be able to question and push back but do so thoughtfully and respectfully to build a workable comradery

• Recognize that executive sessions are opportunities not just to critique but to identify what additional resources the boards might be able to provide

• Don’t be afraid to reach out and seek the advice/guidance/opinions of your fellow directors

• Ask the questions if you don’t understand but make sure you actively listen to the answers

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Vanessa Teitelbaum, Senior Director of Professional Practice at the Center for Audit Quality (CAQ), to discuss the critical role audit committees play in the integrity of capital markets and how transparent disclosures about their oversight practices can provide significant value in the protection of investors.

Key Takeaways

• Robust proxy disclosures represent an opportunity for the audit committee to make clear to investors how the audit committee conducts its oversight responsibilities to promote audit quality
• Most significant noted proxy disclosure increases in 2021 relate to the audit committee’s oversight of cybersecurity
• Expanded audit committee disclosure may present a mitigating safeguard to investor concerns of a lack of objectivity by the audit committee
• Audit committees may find value in benchmarking from the Barometer, along with other CAQ resources, to provide practical data to help inform judgment on their own oversight and resulting disclosures
• Audit committees are reminded to pay close attention to the SEC Regulatory Flexibility Agenda and proposed rule-making/comment letter process

Resources

Access the CAQ’s 2021 Audit Committee Transparency Barometer here.

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Trish Oelrich, seasoned independent board member, to discuss how boards are helping make corporate initiatives focused around diversity, equity & inclusion successful and how board self-assessments and refreshment efforts are further lending both support to DE&I and providing broader protections for the company. 

Key Takeaways

• Boards need to be focused on diversity with specific actions of intentionality not only to create a diverse environment, but also to ensure diverse candidates are successful.

• Now is the time to audit the company and board’s diversity practices to ensure they will produce the results intended.

• Ensure the Board and company’s actions align with what you are reporting to the public, misalignment may result in derivative lawsuits against the board.

Key Takeaways:

• The SEC and DOJ are imposing record-breaking financial penalties to hold wrongdoers accountable for misconduct, while also offering credit to those who proactively self-monitor, self-report, and remediate misconduct.
• As highlighted by recent cases, internal investigation procedures and remedial actions are commonly cited as key factors related to the regulator’s view of cooperation and the determination of reduced penalties.
• Boards must ensure the company has established protocols and resources to identify, investigate, discipline, and remediate violations of laws, regulations, or company policy.
• Conducting a timely and thorough internal investigation can demonstrate to regulators the Board’s commitment to compliance, potentially helping to avoid or reduce penalties and support a healthy compliance culture.
• Where misconduct is identified, the board must determine suitable corrective measures and establish an action plan.

Related Resources:

• Podcast: Audit Committee: Alleged Fraud, Now What?
• Archived Webinars: The Board’s Oversight of Fraud

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Sarah Feingold, Co-Founder of The Fourth Floor to discuss corporate governance considerations in the start-up world and what has driven her passion for helping connect diverse individuals to the boardroom.

Key Takeaways:

• Never too early for good governance: Can be the “rocket fuel” for a company’s trajectory

• A diverse board is a powerful board and skillset needs continue to evolve in the boardroom to help companies build, broaden their network and scale the business

• Boards are NOT one-size fits all: As a prospective board member, “aim your arrow” – align your own subject matter expertise and experience with a network and a focus on specific companies that will benefit from your knowledge and add to your personal growth

• Value: Start-up opportunities can be incredible learning opportunities, may lead to equity, expanded networking, and a path to additional board/career roles

Key Takeaways:

Shareholder proposal trends to anticipate continuing into 2023:

• Increasing shareholder proposals – made easier by prior years’ SEC regulations allowing more access for shareholders

• Certain commitments made by companies in previous periods (e.g., racial equity audits, DEI and other social aspects) likely to be scrutinized by shareholders, reflective of societal concerns

Individual directors expected to be held accountable on a variety of issues (e.g., lack of movement on commitments made previously, over boarding of directors, etc.) through ‘no’ votes for re-election

Prepare your investor engagement strategy on a “clear day” (advanced warning system before issues arise), based on stage and profile of company, to take in information from investors to inform the strategy

Establishing a robust board evaluation and refreshment process will allow companies to both satisfy changing needs of the company AND more easily “comply with or explain” via increasing disclosure expectations for how board composition is determined and why this composition makes sense for the company.

Beware of ESG “fatigue” - Don’t allow yourself to get side-tracked by confusion over timing/content of regulatory direction. Boards need to look critically at, and articulate, the material ESG factors impacting their companies and how these are managed with respect to ERM and strategy.

Key Takeaways:   

• Have a clear understanding of entire supply chain – from where merchandise originates to where it is assembled or manufactured
• Gather and analyze transactional data to understand the financial impact of tariffs
• Review the customs triangle levers: tariff classification, country of origin, and value reported to customs
• Manage the tension between transfer pricing and customs valuation, as these both work in opposite directions
• Consider the long-term strategy of relocating manufacturing taking in factors such as: cost savings, labor rates, and potential free trade agreements
• Consider ethical sourcing and sustainability issues, such as compliance with forced labor prevention laws and environmental impact regulations
• Companies without in-house expertise to address complexity of global customs and trade issues may need to seek outside advisors with specialized knowledge to ensure informed strategic decision-making from both a legal and tax perspective

Resources:     

• BDO Talks Tariffs: Your 30 Min Monthly Briefing Webcast Series
• Customs & International Trade Services

Key Takeaways:

1. Approaching embedding AI into a service delivery model requires:

• Identifying and prioritizing AI business processes and use cases that align with your business objectives
• Assessing the feasibility and potential impact of each use case
• Developing a detailed implementation plan that contemplates the steps, resources, and timelines required for successful AI adoption
• Keeping cybersecurity at top of mind as well as quality assurance approaches.

2. Adoption and use of AI requires encouragement of curiosity and innovation tempered with a good understanding of the risk and challenges AI poses to current methods of obtaining and authenticating data.

3. Compliance with regulatory standards needs to factor into AI change management along with corporate culture, policies and procedures regarding the use of AI.

4. Auditors are currently embracing AI in measured approaches – e.g.:

• Leveraging digital assistants as a gateway to demystify technologies and to bring the talent pool up to speed on the basics – what it is, how they work, and general best practices.

• Using generative AI environments to streamline and further standardize the firm’s service delivery models and build capacity.

• Embedding AI into existing tools to surface unusual and irregular transactions that the humans may otherwise miss as quality focused.

• Considering AI-powered image recognition in verifying physical assets and reconciling with financial records.

Key Takeaways:

Establishing a “safe” environment for AI isn’t just a protective stance, it is itself a strategy that accelerates innovation, builds trust, and ensures long-term success.

In making the decisions to address entity- readiness to greenlight AI initiatives, boards’ due diligence includes:

• understanding how competitors, customers, employees as well as supply chains are using or would like to use/leverage AI;
• establishing a robust management risk management and oversight governance framework that provide appropriate mechanisms to protect proprietary data; and
• ensuring internal organizational parameters of AI use consider ethics, explainability, data reliance/privacy/security, talent/expertise, and strategic fit; and
• applying standardization for consistent and ethical development and deployment.

Join BDO’s Hitesh Shah, leader of our San Jose Board Roundtable series, in discussion with Raj Sisodia, Co-founder of the Conscious Capitalism movement, as he introduces the concept of Conscious Capitalism and the potential impacts of embracing the movement in your organization.

Key Takeaways:

• Conscious Capitalism is a philosophy based on the belief that a better form of capitalism is emerging that holds the potential for enhancing corporate performance while simultaneously advancing quality of life for people globally.
• Conscious Capitalism is grounded in four tenets: higher purpose, stakeholder integration, conscious leadership and conscious & caring culture
• Conscious Capitalism explores the possibility of embracing all the positives of capitalism while simultaneously reducing the negative impacts of business in the support and advancement of humanity.
• There are many benefits of being a conscious business that can counter some of the more significant issues facing companies today: increased employee engagement in the attraction and retention of talent; promotion of customer loyalty/advocacy; development of stronger supplier relationships; uplifting of communities, etc.
• While you may be successful operating your business in the traditional manner of maximizing profit and share price, broader stakeholders are increasingly demanding more and companies who do not embrace a conscious model increase the risk to their future business strategies and competitiveness.

Additional Resources:

• To learn more, BDO has partnered with Raj Sisodia and Neha Sangwan, MD to create the Conscious Business Leadership Academy (CBLA) to support leaders looking to maximize their personal potential while optimizing value and benefits for their organizations and stakeholders.
• Raj Sisodia - Co-founder of the Conscious Capitalism movement

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Cathy Moy, BDO Chief People Officer, to discuss company culture as a business imperative and the reasoning why culture must be center stage for boards as companies reposition their businesses and focus on growth in 2021 and beyond. From Cathy’s unique vantage point, she has seen firsthand how a company’s investment in its people positively impacts its bottom line – and long-term sustainability.

Key Takeaways:

• Today, corporate culture is no longer a nice-to-have – it is a key driver of business and competitive advantage that must be top-of-mind for boards and the C-suite.

• Culture has to be foundational, drive from the top, for an organization to achieve the type of success that comes with employees who are fully bought into the company purpose and vision.

• Companies that approach key drivers of culture – from reimagining how work is accomplished to advancing DEI to investing in talent development and retention – have been, and will continue to be, the most resilient in the face of challenging times.
• Don’t discount the importance of culture when considering M&A – if you don’t have culture synergy and common vision for the future, the likelihood of successful integration decreases significantly.

• As part of the board’s role in mitigating risk and providing strategic oversight of management, it must consider the implications that corporate culture has on organizational agility and ability to sustainably scale.

Recommended Resource:

NACD Blue Ribbon Commission on Culture as a Corporate Asset

Join BDO's Center for Corporate Governance Amy Rojik as she discusses what may be in store for corporate tax reform under President Biden’s administration with Todd Simmens, one of BDO’s National Tax Partners.

Key Takeaways

• Talking points indicate President Biden is in favor of scaling back provisions put forth by the prior administration

• Key corporate tax anticipated changes include:

• increasing the corporate tax rate from the current 21% up to 28%

• restoring the Alternative Minimum Tax to a rate of 15%

• increasing GILTI tax up to 21% (from current 10%-13%)

• The pandemic remains the priority, but we may expect to see procedurally certain tax provisions included within any additional stimulus legislation, akin to what was done with the enactment of the CARES Act

• Tax reforms may be permanent or temporary: Reminder that some of the prior administration tax reforms were temporary and are set to expire in 2026

• Boards are encouraged to remain abreast of this area as part of their oversight of management’s corporate strategy, as tax considerations will undoubtedly have significant impacts in business decision-making

Resources:

BDO 2020 Tax Survey – stay tuned for the BDO 2021 Tax Survey - February 2021 release

BDO Tax Resource Center

Join BDO's Center for Corporate Governance Amy Rojik and Ryan Hourihan, a principal and certified executive compensation professional at Pearl Meyer, as they highlight several key considerations for directors and management teams as they factor in compensation strategies and performance plans in the upcoming cycle and respond to shareholder questions during annual meetings.

