The Professionals

A growing number of people are making a new career of corporate directorships

In these days of Enron-like corporate governance fiascoes, increased scrutiny from both shareholders and regulatory authorities, and the enormous potential liability should things go wrong, it's hard to figure the attraction of sitting on a company's board of directors. When you add the relatively modest compensation and hours upon hours of required reading in preparation for day-long meetings, along with some intensive committee work, you begin to realize that taking on a directorship may come with a fancy title, but doesn't necessarily translate into a lot of glamour.

Yet Jalynn Bennett, whose professional life included being the vice-president of corporate development at Manufacturers Life Insurance Co. during the 1980s, sits on six corporate boards, finding the work "challenging and intriguing." What's more, she says that as the spotlight increasingly shines on governance issues, the work is actually becoming "even more interesting and meaningful." Bennett adds that's partly because of a greater commitment to making boards more effective. "I certainly see an increasing level of thoughtful discussion about the role of a board, and much more clarity on what boards are supposed to be focusing on," she says.

Bennett--who sits on the boards of Canadian Imperial Bank of Commerce, Sears Canada Inc., CanWest Global Communications Corp., Bombardier Inc., Cadillac Fairview Corp. (owned 100% by Ontario Teachers' Pension Plan) and Ontario Power Generation--is one of a growing breed of "professional" board directors. These are men and women who have left their professions or the active management of businesses to take on corporate stewardship as a full-time vocation. "I didn't get into this type of work thinking I'd become a professional corporate director," says Bennett, who does some consulting work on the side. "But the reality is that four-fifths of my working life these days is spent on corporate boards."

There's nothing particularly new about people who sit on a number of boards, says Bennett, 60, who first became a director in the 1970s as part of tending the investment interests of Manufacturers Life. But now, there are increased expectations put on directors to take the job very seriously. So anyone who sits on five or six boards probably doesn't--or shouldn't--have time for much else if she wants to serve her boards well, Bennett says. In fact, a blue ribbon commission of the National Association of Corporate Directors in the US suggests active CEOs limit their directorships to one or two boards apart from their own, while other senior executives take no more than three seats. It also suggests that those who treat board work as a full-time vocation limit themselves to sitting on five or six boards. "The work is becoming increasingly more demanding, and the level of scrutiny has become more formalized over the last few years," Bennett says. "I am finding it takes more and more time to be an effective board member--not just the physical time spent in board meetings, but the preparation time and keeping broadly abreast of trends facing the business and corporate governance in general."

Anne Fawcett is a managing partner with Caldwell Partners International in Toronto, which conducts searches for companies looking for good candidates to sit on their boards. "With all the attention--some of it negative--that boards have been receiving over the past few years, the first thing some people might say is, 'Why would anyone want to sit on a board?'" But the reality, adds Fawcett, is that increased scrutiny has prompted many to consider directorships an opportunity. "There are people out there in the corporate world who are thinking, 'Hmm, this is pretty stimulating work, dealing with some pretty important issues. Maybe sitting on boards is what I want to do as my primary occupation.'" She suggests that retired CEOs and other senior executives who take on a number of directorships still make up a large part of the membership on corporate boards, many even making it a full-time responsibility. But she adds there are "probably about 30 or 40" people now sitting on boards of the top Canadian companies who have left their professions far earlier than the traditional retirement age in order to pursue board work as a vocation in itself.

As well, the compensation for those who sit on boards has been getting better, reflecting the greater expectations being put on directors. A 2002 survey by executive recruiter Spencer Stuart Canada found that, of the 100 companies it tracks (all with revenues of more than $1 billion), the total average cash compensation (retainers and meeting fees) was $49,862, up from about $45,000 in 2000. However, even though compensation may be increasing, Andrew MacDougall, president of Spencer Stuart Canada, says due diligence is getting tougher, including reference and credit checks, criminal checks and education verification. "The reference checking is probably the most important, because you are introducing a new element into the culture and you have got to have enough information about how that person behaves to be sure it will be a good fit."

Fawcett adds that the growing need for people with certain types of skills--for example, financial experts--is also expanding the pool of those who are now considered good potential candidates for board directorships. "It's not all about finding a retired CEO to come sit on your board, like it might have been in the past," she says. In the old days, Fawcett explains, corporate boards had a more "old boys club" feel, and while a board might have had directors with "a nice combination of experience and skills, who had good judgment and who worked well together, there was a lot more homogeneity of perspective." As well, says Fawcett, there is now greater opportunity for women in the business world to make their mark as board directors, since the push for diversity now means more women are being sought to sit on boards.

Mary Mogford, who served as deputy minister in both Finance and Natural Resources for the Ontario government, says that when she left public service in 1989, she was approached to sit on the board of Credit Suisse First Boston Canada. It was about the same time when there was a "flurry of negative comments" about corporate boards following the demise of Confederation Life, with many boards considered "a bit like parsley on a plate: decorative but not particularly useful." However, Mogford says she has found the work "intellectually challenging and rewarding," especially as the issues surrounding corporate governance gain more attention. Today, she serves on the boards of five companies and one advisory council: Empire Co., Falconbridge Ltd., MDS Inc., Potash Corp. of Saskatchewan, Sears Canada and the Altamira Advisory Council. In 2002, Mogford was made a fellow of the Institute of Corporate Directors (as was Bennett in 1999) in recognition of contributions to corporate governance. In addition to her corporate board work, she sits on the boards of the Hospital for Sick Children Foundation and the Toronto Symphony Foundation.

Mogford says that as a board director, "you have to be very conscious of your role versus management," and be willing "to ask tough questions and take tough action when necessary." You also have to be prepared to take on a lot of committee work, adds Mogford, who sits on 14 committees. In addition to preparing for meetings--which in itself can take a day of reading through inch-thick agendas--a board member should expect to "be available to drop everything for any special situations or crises." The other significant time commitment is travel, as many directors sit on boards with headquarters and operations across Canada or in other countries.

Bill Etherington, who sits on five corporate boards--CIBC, MDS, Celestica Inc., Dofasco Inc. and most recently, Allstream Inc. (formerly AT&T Canada)--in many ways fits the more traditional mold of how someone ends up on a corporate board. The former CEO of IBM Canada and IBM World Trade Corp. spent 38 years with the company before retiring at age 60 in 2001. He has sat on the board of CIBC since 1994, and that gave him a push to start a post-retirement career as a professional corporate director. "Rather than going to the lake and reading the newspaper, I liked the idea of being able to contribute the skills I learned during my business career," he says. But Etherington says he turns down invitations to sit on a lot of boards, adding he looks not only for those he feels he can contribute to, but those he feels he can learn from. For example, while the opportunity to join the board of CIBC came, in part, from his technological expertise and sales and marketing skills, he says he has tried to steer away from the boards of too many companies with a tech bent--hence his directorships at steelmaker Dofasco and health care firm MDS.

The concept of a professional director hasn't yet translated into the idea of professional certification. But Caldwell Partners' Fawcett says groups such as the Institute of Corporate Directors and the Conference Board of Canada are launching "training" programs for board members, especially new directors, to help them become better acquainted with corporate governance issues. "Will we soon see the emergence of mandatory credentialization in order to sit on boards? Probably not," she says. "What we are seeing, though, is that good senior people with a variety of business skills aren't reacting to the issues of corporate governance by saying, 'Get me out of here,' but instead are looking at it as a career opportunity."

Zena Olijnyk 2003-08-04

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