Key Takeaways

• Increased discretion exercised by companies around the unplanned impact of COVID-19 as reflected in changes to short-term incentive plan measures and goals continuing through 2021

• Shareholder optics and employee consistency/fairness should factor in heavily to board decisions in compensation strategies

• Business needs may trump proxy advisory needs in setting compensation but the rationale needs to be well disclosed

• Quarterly or semi-annual goals are trending over annual performance period goals in the current environment

• Performance ranges may be broadened – on both the upside and downside – and relative measures among comparative groups may be preferred

• Time-based equity vehicles are getting more attention

• Shifts in business strategy likely require a company to realign incentive programs

Resources:

Access the full recording from the webinar – 2021 What's on The Minds of Boards Ahead of Shareholder Meetings

Key Takeaways:

• Building corporate sustainability is not about “being responsible for” but rather recognizing “how to work in concert with” a broader group of stakeholders to reduce friction and produce better results.
• Innovation in a staid industry requires:

- Creation of an environment to embrace and enable change – first speak about what will remain the same and season in what the change will be.

- Recognition that incumbency is NOT powerful (i.e., faulty assumption that formulas in the past will work in the future)

- Innovate by embracing what is evolving – e.g., technology

• Adopt a simple "Measure/Report/Reduce” framework – allows managements to act and the board to make informed decisions based on data-driven metrics to drive accountability and achieve whatever the “reduction” goals are – e.g., emissions, talent attrition, customer loss, use of resources, barriers to entry, etc.
• Don’t make the mistake of focusing heavily on low hanging fruit instead of looking broadly at both risk and opportunity
• Oversight tool: Instead of asking management “How do we make this?” consider the asking “How do we make this better?”

Resources:

• Book: BOOM! Deciphering Innovation: How Disruption Drives Companies to Transform or Die
• Resource Center: BDO ESG Center of Excellence

Key Takeaways:

• One of the roles of a board of directors is to continually assess the company and make decisions in the best interest of sustaining value for the long-term.

• Decisions to change business models should be weighed against the core purpose of the organization.

• Significant strategic changes necessitate the board to broadly evaluate the impacts on significant internal and external stakeholders.

References:

• SEC Chief Accountant Statement: Audit Independence and Ethical Responsibilities: Critical Points to Consider when Contemplating and Audit Firm Restructuring

• BDO as an ESOP Company

Join BDO's Center for Corporate Governance Amy Rojik as she and her colleague Mike Stiglianese, who serves as the Managing Director in BDO Consulting’s Technology Advisory Services Practice, discuss the SEC’s recently proposed rules on cybersecurity risk management, strategy, governance and incident disclosure and the impacts and considerations these rules may have on those charged with governance.

Key Takeaways:

• The SEC proposed cybersecurity disclosure rules are intended to formalize currently expected disclosures around aspects of cybersecurity that are useful to investors
• The board will be required to provide disclosure about the cyber expertise that exists within the organization’s governance structure
• Cybersecurity should be thought of and treated as necessary risk management processes and procedures
• Cyber incident response plans need to be planned in advanced, involve key stakeholders, be well thought out and practiced and be adjusted continually to reflect the changing risk landscape
• Documentation by the organization of the cyber risk management program is critical – including the identification, protection and disposal of data – along with testing of the program
• Process and metrics shared with the board needs to be at the right level – By analogy: The audit committee wants to see the financial statements not the general ledger…

Resources:

• SEC Proposes Rules on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Yelena Barychev, Corporate Governance and Securities Compliance attorney, to discuss the proliferation of voluntary disclosures being produced by public companies, the increasing attention by regulators and considerations for how boards are to respond in the best interests of their stakeholders.

Key Takeaways

• Voluntary disclosures generally fall into two buckets: (1) suggested directional principles-based disclosure – e.g. from the SEC; and (2) company and broadening stakeholder expectation-driven voluntary disclosure – e.g. investors, proxy advisory voting policies, rating agencies, consumers, employees, lenders, etc.

• Disclosures of 10-K narratives within MD&A and proxy statements are beginning to reflect more expansive voluntary disclosures inclusive of direct messaging on societal issues from the company and its leaders.

• Voluntary disclosure may be viewed as an opportunity to share where the company may be headed strategically but need to be mindful of once something is disclosed, there is an expectation for consistency in continuing to provide information going forward – good or bad…

• Controls and procedures are extremely important considerations for the board and its committees, particularly when considering providing non-prescriptive disclosures or in non-traditional areas where reporting practices continue to evolve.

Join BDO's Dan Newton in discussion with Nathan Goldman, Ph.D., assistant professor of accounting at North Carolina State University, and co-author of a recently released research study Board Risk Oversight and Corporate Tax-Planning Practices.

Key Takeaways

• When board members get involved in understanding the tax strategy and tax risk of the company, corporate tax burdens go down

• Companies disclosure risk oversight practice typically have a more robust oversight process

• Research indicates that oversight really was focused on permanent book to tax differences more so than temporary differences so would encourage boards to be inquisitive as to both in practice

• Proactive tax planning oversight generally may result in companies having more favorable impacts on lower tax uncertainty reserves

• ERM Frameworks help companies identify their risk appetite and risk tolerance and such an exercise could and should extend to tax risks

Key Takeaways:

• The NEED: Data governance programs exist to manage change in data assets overtime.
• The WHAT: Data is an intangible asset that is constantly evolving and has a host of characteristics that make it difficult to manage compared to traditional assets.
• THE WAKE-UP CALL: When surveyed, 95% of respondents felt data governance programs were unsuccessful.
• The PITFALLS: Poor data governance stems from: poor data quality, lack of enforcement of policies and procedures; and data security and privacy practice that don’t evolve with hacker sophistication.
• The HOW:

- Board directors should be asking corporate management the following:

- Does the company have a data governance program?

- Is the data governance program working? How do you know?

- What assistance does the data governance program need from the board?

• Directors should encourage management to decompose data governance problems into smaller initiatives and ask for stratification of data governance decision-making so that people at the right level are making decisions about data.

Resources:

• Data Privacy and Governance Checklist for the Board

Join BDO's Center for Corporate Governance Amy Rojik and Courteney Keatinge, Senior Director of Glass Lewis’ Environmental Social Governance (ESG) Research, as they highlight several significant considerations from a proxy advisor’s perspective for boards and management teams to think about ahead of 2021 annual shareholder meetings.

Key Takeaways

Anticipate shareholder meeting agendas to be extensive in 2021

Some of the key areas proxy advisors are keenly interested in:

• Virtual only shareholder meetings should ensure equitable participation and protection of shareholder rights

• Changes in executive compensation in light of COVID-19, particularly on one-time grants or modifications to compensation to executives without justification

• Disclosure around the extent of board oversight of Environmental and Social (E&S) issues

• Expectation of expanded company and board diversity policy disclosures

Resources:

Access the full recording from the webinar – 2021 What's on The Minds of Boards Ahead of Shareholder Meetings

Key Takeaways:

• Service delivery models demand that auditors demonstrate their efforts are directed principally to potential risks and anomalies and areas of higher risk.
• Boards that derive the most value from audits that leverage data analytics are those that have pretty specific views of what constitute outliers or anomalies for the business and that understand the auditors’ demonstrations of how their analytic tools can quickly surface and identify risks and patterns that may not be immediately apparent through traditional audit methods.
• Boards have potential opportunities to enhance both the value of the audit as well as the reporting information provided by management – e.g., address disparate systems, enhance limited data hygiene and inexact controls around data.
• Greater scrutiny of information, including relevant controls over data and data integrity, requires auditors to focus on modernizing their professionals’ experience, as well as audit technology development, as they are the agents of change in enhancing audit quality.
• Boards should be asking their auditors to show them the value that data analytics is providing and become better informed as to: how difficult is the data to extract; how much cleansing is necessary; does it reconcile; how well is it controlled; etc.

Join BDO's Terry Adamson as he sits down with Robin Ferracone to discuss the expanding responsibilities that compensation committees are taking on. Robin is the founder and CEO of Farient Advisors and Chair of the Compensation Committee at Trupanion, Inc., (NASDQ: TRUP).

Key Takeaways

• The role of the compensation committee is continuing to expand requiring oversight needs to clearly define and incorporate broader responsibilities - including, for example, human capital philosophy and culture.

• With the move toward greater corporate social responsibility, it is possible to incorporate stakeholder measures into incentive plans – both short and long term.

• Diversity, equity and inclusion (DEI) are all separate but interrelated opportunities that need to be thoughtfully assigned within the board to a committee(s) that can obtain a baseline, understand the gaps, and consider solutions to close those gaps throughout the organization and be reflected in human capital and compensation practices moving forward.

• Looking forward to 2021, boards should expect continued evolution of the workplace that will require a renewed awareness of stakeholder concerns and discussions of their impact on incentive plans.

Key Takeaways:

Funding for the CHIPS Act has been signed into law. This act provides tremendous opportunities for semiconductor industry organizations to expand production in the U.S. and additionally, provides many other benefits to the economy.

This podcast discusses:

• Opportunities for national economic initiatives for organizations that can pass threshold question – How does the project enhance national economic security?
• Under the Act, lessons have been learned from PPP funding during COVID and the need for attestations to counter fraudulent/inappropriate use of funding, which came back to haunt many companies who could not support their use of PPP funds after the fact.

Resources:

• Archive Webinar - The CHIPS Act Has Passed: Now What?
• What Semiconductor Organizations Need to Know about the CHIPS For America Act
• Semiconductor Industry Association

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Amanda Shpiner, Managing Director at Gasthalter & Co. LP, to discuss considerations for board communications as part of an overall governance strategy in the face of numerous disruptions impacting the business.

Key Takeaways:

• Boards have the responsibility to continuously monitor vulnerabilities and hold management accountable to address these via strategy and consistent, transparent communications with stakeholders

• Communication to stakeholders needs to be thoughtful and clear – don’t underestimate the power of the varied traditional and social media channels, engagement and stakeholder polling – to differentiate from your industry peer set

• Just because you may not have a complete plan in place to address an issue, it should not hold you back from communicating objectives and your thinking on the actions to undertake to achieve them

• Activist positions are usually very well thought out with significant research and analysis behind them; company boards/management have day jobs and these fights can be extremely time consuming and expensive

• Activism is morphing from perceived “corporate raiders” to “engaged shareowners/investors” for investors who hold their positions for long periods with a mission to change companies for the better through policies and performance enhancements

• When faced with an activist challenge (e.g., 13D filing), speed of response is critical and requires a pre-planned approach based quality of continuous monitoring; you only have one chance to make a first impression to stakeholders

• Current target areas for activists: corporate governance and perceived entrenchment of the board; operating performance; innovation to remain relevant; ability to tie ESG factors to bottom line over the long term; and management of supply chain challenges

Join BDO in discussion with Mercedes De Luca, Chief Information Officer at Pebble Beach Resorts and Board of Director for PFSweb, Inc, and INETCO Systems Limited.

Key Takeaways

• Truly needing to have a strategy on landing a board seat and be proactive

• Understanding board service will be both rewarding and challenging

• Being persistent and resilient – it is going to take a while and feel daunting

• Using board interviews to build rapport and assess whether you will be a good fit with the board and CEO

• Once on the board, really get to know your fellow directors to not only problem solve effectively but recognize that this additional network may be the best source of future opportunities

Transcript

This transcript has been lightly edited for clarity.

Nicole: Hello everyone and thank you so much for joining BDO's podcast series, Getting to the Boardroom. I'm Nicole Ward Parr and in this series I have the pleasure of hosting some of the most distinguished executives currently serving on public company boards to discuss their journeys and the paths that got them there. Today I'd like to welcome C-Suite executive and public company board member Mercedes De Luca. Mercedes De Luca is a technology leader and board director who creates digital experiences that delight customers of public corporations and start-ups while driving transformational and profitable growth. She excels at bringing the startup innovation mindset to a large corporate environment. Mercedes has held roles as CEO, CIO, COO, CTO, and GM and is currently the VP and CIO of the Pebble Beach Company. Prior to that, she served as COO for Basecamp, a SaaS workplace collaboration platform. Mercedes was vice president and general manager for the E-Commerce business of 22 billion dollars, Sears Holding Corporation. Previously she was CEO and Chief Technology Officer of the venture backed, My Shape, which was at the forefront of using machine learning and data analytics to personalize the online shopping experience. Mercedes currently serves on the board of directors for PFSW, INETCO and she has been a guest speaker for Girls in Tech, WITI, and other STEM organizations. A graduate of Columbia University School of Engineering and Applied Science, Mercedes majored in computer science earning her Bachelor of Science degree in Electrical Engineering and earned her MBA from Santa Clara University. Mercedes what an accomplished background. I'm so grateful to have you join us today and to learn more about your path to the boardroom.

Mercedes: Nicole, thank you so much for having me. Pleasure to speak with you. Thank you.

Nicole: Absolutely. Well with that let's jump in. I would love to hear, Mercedes, when you were considering joining your first board, remembering back what that was like. Did you have a strategy or an approach that you used? And if so, can you share with us what that was?

Mercedes: You know, I'm almost embarrassed to admit that the first board that I was invited to join was a private board and I was recruited onto that board back in 2008, and I thought for sure that if I just sat tight and waited I would get another recruitment to a public board and it actually took 11 years more to get my first public board appointment. So about, let's see, four years prior to that, so about four years ago, I did start thinking about my strategy to get on a board and I started by talking to other board members. I informed them about my desire to join a public board and I joined organizations and got help from organizations like Athena, New Role, Boardlist, and How Women Lead and also talked to CEOs who are often chairmen of their particular boards.

Nicole: Interesting, and so if I heard you correctly, you started down the path of wanting to get on a board and it took several years for you to understand that you needed to perhaps change your strategy. Is that correct?

Mercedes: Yeah. It took me several years to realize I needed a strategy. I think one of the things I overlooked was I just sort of sat there and waited and thought, well, they'll come to me and I think if you want a board seat, you need to be very proactive and to work toward it, just like anything else you would go after.

Nicole: Absolutely, it makes complete sense, and it sounds like tactically what you just shared was you had conversations with CEOs. You involved yourself with organizations, other key networking efforts. Any other specific ways that you leveraged your network to get access to board opportunities?

Mercedes: I think the key was to start thinking about who else in my network was already on a board and to speak to those people, because they are already on a board and more likely to know about the opportunities. Again, I naively thought that most of the board opportunities were going to come through public search, or rather through retain search. But it's only a very small percentage. I think it's less than 5% actually come through that way. The majority come through other channels and so it's really important to be active and to let others know that this is what you're looking to do.

Nicole: Got it. That's very helpful, and was there someone or a mentor that was specifically helpful to you in getting that board role? Someone that you identified as, “I want to be you” or “I would love you to help me and teach me tips and tricks.” Was there one person that stands out to you?

Mercedes: Yeah, so I would say there were two people. I've had a mentor in my career who was CIO at Credit Suites First Boston for a long time and he and I met when he was on a board of a company that I worked for and he's been a great mentor; helped me get a lot of advisory roles and a lot of things like that, and I always thought he'd be the one to sort of help me get a public board seat. But, in reality, it was a colleague in my own network, another woman who landed her first public board seat that actually helped me, and I think that's because once you have a public board seat, more people come to you for new seats. So, she was the most impactful for me.

Nicole: That's a great example, and when you were thinking about the value that you would like to bring to a board role, did you self-identify areas where you thought, “you know what, I'm probably going to need to know this,” or ex-champion like the woman that you just mentioned? Or your network that had seeds. Did they advise you that this is an “unforeseeable,” that you might not know you're going to need to know. Anything like that?

Mercedes: Yeah. I think the biggest thing is that we tend to romanticize getting on the board and what it's going to be like when we get there until we're on it, and there's a lot of basic blocking and tackling that happens on boards. There's a lot of good things and adversarial things that happen and so a lot of the people in my network really prompted me to think about: Why were they driven to board service? And did I understand it would be difficult, and that it would be challenging? And so, I think it was really important to not just think about what's good about it, but also what might be challenging about it.

Nicole: Absolutely, you know, it's almost become very in vogue these days to say, oh I want to be on a board, but do we really understand what that means? And I think your point illustrates that beautifully. So from a preparedness standpoint, from a study standpoint, or even just board readiness, were there are certain things that you looked to for guidance or to prepare for that role?

Mercedes: Yeah, in terms of preparation I think it's interesting, because a part of me didn't feel like I should have to prepare to be considered to be on a board. Not that I wouldn't prepare to interview, of course I would do that, but this notion that I would have to go through, and prepare a board bio, and really think about the value that I bring to the board, and do some mock role playing. I mean, a part of me resisted that, because again, I think when you’re an accomplished executive you get there because you have a certain amount of gravitas and so it's hard to think that you could be a novice all over again. And so, I think preparation is important, even though you may think you don't need to do it. I think it's really important because you need to be able to put forth what your value is and I'm talking about getting ready to be considered for board. Know once I got appointed to the board, I had a different strategy around how I prepared for that first meeting.

Nicole: Very helpful. And so, dovetailing from that just a little bit, were there mistakes that you made? And if you don't mind, that's a fairly vulnerable question, but once you got there, were there mistakes or ways that you sort of nicked your knees? You went, “Oof wow, I wish I'd known beforehand, and I might have avoided that,” or something along those lines?

Mercedes: Yeah, early on I had an opportunity to interview for a board position and I was talking to the CEO and I treated it too much like an interview instead of seeking to establish rapport with the CEO and figuring out if we had chemistry. And so, I think it was unfortunate that I just wasn't prepared enough. It comes back to being prepared, because you just don't know when that opportunity is going to present itself and unfortunately, they take a long time and you don't get as many at-bats. That was definitely a learning for me is, don't think of it as an interview for a job. Think of it more as establishing rapport with the people you're meeting with and learning and understanding this is a group you can work with to help drive the success of the company.

Nicole: Now that's a great point. Just that mindset shift and that's such a difference, right? It's such a different way you go into the room or to that meeting when you have shifted that mindset that way. That's terrific. So, there's a lot of conversation, of course, around diversity in the boardroom and I would love to know what you might have done, or encouraged others to do, to facilitate further diversity on the boards with which you've been apart.

Mercedes: Right, to begin with for me, this was the passion behind co-founding and being a founding board member for the Athena Alliance, because that group grew out of a networking group that met. And then we realize that there were so many high-powered women in the room, and many of them were seeking board opportunities, but we didn't quite know how to go about it. So, the first thing that I felt that I tried to do was to give visibility, both preparation and visibility to this group of really amazing women, and I think a lot of times people say, “Well, we can't find any diverse candidates. There aren't any out there.” And then here’s this room of hundreds of women, every one of them is an amazing career story, and so I think it's more that the paths weren't crossing. So, what I try to do is really encourage other women and make connections between women, and also hear and look for other candidates to help get people connected, because it's really about being connected one level outside of your own network. You've already mined your own network, so it's really getting into other people’s networks that's part of the challenge.

Nicole: Absolutely. What innovation do you bring to the boardroom? And so, I'll pose that to you. I would love to hear your answer to that.

Mercedes: You think for me, it's an interesting question, because for me, my brand is about bringing innovation in general. I think as an engineer, I'm a very creative thinker. I like thinking outside the box, and I like coming up with solutions that meet all of the constraints. That's what engineers do. They design solutions despite the constraints. And for me, the more constraints, the more challenging, the more interesting the solutions can be. So, I really value when I'm in the boardroom bringing that logic and that creativity to problem solving and coming with ideas that maybe people didn't think of before, just because they're thinking inside the box. That's how I think about innovation at the boardroom.

Nicole: I love that answer and I think diversity to me is, of course it's gender, it can be ethnicity, it can be many things, but I also think that diversity in the boardroom is among C-levels, right? And different experiences, whether it's a marketing background, a legal background, or what you just described, which is engineering, which is an amazing blend of sort of creative and yet linear, which does put you in a very unique spot, and place to impact thinking differently, which of course contributes to diversity, which is amazing. That's yeah, fantastic. And what other thoughts or comments or advice might you share with listeners? What haven't I asked you that I should have asked you, Mercedes?

Mercedes: Well, I think the first thing I would say is in terms of advice is be persistent. It's going to take a while. It can feel very daunting, but you need to be persistent and resilient. I think resilience is one of the most important skill sets any executive can have. And when it comes to finding the right board seat, it's probably even more important. I think once you do get that board opportunity, focus on getting it, but then once you get it focus on doing a really great job. I think too often people are focused on trying to get too many things. I want this. I want that. I think what really matters is what kind of an impact do you help make as part of the team on that board? And I think being patient. It's persistence and patience in terms of working together. And the other thing I would say is just, when you join a board you are the new member. You’re coming in, most of the board already has relationships with the other members and you do, you bring in fresh eyes. You bring in a fresh perspective, but I think it's also really important to get to know the board members individually and to establish and build relationships. Because again, if you really are advocating for other people, chances are other opportunities are going to come through those other seated board members as well. So, it comes down to people and I think it's just really important to focus on making an impact.

Nicole: Absolutely, I couldn't agree with you more on the people piece, right? It does come down to relationships and I have a dear friend to quote him, he says, “To invest in relationships will yield returns that you can't even fathom or imagine.” And it's really about people. I think that strategy is so well spoken as it relates to the boardroom, and really speaks to how things have changed in the boardroom compared to the 20th century versus this century we now find ourselves in. I think things have really changed, and I think that your point illustrates it. Any last thoughts that you have on that?

Mercedes: You made me chuckle when you talked about the boardroom because a lot of us, at least for me, I'll speak for myself as a kid. My first introduction to the boardroom was playing monopoly, and getting the board dividends and seeing the picture of the banker on the card, and I think the days of a very passive board or the board that just rubber stamps decisions that are being made in the company, that's changed dramatically. Boards are highly accountable. They are expected to be very diligent, asking sharp questions and really doing a lot more and being a lot more vulnerable through social media and things like that. So, I think it's so important to have multiple voices in a boardroom so that you don't end up with group think, and so that you do come to the best outcome. There's just so much information out there sharing that board diversity helps boards function better and that boards are being held to a much higher standard and have to know a lot more about a lot of other things right now than they ever had to know before. So, I think now is the time to bring on new perspectives and new eyes and fresh eyes. And yeah, I really appreciate this time to share.

Nicole: Absolutely. Well you're clearly an example of someone who's doing, precisely the things you just described as, so kudos to you for that. And being such a great example of diversity and innovation in a place that really needs it, and where we are in the world today. So, I am so grateful for your time Mercedes. And thank you so much for taking the time for our listeners and for us to share your thoughts in your path and certainly wishing you well.

Mercedes: Thank you so much, Nicole and appreciate what you're doing to help people in terms of their path to board readiness. Thank you so much.

Nicole: Absolutely. Thanks.

Join BDO's Center for Corporate Governance Amy Rojik as she discusses why and how boards are turning their focus to the “S” in ESG with Nora Denzel, a seasoned Silicon Valley technology executive and dynamic public company board of director at AMD, Ericsson, NortonLifeLock and SUSE Linux.

Key Takeaways

• “S” is not just about shareholders – it is about the health and well-being of all of your stakeholders: employees, suppliers, customers, and communities your serve

• “S” is in an “early” market phase – First step is to turn inward and perform “bottoms up” (e.g. pulse surveys, open door policies, view your health/benefits offerings) and “top down” (e.g., select the material issues to your company, particularly your talent pool)

• Select your framework in identifying relevant ESG issues to your company and perform a materiality analysis of the impact of these issues aligned your company strategy

• Ensure you are developing your ESG information via a stakeholder lens that has the same rigor, processes, inspection and metrics that other important corporate initiatives do

• Communications – How and Who and When

• Internally – Determine how might dashboards need to change; how might committee charters need to change; understand tone at top, mood in middle and buzz at bottom

• Externally – Ensure your CSR plans have built-in continuum of accountability

• Boards have an opportunity to take a deeper dive into company data and identify trends and areas for improvement

• Focusing on the “S” can be a path not only to strengthen overall value creation but to also protect against reputational damage

• Start small and be cohesive: Tell a “single” story – integrate your reporting based on strategy and the identified critical success factors and how these are managed

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Cynthia Clark, Executive Director of the Harold S. Geneen Institute of Governance and independent board member, to discuss how the ability to voice values can change behavior and drive better decision-making in the boardroom.

Key Takeaways

• The majority of board members know what is right when faced with an ethical challenge in the boardroom – Board members need to give a voice to values

• The ability to identify what is at stake if those values are not exercised, what the rationalizations may be for not doing what is right and who might be your allies will help inform the path forward.

• Pre-scripting both your position and responses to various rationalizations/challenges and identifying the most important point to focus on in support of intended action can help strengthen director independence, competence and decision-making in the boardroom.

Additional Resources:

Cynthia’s newly released book Giving Voice to Values in the Boardroom is available.

Join BDO in discussion with Coco Brown, Founder and CEO of the Athena Alliance.

Key Takeaways

• The rise of the feminine architype – roles that women have historically embodied – are increasing board role opportunities for female directors.
• Organizations like the Athena Alliance are helping women develop their strategy for board service by defining their strengths and presenting and articulating where their contributions best fit in different business models and stages.
• Board seats are achieved through effort, thoughtful strategy and of course, outreach to various networks.

Transcript

This transcript has been lightly edited for clarity.

Nicole: Welcome to the BDO podcast series, Getting to the Boardroom, where we interview a distinguished series of public company board members on how they got there. We kick off our series with the CEO and founder of the Athena Alliance, Coco Brown. The Athena Alliance is the premier organization dedicated to advancing diversity in the boardroom by preparing executive women for board service and facilitating board matches. Athena has worked with over 300 boards and over 600 board members since its inception in 2015, making a significant impact and shape to the modern boardroom. Coco, we are thrilled for you to be joining us today on this hugely important topic and we're especially excited to get your point of view as it relates to getting women into the boardroom, so welcome.

Coco: Thank you, it's great to be here.

Nicole: Wonderful. Well, I thought I'd kick it off with a question around how the 21st century boardroom differs. How is it changed from boardrooms in the past?

Coco: Yes, it's a great question. If you think about centuries past, and the focus of boardrooms for as long as we can remember back before this more modern century, the focus was very much of a backward-looking view on the organization; a view of the organization based on the financial metrics and the financial measures of the company and whether or not those were being achieved quarter over quarter, making sure to stay within regulatory and legal boundaries, and then also succession planning, but specifically for the board itself and for the CEO. So, you have these traditional committees of audit and risk, compensation, and nomination and governance that's spent most of its time really looking backward and looking through the details of how the organization operates in the way that I described. In the 21st century, organizations are being held to a much bigger bar for success. They're being looked at not just from the perspective of shareholders and shareholder return, sort of financial metrics, and whether or not the company is in legal compliance, but a broader understanding of the world as a whole and “stakeholder,” and whether or not the company has long term viability and health based on what stakeholders expect of them which is the society around them, the customer, the employee, etc. And really what's happened is there's been three massive fundamental shifts that have driven this change.

One is certainly the shift from businesses being the ones in charge to the consumer being in the ones in charge, you know? So, moving from businesses telling consumers what to buy and what to think to consumers telling businesses how to behave and what to make. And this has been enabled by just massive connection. You know we can really connect to any information without, you know, with the exception of government intervention, any information, anywhere, anytime and word of mouth carries very, very quickly. So, businesses are now being expected to relate to and understand the perspective of the broad human populous that they touch.

The second thing is that there's been this rise of conscious capitalism . . . This understanding that it's not enough to focus on quarter over quarter results; that purpose and culture drive profit; that if you don't have a real connection to society, you really won't be long term viable from the perspective of your bottom-line metrics. You can just look to companies like Boeing and United Airlines and Uber and WeWork, and these companies to give us some indications of how the sentiment of the public affects the business as a whole.

And then the third big thing is the rise of what I call the “feminine archetype,” which is saying that in the boardroom in order to meet the needs of a very dynamic world you need to have greater capabilities around relationships: to the go to market strategy, to customer experience, to people and different ways of working, organization, structure etc., Things and capabilities that really live within roles that women have more historically played in customer success: marketing and human resources and those roles are being more and more valued in the boardroom.

Then of course, there's what everybody knows, which is that technology is changing everything and every business is a technology business now, and so the boardroom of the past that you thought about, organizations from the perspective of your old business model of 25 year plans, and being able to slowly meet goals that have been set over a long period of time have been disrupted by the fact that everything changes so quickly in a technology driven world, and every company needs to be a technology driven company. Which really changed the entire dynamics of how all the businesses operate. When every company has a different way of doing sales now, a different way of doing marketing, and board members of the past may have grown up in a different business model world than they do now.

Nicole: Very interesting! And so what I'm hearing you say is the expectations of board members and how boards function is very different than it used to be, and in terms of how that might be an opportunity for women, can you speak to those things at all?

Coco: Yes! There's definitely an expectation that boards need to operate differently, and the first step in that is that you see committees becoming, sort of bulging, right? Like now, audit and risk is also cyber risk and then also, well wait a minute, what about technological innovation? Where does that fit? Is that under audit? Is that under comp? Is it non-gov? It doesn't really fit anywhere. You see compensation sort of bulging into this people and culture arena. So a couple of things are happening. Boards are being tasked to think differently about the skills matrix that they've historically looked at, the kinds of people that bring the right skill to the table. It's no longer just former and current CEOs, and former and current financial experts, CFOs, etc. It's roles that historically have not been in the boardroom, but where you are more likely to find women. For example, 55% of CHROs are women. The compensation committee is being, in very modern boards, you're seeing Avalara, as an example: Kathy Zwickert was brought on to that board because of her HR background, in part to really broaden the view of what that comp committee is to be much deeper into the organization in terms of thinking about culture and people and systems that will work around the people organization. So, you know that's one opportunity for women is that CHRO function, that has always been an expert in compensation and succession planning and evaluation, etc., in equity structures, is also an expert in people structure and the modern people structures, and how to bring that thinking around global workforces, gig economies, multigenerational workforces into the boardroom.

Another area where you see opportunity for women is with the CMO or the CCO, the chief customer officer, which didn't even exist 10 years ago. Those roles are 32% women and 35% women. And so there again you have a lot more women in those roles that have the closest connection to customer, to the end stakeholders experience with the product or service, and it's play in the world and how to bring that to the world. That sort of capability is necessary in the boardroom as well, because how we're bringing products to the world is very different today than it was in the past, and educating the board and leading the board, as the board leads the company and stewards the company. More of those kinds of roles are being brought into the boardroom and that's providing opportunity for women.

Nicole: Fascinating and in terms of innovation in the boardroom, what I'm hearing in the trends of what you're saying, is that things have changed the impact of technology and sort of a reshuffling of the dynamics and change. So how is it that you've seen or experienced women being innovators in the boardroom?

Coco: Yeah, this is one of my most interesting “ah-ha's,” because women are the ones who are being brought into the board from newer perspectives, right? These different roles that didn't used to be in the boardroom, including, I've mentioned CHRO and those sort of go to market roles, but also the chief information officer. 19% of those are women, whereas women are only 11% of CFOs. So, you see women coming in from these technological roles: Chief Product Officer, Chief Technology Officer, Chief Information Officer and those roles are not only bringing women newly into the boardroom, but also bringing capabilities into the boardroom. And so, women are driving more of the innovative thinking around boardroom structure. I mentioned Kathy with regard to compensation committee, sort of evolving at Avalara, but there's also women like Allison Davis who created the Innovation and Technology Committee for the Royal Bank of Scotland and now she has a historical financial background, but she drove this innovation, because the board is stewarding large investments in full digital transformation both internally and externally for the Royal Bank of Scotland. It's becoming a very different business model and the board needs to know how to steward that. So, I see women bringing innovative thinking to the boardroom around how the board configures itself. You know, really, what are the right committees? How the board thinks about and educates itself, in terms of being the long-term strategic stewards for the business and really taking the responsibility to say, the median tenure of a CEO is 5 years. Which means half of CEOs don't last 5 years, but boards are committees and collectives that last over the long haul. How do they make sure that they have a long-haul view that includes the world as it is today? And so, a lot of that thinking, I see women bringing to the table naturally, because they're coming into the organization disruptively, you know, into the boardroom just as different skill sets than the past.

Nicole: Great. Very interesting and in terms of other thoughts you have, you know, sort of open-ended question here. Anything else that listeners out there that are contemplating getting on a board or how to position themselves into that next step? Any guidance, any thoughts, anything else that you might like to add?

Coco: Yeah, one thing that I have also come to realize is that the work we do at Athena, which goes beyond the boardroom, but uses the boardroom as the final frontier of senior leadership. It is the place from which companies are stewarded into the long term and they operate very differently. They operate very like a C-Suite, but they operate very differently than any other function within the organization. So, getting there, getting to that space requires a different approach than we have historically used, in our careers, any of us. You know, we sort of climb a career ladder and this is not unique to women. This is male or female. As you climb a career ladder you sort of, and you may move over to a different ladder, but you're incrementally adding from one thing to the next. And as you talk about yourself you say, well in my last role I did this, and I was elevated to that. When you're looking to jump into the boardroom it's, this is going to sound kind of funny, but more similar to your high schooler preparing to go off to college. They have to build an entire strategy around that effort, that includes thinking deeply about: Which are my reach schools? Which are my match schools? Which are my safeties? You know, where really can I apply? If you will. So similarly, in the boardroom you need to think about, where does my scaling and overarching contribution to business fit to different business models and different business sizes and stages? And then you need to think also about the way that you know high schoolers will think about applying to colleges: What do I bring to the table? You know, what is my story? I'm going to tell my story in a series of essays and when you weave them together you see a picture of my potential, my passions, my capabilities, who I am, my character and you have to do the same thing as you're approaching your desire to join a board. You have to think about: Who am I, character? Who am I, passion? Who am I, potential? And how do I bring that to a boardroom? And you need to be able to tell that story in a bio very well, and also in the way that you present yourself. I think those things are extremely important. The third thing I would say is you have to realize that board seats are achieved through your network. It really is about who knows you, and how many click throughs and impressions you're getting, and so that takes effort on your part. It's like asking people to write letters of recommendation. You know, you can't just hope to get in, and somebody will find you. Yeah, yeah. It takes strategy and it takes outreach and letting people know what you're trying to accomplish in getting them to work for you.

Nicole: Absolutely. Well, I can't thank you enough for all of your thoughts and your perspective. I mean, clearly you see across many organizations and many boardrooms, and that's so insightful, I'm sure, to our listeners and women who are trying to get there. So, Coco, thank you so much for your time today and all the work that you've done at the Athena Alliance and we certainly wish you well and hopefully in the future we'll be able to have you back again. Thank you so much.

Coco: Thank you. It was great to talk to you. This is great what you're doing.

Nicole: Thanks so much.

Join BDO's Center for Corporate Governance Amy Rojik as she discusses transformative impacts on corporate governance within the consumer products and retail industries with Anddria Clack-Rogers Varnado, Vice President, Head of Strategy & Business Development for Macy’s and Board of Director for Umpqua Bank (NASDAQ: UMPQ).

Key Takeaways

Trends for retail and consumer products industries are currently focused on:

• Personalization of service – Getting beyond marketing saturation and offering an augmented reality/virtual styling that gets at “what is right for you (the customer) and how do I get it to you faster”

• Incorporating sustainability in end to end board discussions – e.g., From how sourcing products (e.g., from inventory waste in production to customer product disposal and “re-commerce” options)

• Ecommerce and data privacy concerns – personalization and targeting customer information leading to more frequent risk management conversations in the boardroom

• Leadership and talent development reflective of stakeholder groups - Does your board and management team adequately represent perspectives of your employees, your shareholders, your customers, etc.?

Evolution of governance - Questions directors should be asking:

• Has the longevity or tenure of board members limited perspective/response in keeping up with trends in rapidly evolving industries?

• What new skills sets may be needed now that were not needed previously?

• How can the board agenda be re-shaped to determine relevance and frequency of discussion cadence?

• How can the board introduce/rotate voices in the board room to bring in new viewpoints?

• How can we learn from COVID-19 to ensure that management incorporates elements of scenario planning and broadening the “playbook” in strategic planning?

Resources

60-Second Retail - A BDO Podcast Series: https://www.bdo.com/insights/industries/retail-consumer-products/60-second-retail-podcast-series

Join BDO's Center for Corporate Governance Amy Rojik as sits down with Sheila Ronning, CEO and Founder of Women in the Boardroom to discuss thoughts on how to not only get more women to the boardroom but peel back and understand self-imposed hurdles that both men and women need to scale in order to get those covered director positions.

Key Takeaways

• Networking is your way to the board – understand who is currently in your network and plan to spend time sincerely nurturing those relationships and establishing new ones

• Know your value – prepare yourself for opportunities by being able to clearly articulate, quickly and concisely, what your value proposition is AND what it is you are looking for in board service

• Set goals and objectives and do your homework on the various types of board opportunities – assess your capacity, know what is expected of you as a board member and ensure opportunities you are pursuing align with your goals/objectives

Boards need to work with management team to continue to identify and prioritize opportunities in automation to enhance all aspects of operations, product development and service delivery.

• Challenges in implementing automation need to be identified and incorporate into a strong change management program to ensure enterprise-wide acceptance and adoption.
• Boards can play a significant oversight role in the automation process by helping management establish guardrails – policies, protocols and controls – and require reporting back on progress as an accountability mechanism in driving change.
• Become and remain familiar with emerging automation technologies and methods to be competitive and optimize the business’ capabilities.

Join BDO's Center for Corporate Governance Amy Rojik as she and her colleague Todd Simmens, National Managing Partner of Tax Risk Management, to discuss how the board’s oversight of corporate strategy and risk management would be remiss without an understanding and consideration of evolving global and domestic tax regulations anticipated to significantly impact decision-making at the board level.

Key Takeaways:

• Companies are advised to continue to remain abreast of legislative activity to inform on-going scenario planning, inclusive of the tax department and appropriate advisors. Tax implications need to be considered early on in contemplation of transactions as well as operational decisions and human resource matters.

• Expectations for a robust tax bill in 2022 under the Biden Administration’s ‘Build Back Better’ plans may have lost sight of the power that individual members of the House and Senate can have.

• Mid-term U.S. political elections may put some of the more contentious progressive tax increases being considered on the back burner.

• With regard to Biden’s budget (aka the Green Book): As a reminder, certain of the Jobs Act provisions expire in 2025/2026; other provisions are permanent (e.g. Corporate Tax Rate increase from 21% to 28%, individual rates and capital gains as well as international regulations and policy changes such as the replacement of BEATS and onshoring of taxes) and would require legislation to enact tax changes.

• Internationally, companies are advised to be in tune to the OECD’s agenda

• The IRS continues to experience operational challenges including staffing issues, processing, refund delays and extended communication response times. Filers are advised to communicate with the IRS using certified mail or other form to demonstrate proof on communications.

• It is the responsibility of board of directors to be very aware of what tax professionals have to say about what is going on at the business level.

Resources:

• 2022 BDO Tax Outlook Survey

Key Takeaways

• Flexibility is dynamic way of operating business across workplaces, spaces and time with strategic coordinated intention to achieve high levels of performance and engagement.
• Lead with the what (not the where): Flexibility is about organizing around the work itself and how, when and where it happens best, no longer around the workplace.
• Boards and management teams, who have already instilled strong core values and a culture of innovation, experience fewer challenges in executing flexibility strategies.
• Not simply a human resource policy: A flexibility strategy requires the mind shift from “I” to “we” – requiring a framework that includes full leadership buy-in, organization-wide training, communication and the permission to experiment and innovate.

Key Takeaways:

• Data protection, which encompasses data governance, data privacy and cybersecurity, should be considered as part of the board’s oversight of risk and strategy
• The board’s responsibilities related to data protection include identifying director(s) or advisor(s) with the appropriate skills and experience, stating explicit accountability within the board, keeping management accountable and ensuring compliance with laws and regulations.
• Board best practices in their oversight of data protection include good data governance hygiene, frequent and robust communications, expertise, and continuing education.

Resources:

• The Board’s Role in Data Protection (practice aid)
• Board Oversight of Cybersecurity (publication and resources)
• BDO Digital 2022 Cybersecurity Month Resources
• BDO Digital Governance, Risk & Compliance

Join BDO's Center for Corporate Governance Amy Rojik as she discusses the challenges and considerations boards face in navigating a SEC 10A investigation with Seth Friedman, Partner with McDermott, Will & Emery and Christopher Tower, BDO’s National Assurance Managing Partner Audit Quality and Professional Practice.

Key Takeaways

• The audit committee and the auditor have very clear, specific and time sensitive responsibilities when an illegal act is suspected.

• Company management and the audit committee should involve the auditor as early as possible when an illegal act is suspected.

• 10A investigations tend to be incredibly dynamic, require iterative processes and often require independent experts to identify the full scope of the wrongdoing.

• Communications – timely and transparent – are necessary between the auditor and the audit committee and are expected by the SEC.

• Vigilance is strongly encouraged in the current environment where many organizations are experiencing rising economic and operational pressures and incentives to commit fraud are increasing.

Key Takeaways:  

Suppliers have become an integral part of a company’s ESG performance against targets and laws, and therefore have an outsized impact on operational and financial performance

Boards should set clear expectations for including supply chain risk within Enterprise Risk Management and require detailed management action plans to address and mitigate risks as well as identify opportunities. Good questions to ask include:

• Has the company mapped their supply chain and knows their 3rd party vendors beyond Tier 1, globally?
• Have we evidenced processes and policies for supplier onboarding and data management?
• Is our existing technology adequate to collect and maintain large amounts of supplier data and documentation?
• How can our supplier management program of 3rd party vendors be verified to mitigate supply chain disruption due to ESG compliance issues?
• Is the board engaging with the right cross-functional operational leaders responsible for supply chain management?
• Is management monitoring industry trends and regulations and embedding those in supply chain planning, optimization, and monitoring?

Resources:    

• Supply Chain Disruption isn’t Going Anywhere
• Three Key Supply Chain Management Questions for 2023
• Ahead of Time Supply Chain Model eBook
• U.S. Senate Committee Expands Alleged Forced Labor Probe Involving Major Automakers to Suppliers.

Join BDO's Center for Corporate Governance Amy Rojik as she discusses drivers of audit quality underlying high quality financial reporting that audit committees, management and users of financial statements can trust in with the leaders of BDO Assurance and Audit practices Christopher Tower and Phillip Austin.

Key Takeaways

Audit committees are encouraged to understand how their auditors define audit quality and relevant audit quality indicators across a framework that considers people, process and technology to respond in real-time and achieve desired outcomes

Audit committee engagement with auditors can be enhanced by:

• Asking for more time with auditors

• Taking advantage of educational opportunities and timely insight guidance

• Engaging in meaningful commentary on observations noted in the audit

• Having proactive discussions around areas of significant audit focus, Critical Audit Matters and risk, including potential fraud or illegal acts

• Understanding how the auditor is engaged across the profession and with regulators and standard setters

• Inquiring about the depth of support from centralized resources in the Firm

• Requesting candid observations about adequacy and quality of the accounting and finance functions within the clients’ organization

Management and the audit committee can expect the future of audit will require:

• Auditors who are focused on greatest measurement and disclosure risks to the company

• Auditors who are “current” and bring insights based on specialized expertise to bear based on your circumstances

• Predictable audit work methods that aren’t disruptive of management operations

We invite you to visit our current BDO Audit Quality Report – Continuing to Build Trust.

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Demetrios Frangiskatos, Assurance Northeast Regional Managing Partner, to discuss the frenzy of SPAC and resulting De-SPAC transactions and in particular, considerations that board members should be thinking about if thinking of or selected to be affiliated with the acquirors or acquirees.

Key Takeaways:

• Good governance at the board level enacted at the outset of the SPAC transaction process is becoming an important differentiator
• Speed of an operating company becoming a public filer accelerates the need for public company experience in both the management team and the board
• Integration of the target company requires directors to have a strong understanding of technology, financial and operating systems, internal controls, regulatory filing requirements, accounting and financing complexities, and overall fiduciary governance responsibilities
• Critical to have a solid understanding of current deal terms, regardless of what side of the transaction you may be

Join BDO in discussion with Yvonne Wassenaar, CEO of Puppet and Board of Director for Forrester (FORR) and Anaplan (PLAN).

Key Takeaways

• Be crystal clear about the type of boards you want to serve and the value that you can bring to those individual boards

• Focus on both those in your network who can put you in front of boards you are seeking but also those who will serve as references for you

• When driving diversity, you can start in your own backyard by being very intentional in building board candidate slates that satisfy both diversity and skill needs

• When considering a board opportunity do your homework: “Be thoughtful, be picky, you are worth it”

Join BDO in discussion with Julie Bell Lindsay, Executive Director of The Center For Audit Quality.

Key Takeaways

• Focal areas that help drive audit quality promoted by the Center for Audit Quality:

• Understanding and successfully implementing new auditing standards via proactive dialogue among the profession, the regulators and management and audit committees

• Audit firms focus and investment in their organization’s system of quality control

• Innovating with emerging effective and efficient audit technologies

• Transparent and regular communication and engagement among and with all audit stakeholders

• View toward the future of auditing as going beyond traditional financial statements and encompassing decision-useful information including ESG, non-GAAP and cybersecurity

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Jason Brooks, a Managing Director and BDO’s Compensation Consulting Practice Leader, to highlight key planning considerations for compensation committee directors as we rapidly approach the end of 2021 and enter 2022.

Key Takeaways:

• Compensation committees are encouraged to take a current inventory of company needs in relation to their unique risk and opportunity factors as well as in relation to their competitors.
• There are further challenges to take charge of the company’s narrative in its public disclosure considerations. Historic focus on executives is no longer enough. Market expectations for disclosures concerning human capital management and related ESG factors has expanded to consider employee needs more broadly. Compensation committees should be thinking about such and incorporating into the overall company’s retention and attraction strategies of their workforce.
• Expanding responsibilities of the compensation committee should be clearly documented and reflected within its committee charter.
• Directors need to be mindful of ISS Updated Compensation Policies that indicate the “surprise” element of the COVID pandemic is no longer applicable. Accordingly, ISS will view, “as in pre-pandemic years, any mid-year changes to metrics, performance targets and/or measurement periods, or programs that heavily emphasize discretionary or subjective criteria will generally be viewed negatively. This will be of particular focus for companies that exhibit a quantitative pay-for-performance misalignment.”
• Executive and board compensation strategies may need updating for 2022 given continued economic impacts and should be accompanied by robust transparency and disclosure:
• As compensation committees consider introducing “discretionary” components into their compensation plans to counter uncertainty, they need to be mindful that these may not be seen favorably by shareholders and proxy advisors and will require enhanced disclosures supporting the use of such tactics.
• Changing performance ranges – e.g., lowering minimums/raising maximums to flatten leverage curves – may prevent small changes in performance from having significant changes in payouts, but again, would require enhanced disclosure.
• Rethink goal setting expectations of shareholders as their basis for comparing to increased revenues/earnings may not be appropriate for the company’s circumstances – e.g. holding steady or evening slight declines may be necessary.

Access:

The BDO 600 2021 Compensation Studies

BDO 2021 Board Compensation Trends Archived Webinar

Join BDO's Center for Corporate Governance Amy Rojik and Tom Conaghan, a partner and the Co-Head of McDermott Will & Emory’s Capital Markets and Public Companies Group, as they highlight several key considerations for upcoming shareholder meetings for directors and management teams from the perspectives of institutional investors and regulators.

Key Takeaways

• Institutional investors and regulators are placing significant emphasis on the following areas:

• Engagement with shareholders should be a critical component of proxy season strategy

• Anticipated increased activism and demands for disclosure – including racial inclusion and diversity

• SEC’s enhanced focus on climate change as well as human capital management initiatives and related disclosures that may have material financial impacts

• Consideration of the need for quantitative metrics included in SEC filings to be reliable, consistent and accurate

• Importance of remaining current on evolving legislation, listing exchange and regulatory rules, particularly around DE&I and other ESG issues

• Reminders to companies that non-GAAP measures and inappropriate use of executive “perks” remain on the radar for regulators’ enforcement activities

Resources:

Access the full recording from the webinar – 2021 What's on The Minds of Boards Ahead of Shareholder Meetings

Key Takeaways and Tax Planning Points:

• Enacted as part of the Inflation Reduction Act (IRA), corporations are now subject to a 15% minimum tax on book income of $1 billion or more.
• The IRA also provided $80 billion of funding for IRS – with $46 billion earmarked specifically for enforcement.
• Enacted as part of the 2023 Omnibus Appropriations legislation, the SECURE Act of 2022 contains a host of retirement provisions such as changes to 401k, IRS, Roth, and other plan rules.
• While the current Administration’s “Green Book” on tax policy has not yet been released, a few tax proposals were discussed during the February 2023 State of the Union Address:

• Establishment of a new increase from a 1% excise tax on stock buybacks (enacted August 2022) to 4% excise tax

• Establishment of a new “billionaires” tax – households with net wealth exceeding $100 million would pay a minimum rate of 20% on an expanded computation of income, which would include unrealized capital gains.
• Reaffirmation by President Biden that the government would not raise taxes on anyone earning under $400,000/year.
• As Congress is split politically, it remains difficult for meaningful new tax legislation to make it through both houses and clear the President’s desk in the near term.

Resources:

• Navigating the Intersection of Tax & ESG
• Is Your Company Effectively Managing Tax Risk?
• How to Benefit from Total Tax Transparency

Key Takeaways:

• GenAI can be used to enhance the efficiency and effectiveness in financial reporting and internal controls over financial reporting. Currently, GenAI can help with tasks such as drafting financial statement disclosures, summarizing key contract terms, categorizing expense transactions, and preparing travel and expense reports.
• However, GenAI is predictive technology that provides users with a probable response, so it’s not going to be 100% accurate and requires human oversight, review, and judgment.
• Boards should consider the rigor of their GenAI-related governance policies for:
• - Responsible, ethical use
• - Expertise and training requirements
• - Data privacy and security requirements
• - Deployment, technology testing, and monitoring
• - Mitigating fraud, legal, regulatory and associated compliance risks
• Boards should engage in critical conversation with management about their decisions to use GenAI and how they are assessing related risks, including risk introduced by third parties, and the need for new/enhanced controls.
• Boards should also apply an appropriate risk framework. Asking the auditor how audit procedures are being adjusted to evaluate significant risks associated with use of data and the GenAI models in developing estimates, judgments and other information that has an impact financial reporting and disclosure. This would further include understanding technologies that the auditor may be using to perform their audits.

Additional Resources:

• CAQ Publication: Auditing in the Age of AI

• CAQ Audit in Action: The Age of Generative AI: How the Profession Can Respond

Join BDO’s Hitesh Shah, leader of our San Jose Board Roundtable series, in discussion with Raj Sisodia, Co-founder of Conscious Capitalism movement, as they discuss the importance of the board’s role in supporting conscious leadership and building a conscious business.

Key Takeaways:

• The board’s role is critical in helping management define the purpose of the company to build and support a conscious organization – without it, C-suite efforts are likely to fail.
• Under the traditional business paradigm, companies invest much less in their futures and tend to take on massive risk when primarily focused on shareholder primacy, fiduciary duty and financial performance. A conscious business is set up to hit both purpose and performance benchmarks far into the future.
• Conversations at the board level around culture, purpose, and core values that align all stakeholders send a very strong signal to management and lead to a successful business strategy.
• ESG is an increasingly important topic in the boardroom but often seen as a compliance exercise or obligation rather than as an opportunity to build a conscious business with a defined purpose to truly generate and sustain long-term value creation for many stakeholders.
• Boards can play a very important role in helping their companies tackle the largest existential threats like climate change, income inequality and inclusion by being informed and being active in the conversations on these topics with company management.
• Succession planning is a critical role of the board especially when you’ve built a conscious business - selecting the wrong leader for a conscious company can destroy decades worth of work.

Additional Resources:

• To learn more, BDO has partnered with Raj Sisodia and Neha Sangwan, MD to create the Conscious Business Leadership Academy (CBLA) to support leaders looking to maximize their personal potential while optimizing value and benefits for their organizations and stakeholders.
• Raj Sisodia - Co-founder of the Conscious Capitalism movement

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Lara Lee, Fortune 50 executive and now seasoned independent board member, to discuss how boards can reframe ESG by taking a strategic, holistic approach that moves beyond the obligations of disclosure and mitigation toward the opportunities of innovation and enhanced reputation. Lara is an expert in turning disruption, challenges, and emerging threats into sources of strategic repositioning and innovation.

Key Takeaways

• Best approaches to ESG are: strategic, holistic AND human

• ESG is not a check the box exercise but should be prioritized around elements that are both material (e.g., have significant business impact) and have strategic importance

• ESG is a lens to identify both risk and opportunity with a focus on long-term value creation and sustainable health of the business throughout the value chain

Don’t let the tail wag the dog:

• ESG can be a catalyst for innovation and re-alignment of business strategy

• The board needs to set the tone that it’s not simply about disclosure and risk mitigation but balanced with opportunity

• ESG should not be an initiative in and of itself – it is a tool (not a strategy)

• Boards need to remain independently informed on the evolving ESG landscape

Key Takeaways:

• Engaging with Stakeholders: Consider the importance of addressing every inbound inquiry, whether from activists, institutional investors, or shareholders. This involves methodical rigor and balanced engagement to understand and address the underlying concerns.
• Evaluating Board Performance: Allows for continuous evaluation of board performance, effectiveness, and skills. This includes assessing vulnerabilities and ensuring that the board is equipped to address current trends and macro-environmental impacts.
• Succession Planning: Nom/Gov committee plays a critical role in defining long-term succession objectives and plans and considering the viability of leadership in multiple levels of the organization for selection, retention, and refreshment/removal of the CEO, C-suite along with the “plus 1’s and 2’s (next level management) as well the board itself. This involves evaluating the needs of the organization and ensuring there are no critical skills gaps.
• Committee Structure and Allocation: Be accountable for reviewing and optimizing the allocation of responsibilities among all standing and potential other committees of the board. This includes considering rotations and refreshes based on a rationale thought process.
• 5. Corporate Resilience, Culture, and Talent Management: Stress the importance of focusing on the futureproofing of the company by ensuring good due diligence, strong corporate culture, and effective talent management across the organization. This includes considering evolving and shifting regulatory, competitor, and M&A landscapes while integrating new technologies and understanding their impact on people and culture.

Key Takeaways:

• Each change to a business represents new strategic opportunities, but those changes also present new potential risk of and to the corporate strategy. Boards need to understand how the executive team approaches risk informed decision making to assess effectiveness.
• Streamlining and optimizing risk management require proper structure, process, and timing of risk assessment and mitigation activities and programs (e.g., insurance, internal audit, product recall, business continuity, cybersecurity, etc.)
• Corporate culture should include enterprise-wide risk awareness to consistently identify and address emerging and rapidly evolving risks (e.g., COVID, Russia, etc.).
• Macroeconomic trends in risk management should be part of regular dialogue with the executive team and include consideration of bringing in leading experts to educate and advise in particular areas of risk.
• Directors should challenge organizations to make appropriate investments in risk management while building incentives for managing rapidly evolving risks.

Key Takeaways:

• Audit committees can ensure smooth ICFR implementation by encouraging early planning, helping secure adequate resources, being familiar with management’s process to identify risks and management’s processes and controls in place to manage those risks.
• Boards should be particularly focused on controls addressing areas of the business that are inherently higher risk.
• IT systems are critical and thorough evaluations of the IT environment and the IT general controls should be done early to avoid the late detection of control flaws over systems and relevant data that may have pervasive impacts on the effectiveness of the entire internal control environment.
• Depending on the severity of any deficiencies, the board should understand the root cause of the deficiency and what management’s plans are to remediate; and further, hold management accountable to their remediation plans.
• Board should ensure that the control environment is continually reviewed and that management takes into account, among other things, changes in risks, policies and procedures that may require enhancements to the controls environment.

Join BDO in discussion with Julie Cullivan, Chief Technology and People Officer, ForeScout Technologies and Board of Director for Axon.

Key Takeaways

• Get started early – recognizing it takes time to find a good board fit

• Identify your “superpowers” that you can bring to a boardroom to differentiate yourself and make positive impacts

• Recognize if you have been on one board, you have been on one board – all boards and their dynamics are unique

Transcript

This transcript has been lightly edited for clarity.

Nicole: Hello everyone. And thank you so much for joining BDO's podcast series Getting to the Boardroom. I'm Nicole Ward Parr and in this series I have the pleasure of hosting some of the most distinguished executives currently serving on public company boards to discuss their journeys and the paths that got them there. Today I'd like to welcome C-suite executive and public company board member, Julie Cullivan. Julie currently serves as Chief People Officer and Technology Officer at ForeScout Technologies. The leader in device visibility and control. Before transitioning to ForeScout Technologies, Cullivan served as EVP, business operations and CIO at FireEye, where she helped scale FireEye from a private company with $80 million in revenue, through its successful IPO, to a global publicly traded company with revenues of over $700 million and a $2.7 billion valuation. Cullivan has extensive operational and strategy experience and previously held executive positions focused on sales channel, and marketing operations at Autodesk, McAfee, EMC, and Oracle.

Julie currently sits on the board of Axon Enterprise, Inc. formerly known as TASER International, and is currently an advisor to Cobalt.io, a leader in pentest as a service. Recognized as a 2019 woman of influence in Silicon Valley Business Journal, Cullivan is a leader in the cybersecurity field, and a sought-after speaker on topics including women in technology, security as a boardroom imperative, and building high impact teams. Ms. Cullivan has a BS degree in finance from Santa Clara University and brings extensive business information technology and cybersecurity expertise to the Axon board. Julie, what an accomplished background. So grateful to have you join us today and to learn more about your path to the boardroom. Thank you so much for being here.

Julie: Well, I'm really excited for this podcast. Thanks for inviting me.

Nicole: Absolutely. Great. Well then let's jump right in with the questions. First off is, when you were considering joining your first board, did you have a strategy or specific approaches that you used?

Julie: So, I guess when I first even started thinking about the idea of potentially joining a board, I really kind of started with the same thought process that a lot of other women leaders start with; and that was, “I'm certainly not ready now, but maybe that's something I could do in the future”. So when I very first started talking about it, it was very much in the context of, “Someday I would like to do this,” and I had the huge fortune of meeting Coco Brown who was really focused on trying to build more diversity on boards. And in my conversations with her, she really started to wrap my head around the fact that, “Why not now?” But also, recognition that it can take a while, right? To find that perfect match for the leader and the right company that's looking for a board member. So for her, she was like, why put this off? Why not get started on creating your journey to the boardroom? Because you really never know how long it's going to take. And it was always something that I thought could happen someday, and she really made me believe that you need to start now because you're not sure exactly when things will sort of align.

Nicole: I think that really resonates probably with a lot of women that, “Am I ready?” Or “Someday I will be, right?” But getting from that mentality to, wait, I need to do it now, “I'm ready now”. Was there any other switch that flipped in your brain from a skillset standpoint that told you, wait, I am ready now. I'm not going to put this off. What was that switch that flipped for you?

Julie: Well, I think, that's where other mentors helped flip the switch for me, because one of the things you're really pushed to do as you're thinking about board service is, “What are my superpowers and what it is that I can really bring to a board so that people can really understand who I am?” And it's really hard to pull out because we think of ourselves in terms of accomplishments, not in terms of really superpowers and what makes us unique or different. So I say that's where I started to see, hey, now that I look at this in the context of a board bio, maybe I do have a lot to bring to a board and I hadn't really been able to figure out what those superpowers were and how to pull that out into a nice story that somebody else could pick up.

One other bit of advice that I think you get when you're going through this process is some people will tell you, you need to be maniacally focused on a skill, a value that you bring to a board. And I struggled with that because I felt like I had a broad set of values that I could bring to a board, and not all just in the context of digital or security, but that I was a broader operator and had broader business acumen and experience. And so when I went through this process, I really had to make a call as to whether I wanted to be the cyber technical person, or if I wanted to describe myself more broadly as a global operation leader. And, again, as you find opportunities and are starting to interview for board roles, you'll pretty quickly start to see whether they're open to that broader set of experiences or just very narrowly interested in a set of skills.

Nicole: And did you have a particular champion, or mentor that guided you through that? That gave you coaching as you were going through those board interviews and that gave you that feedback?

Julie: Yeah, I had folks that are part of Athena Alliance, that organization that we're sort of assigned to women pioneers to help us understand who we were, walk us through, how do we tell a story about our experiences and show the kind of impact that we've had on the organizations that we've worked in? They also walk you through, hey, how do you practice your board pitch, right? And actually, on video, going back and forth and getting coaching and communication advice from folks so that when you're ready, you get asked the question, that you have a very quick, crisp, well-articulated story about why the conversation should continue. I do not want to say that I haven't had tremendous coaches and mentors in my work life, but I have found that those coaches and mentors seem to be a little more focused on mentoring how you grow in your career, as opposed to how you grow as a potential board member. So, I really felt like where it all came together for me was through that network and that confidence that we give each other to say, “You can do this!”

Nicole: That's fantastic. And the two things that really stuck with me about what you just shared was the telling of a story, right? Really the anecdotal sharing of the types of problems that you've been able to solve, the value that you've added coupled with video conferencing. That sounds like a fantastic tool that really does allow you to know what you don't even know you don't know?

Julie: Yeah! And practice!

Nicole: Exactly. That must have been valuable

Julie: So, there was one other set of experiences I think that we all say, "Oh, I think I'd really love to serve on a board." And then there's the questions about, well, what kind of board? And there's also the question of, what does it really mean to serve on a board? Because I think many of us have the experience of sitting in on our organization board meetings, but it's sort of different when you flip the table, right? And now you're the board member with the management team coming into present. So, one of the other nice activities that Athena put together was the ability to walk through board simulations as a group. So, a group of 10 women would come together and there'd be a facilitator and you'd actually walk through a board scenario, and kind of learn the process, in terms of, even just the simple things about calling meetings to order when there was something that required some sort of approval or vote, what the process was, but then really throw in a hairy situation and say, “Hey, you're now the board, let's walk through how you're going to advise the management team on how to handle the situation.” Or in some cases the boards need to step in, right, and play a bigger role in making sure that the situation is managed appropriately. So I thought that was really great as well, because we all talk about, hey, I want to be on a board, but getting the opportunity to really do more scenario based understanding . . . and it's like, wow. I mean, that's a serious responsibility . . . getting to kind of experience that, not in an actual boardroom, but in a simulation, I thought was super valuable.

Nicole: Absolutely. And nonetheless, once you were on a board, I'm sure there were still gaps in your game if you will, and areas where you were like, whoops, I've never simulated for this. This is real time. And I have a gap in my skill set here, or I just made a mistake. Whoops. What were some of those hiccups, if you don't mind sharing?

Julie: Yeah. So, I guess what I found out pretty quickly is there's a lot of discussion about onboarding new board members. My experience was that you onboard yourself in many ways and that, I think I heard something fantastic last week where somebody said, if you've been on one board, you've been on one board, because each board is somewhat unique. So, I'm not making any generalizations, but Axon had a board team that had been with the company for many [years]. I was the first new board member in a few years to onboard. And not only was I new to being on a board but was new to them. And so as much as I got a lot of great support and coaching and advice from the chairman and the gentleman that runs non-gov, right? They were more than happy to help me.

I had many years of history to try to catch up on. So, what I realized pretty quickly was somebody's not going to do it for you. Take some initiative to figure out how you onboard yourself and knowing that I can never make up for the fact that some folks have been on this board for 10 years, but how do I at least show the initiative and the desire to want to understand more. And also, when appropriate, raise my hand and say, I don't have that context or history. If now's not the time to give it to me, fine, but I'd love to understand more so that I can really understand the dialogue and the conversation more. So, I think a lot of it's taking initiative to really engage and learn the business, learn the committee that you're on and kind of what your roles are, but more than anything constantly ask for feedback, right?

I mean, I've been on Axon's board for about two and a half years. And outside of the fact that this past one we just did is virtual because nobody's traveling right now, I try as best as I can to pull folks aside and say, hey, any feedback? Right? Cause you know, I'm always trying to make sure I balance my, “Hey, this is what I would do” versus, “Hey, have you thought of these things?” And just make sure that my engagement and support of the team is not coming across as an operator, but coming across as more of an advisor, consultant, if you will. So, I think you just got to keep asking for feedback.

Nicole: I think that's great advice. I also think that if you were the first new board member in a significant amount of time, which you describe, what an opportunity for you to come in and innovate and bring new ideas into that collective group. What are some examples of how you innovated, or some ideas, or perhaps disruptive thoughts that you brought to that group?

Julie: Yeah, so, it's been fun because I was the first woman board member. Not ever. There had been a woman on the board before, but unfortunately, she had to move on. And so, they were very focused on some diversity. And so, I was the first, next woman to join the board. So again, one woman and the rest men. And so, almost immediately, I brought a unique perspective for a lot of different reasons, whether it was conversations about people related things, or just perspectives and interpretation on how things would be perceived. So, I felt like pretty quickly I was bringing a slightly different lens and voice. Somebody that was also somewhat a voice of a customer. I am certainly not law enforcement, but I buy technology all the time, and understood a lot about new business models that they were pursuing and to be able to add a voice about like, this is how this can be perceived from a customer perspective. Right. Great idea for monetization, but let's think about what the expectations are from another view. So I think there were several different perspectives I was able to bring in very quickly and I felt like people were more than willing to listen to my ideas and thoughts and voice having been through similar growth, and similar responsibilities around digital transformation and those types of things. And they would come to me a lot offline and just say, “Hey, what are you doing to solve this problem?” Because they knew I ran IT for FireEye and then ForeScout and it would be like, Boom! This is what we're doing. And sometimes they take that advice and other times they're like, hey, we think we might go a slightly different path and we talked about it. But I think even just in sort of day to day, what are they doing around security? What are they doing around digital? I've got very relevant experience to help them as they make some of those decisions.

Nicole: Terrific. And how would you say, or would you say, that you're facilitating further diversity on the boards that you're a part of? Are there things that you've done or implemented?

Julie: So I, myself, wish I could take credit for the diversity that Axon’s board is focused on. We now have another diverse board member that represents a new community. So that has been phenomenal. And as we look at what skills and experiences we need to bring on the board we constantly talk about, hey, as we look for those skills wouldn't it be great if we could compliment the team with more diversity beyond, obviously, just gender? And so already we've doubled our numbers. And I expect in the future that will continue to grow.

Nicole: That's fantastic. It takes time, but it's well worth it. Right? Terrific. What other thoughts or comments, maybe advice even, for the folks that are listening do you have to share?

Julie: So, I think I was extremely lucky in terms of, you know, decided to go after pursuing a board opportunity and really within the first year and a half made it onto a public company board. I don't know that, that will happen for everyone and not because I'm special, but because I noticed as I interviewed for other board positions and as I've worked with other peers and folks I've brought in network, that sometimes it just takes longer. Sometimes the path is a private company board. Sometimes the path is a nonprofit. So I just, I do feel like there's gotta be a level of patience and that there has to be an understanding that there isn't the right board for you. It's everything has to align. And I find that the processes just end up taking longer than we're used to in sort of the job hiring scenario, right. Where you're going for a new role often they're really trying to move those along very quickly. Whereas with the board stuff, they start very early often, and then things will happen, right? Uh, COVID-19 will come up and somebody will say, hey, look as much as that's important right now it's more important we focus on the day to day business operation. Um, and so it's just patience, I think is what my advice is more than anything.

Nicole: I think that's great advice. One of the questions I've asked some of the other interviewees on this podcast series is about the merit of being on a not-for-profit board or being on a private company board, as it pertains to helping on the path to getting on a public company board would love your thoughts on that.

Julie: Yeah. So I am no expert in, I've gone through the sessions around, hey, how do you really think about what type of boards you're looking for? And so I have a good idea of when going nonprofit might be the way to go. I know plenty of women that started joining the nonprofit board and that opened up doors for them to move into public board service and/or private, or pre-IPO type board service opportunities. So I think it has absolutely been a stepping stone for some really strong women to get on boards, because a lot of times you're sitting on those boards with other operators or CEOs or executives, right. That now you've built a relationship through this nonprofit. And then that opens up the opportunity for you to potentially, when they're thinking about their next gig, or they're thinking about somebody that they know looking for talent, you've now got somebody that's like, look I've served with them on a nonprofit and they're super engaged and intelligent, bright, and smart, and have a lot of great ideas and opinions, and that does open up doors.

Nicole: Agreed. Absolutely.

Julie: And I do think it's a different experience. Sorry to interrupt you. I do think it is a different experience serving on a nonprofit versus a public company. There are different expectations, I think, in terms of fundraising and in terms of things like that. But I think any of those are great experiences that would help in either direction.

Nicole: No agreed, no fantastic. Great insights. Any last thoughts before we sign off that you'd like to share?

Julie: Yeah. A couple of things. This is my advice. I had originally thought that the path to getting on a board was by leveraging my own personal network and saying, "Hey, former boss of mine, I'm really interested in joining the board, just thought I would let you know." I just really did not find that to be a path that worked for me. I feel like they probably hear that from a lot of people and it's not contextual. But I also feel like sometimes people see you as an operator or see you as what they believe you are, and maybe aren't able to, kind of, think more broadly into, hey, how would this person look in a boardroom setting? So I really do feel like taking advantage of the variety of great organizations that are out, I mean, there are many, many great organizations out there that are trying to help support for diversity that I think are, in my opinion, a better way to really get engaged with people that are really supporting this out in the community. I think there's [inaudible], there’s some amazing things. And I find that to be a better route because I think that there's more energy and [inaudible], and activities happening to really make and facilitate these board matches than in just the normal, hey, if you happen to hear of a board opportunity I'm interested, right. I did not find that as effective

Nicole: As helpful, right. It sounds like you took a more strategic sort of laser approach, and that led to a better result. I think that's very insightful for folks. Instead of casting the net widely, being very targeted in your approach. Right. And I've heard different paths be successful. But I think it sounds like yours was very intentional and that made all the difference. Certainly, your year and a half timeline of getting on a board. That's certainly shorter than a lot of other stories that I've heard. So, it seemed to be beneficial to you for sure.

Julie: Yep. And, I mean, I have some really amazing other candidates, right? I mean, when Axon decided to go look for a diverse board member they looked at many really, really strong women in leadership roles. And I mean, it was a super impressive group of people. And very much when I started the process, it was in the context of this is going to be great experience for me. Right. I finally can do the interviews. I can see what they're like. I can see if my board bio resonates. I can kind of practice. I really didn't go into it with the expectation that it would end up being as successful as it was, but it was like my first opportunity to at least sort of try it out. And I'm happy to say that in the end it worked out that it was a great match. But it was . . . I felt prepared, but I also really felt like it was going to be practice more than anything.

Nicole: Right. Well, credit to you and kudos to you certainly. And such an appreciation I have for not only what you're doing for Axon, but for others to promote diversity and to support other women on getting an opportunity to explore these things, right? So, Julie, I'm just grateful that you took the time to spend with us today and to share about your journey and so appreciate all that you're doing. And thank you so much for being with us today.

Julie: Well Nicole thank you for getting the word out, and I'm happy to help in any way that I can. So, as your podcast evolves and as your interaction with other future, female board members, or other diverse board members, I'm really happy to help in any way I can.

Nicole: Absolutely. Well, thanks so much. Appreciate your time. All the best.

Julie: Take care.

Key Takeaways:

• As with any insurance, directors and officers need to have a clear understanding of the purpose of D&O insurance and what it is designed to cover and what is not included – e.g., deliberate fraud, criminal acts, and uninsurable fines and penalties as well as other exclusions or limitations including thresholds for triggering coverage.
• The velocity, volatility, and interconnectedness of risk evolves over time even though D&O policies are typically written for one year terms. Does your company have a framework for evaluating risk, risk tolerance, and risk mitigation in the longer term?
• It’s not uncommon for companies –particularly when in an early stage - to make concessions on the amount or scope of coverage in order to manage pricing. But it’s important that those decisions are anchored in an awareness of the external and internal risk landscape, and contemplate future strategic and financial objectives for the company.
• Traditionally, most securities class actions involve financial misrepresentations, but boards should be aware that in the past several years there has seen a significant increase in ‘event driven’ securities litigation. These claims can often be classified as “ESG-related events” given the broadness of the category.

Key Takeaways:

• Audit Committees should have a playbook when allegations of fraud arise.
• The Audit Committee’s response level to a particular allegation will depend on the scope of the allegation and the corporate environment.
• Determining when an independent investigation is necessary and how independent it needs to be is determined by the context of fraud allegations.
• Timeliness is critical.
• Care should be taken in communicating with stakeholders.

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Board of Director Gloria Cordes Larson, to share thoughts on top of mind discussion points for boards on their companies activities around environmental social governance (ESG).

Key Takeaways

Recent events continue to drive significant focus, particularly on the social impacts and risks representing the “S” in ESG

ESG is more than a reflection of company values; rather at its core, addressing ESG issues is a key component of a smart business strategy, adding to company resilience and growth potential in ways that ensure long-term value

HOW: Whatever stage your board is at in considering ESG, some key questions in considering execution):

• Is the board focused on the right issues – apply the right materiality lens and take inventory of what you are already doing; leverage external rating information and engage with internal/external stakeholders

• Does the board have the appropriate skills and oversight processes for ESG - ESG may be an inflection point for board refreshment and be captured in charters

• Is the company taking strategic or tactical, reactive approach to ESG – emerges as strategic if you look through a “risk and opportunity lens” focused on the long-term

• Is the company setting appropriate KPIs and aligning with compensation - tracking progress and demonstrating accountability

• How is your company reporting ESG issues – don’t treat as a compliance activity; should be evolving as consistent, comparable, decision-useful

To prepare for potential continuation of and/or changes in tax regulations, boards should be taking a vigilant watch and see approach and monitoring respective timing, effective dates and expiration dates:

• Confer with management to review financial models – e.g., changes in tax rates, deductions, credits, and exclusions.
• Get regular updates on tax policy changes to anticipate potential impacts on international and global tax strategies.
• Weigh the more likely scenario that legislative activity taken may allow more permanent actions to extend expiring provisions under current tax laws.
• Understand the organization's tax risk management policies, focusing on compliance, reporting, and consulting to assess how changes in tax law or procedure could affect the company’s risk profile.
• Consult with external tax advisors to stay abreast of tax policy changes and ensure coordination with the organization's internal tax team.

Join BDO in discussion with Jessica Denecour, Board of Director for MobileIron (MOBL) and former Senior Vice President and Chief Information Officer for Varian Medical Systems.

Key Takeaways

• Engage in outreach and conversations to let people know you are looking and then listening to functionality that is expected

• Study up on areas you don’t have deep knowledge while also identifying what you bring from an operational perspective

• Be innovative and draw on your skillsets/unique attributes

• Facilitate diversity by first identifying what may be missing and then pulling together a diverse slate of candidates

• Really prepare yourself – understand what boards are looking for and educate yourself to fulfill those roles

Key Takeaways:

• While simple in structure, these new requirements have complex implications for companies, many of which may not be already gathering and reporting this level of climate data.

• The laws were years in the making but have now pre-empted the country-level SEC climate rules that many have been anticipating.
• Scope 3 reporting will be required for some companies, which includes the full value chain. Third-party assurance will be required in some cases.
• Even though the full extent of the requirements won’t come into force until 2030, the first requirements will be in 2026 covering the year 2025, so companies should get started now.

Resources:

• Prepare Now: California Climate Laws Impact Thousands of Businesses
• Sustainability and ESG Regulations Are Growing
• The Greenhouse Gas Protocol: Measuring Scope 1, 2 and 3 Emissions
• Preparing for the Proposed SEC Climate Disclosure Rule
• BDO Sustainability and ESG Services

Join BDO Tax Partner and Tax Risk Services National Leader Michael Williams as he sits down with James Egert, BDO in the U.K. partner and leader of its Tax Assurance and Risk Management practice, to discuss managing tax risk and why this topic is increasingly appearing on board agendas. James’ perspective from the more legislatively regulated U.K. helps inform what makes managing tax risk important for U.S-based companies.

Key Takeaways:

• Board members and stakeholders are focused on tax risk in all forms: operational, compliance and strategic.
• If the wider operations of the business are not aligned with those of the tax function, there is greater possibility of risk
• Board members should be aware of the top tax risks in business, including e-commerce, cross-border issues, residency issues, and information and data sharing.
• To help avoid reputational hazards, any large business should have a clearly articulated tax strategy approved by the board.

Join BDO in discussion with GavinIsaacs, the Board of Directors of DraftKings, Inc. (DKNG) and Galaxy Gaming Limited (GLXZ).

Key Takeaways

• The skill sets you need to be thinking about and the types of strengths you bring to a board committee.

• The pursuit of further education when you’re on a board.

• Diversity and the importance of it in the boardroom.

• The difference between board responsibilities in the 90s vs. now.

• How to join a board that fits your goals.

Key Takeaways and Tax Planning Points:

To prepare for changes in tax regulations, boards should:

• Confer with management to review financial models – e.g., changes in tax rates, deductions, credits, and exclusions.
• Stay informed on tax policy changes and reviewing with management to understand realistic scenarios.
• Consider the possibility of a divided government scenario, which may result in sluggish legislative activity and short-term extenders for expiring provisions.
• Understand the organization's tax risk management policies, focusing on compliance, reporting, and consulting to assess how changes in tax law or procedure could affect the risk profile.
• Get regular updates on tax policy changes, especially after the election, to anticipate potential impacts on international and global tax strategies.
• Ensure that tax policy aligns with the firm's social policies, particularly in relation to ESG policies and tax credits promoting certain behaviors or investments.
• Consult with external tax advisors to stay abreast of tax policy changes and ensure coordination with the organization's internal tax team.

Resources:

• 2024 BDO Tax Strategist Survey

Key Takeaways:

• Sustainability is the “maturing” of ESG factors crossing over from government regulation to voluntary corporate reporting to becoming commonplace within organizations.

• Sustainability has moved across the threshold into mainstream global commerce as investors understand that issues of sustainability have financial implications and dictate risks/opportunities that companies have from a business point of view.

• Companies need to truly understand their shareholder base and be intentional in pursuing dialogue and engagement with investors – including not only institutional but also “activists” who often truly are speaking the language of business and are paying close attention to business issues impacting the company.

• It is much easier to be a start-up and focus immediately on sustainable strategy than reinvent core competencies based on trendlines, but that innovation is what is required of today’s boards (“how you deliver what you are good at in a different way”).

• Convergence of sustainability reporting standards will necessitate “integrated” reporting within financial statements and put pressure on the management to demand performance AND ensure the integrity of controls over the information provided to the market

• The tools to measure/manage sustainability issues have historically been poor – however, as enterprise resources platforms evolve to address accounting complexity and reporting standards converge to provide a common compliance language, this will drive broader accountability and better information for stakeholders.

• Next set of issues in focus: Human Capital vs. People Operations - However you choose to phrase, DEI, health/safety and labor conditions – companies need to focus on the employee engagement environments they are creating as these have a direct impact on business success.

• As corporate responsibility shifts from reputational risk to a business imperative there is significant scrutiny by investors and the regulatory community that is forcing communication within the company regarding needed changes in controls/ policies/ procedures to accommodate sustainability and financial disclosures fully into integrated reporting that need to be a timely area of focus for the board.

• Boards have responsibility for prioritization around what the company needs to “lean in on” – not a check the box, get an award, enhance my ratings play… this requires continual education that translates into deep thoughts on what is impacting my business to best drive strategy and value.

Access:

• Changing Business from the Inside Out: A Treehugger's Guide to Working in Corporations

• Persefoni – Climate Management Accounting Platform

• BDO’s ESG Center of Excellence

Join BDO's Center for Corporate Governance Amy Rojik as she sits down with Karen Schuler, BDO Principal and Leader within our Governance Risk and Compliance group, to discuss how boards’ oversight of data governance within their organizations is changing to meet the opportunities and risk in the rapidly evolving digital space in which organizations are conducting their business.

Key Takeaways

• Boards need to understand how their organization balances the value data provides with the risk assumed to protect it

• Compliance with data regulations at the local, state, federal and global levels are increasing in complexity

• Data governance is finding its way into the “ESG lens” as companies expand their disclosure landscape to address broadening demands of stakeholders

• Digital shifts towards a single environment or “data fabric” connecting via a cloud-based platform helps organizations manage their business and maximize value of data

• Board members are challenged to ensure their organizations are making appropriate investments in digitization while managing rapidly evolving cyber threats

• Directors who thoughtfully embrace disruption within corporate strategy while placing equal value on enterprise risk management in safeguarding digital assets will be able to demonstrate due care in their oversight responsibilities.