Fast rising activity in Europe     Suite of services     Selection of board members

Reasons for the need for new outside director

• Vacancy
• Desire to increase depth, diversity, knowledge and experiences represented.
• Insistence of major shareholder.
• Result of an acquisition.
• Representation of a particular organization or function.

• People already known to the CEO board members, or other candidates.
• Systematic approach to screen out and select candidates.
• Use of nominating committee.
• Use of outside organizations, such as executive search firms or management consultants.

  a) Character and background

• Intelligence, honesty, integrity, diligence, sophistication in business.
• Personal compatibility with the CEO.
• Genuine interest in the company or the industry.
• Certain level of understanding of business and finance and how a company is run.
• Knowledge and experience in a particular business or technological function.
• Past experience in successfully managing a corporation.
• Prestige value to the corporation.

• Inside/outside director mix.
• Emphasis on balanced boards particularly in companies that make a variety of products or provide a range of services.
• A variety of experiences and points of view.
• Relevance of that experience.
• In addition to experience and wisdom: youth, fresh ideas, innovation.
• Geographical scope, especially for different points of view, for local knowledge, and for opening doors.
• Representatives of specific groups or segments of society.

• Ability to exercise business judgement.
• Attained position of leadership in business, finance, law, government, education, science or administration.
• Absence of conflict of interest or other legal impediments.
• Willingness to devote the time required to prepare for board and committee meetings as required by the company.
• Availability to attend board and committee meetings.
• Experience in business, finance, law, government, education, science or administration.
• Age, potential length of service.
• Familiarity with national and international business matters.
• Applicability of experience to the business of the company and its affiliates.
• A diverse background not directly related to the company's industry or industries.
• Geographical location of candidate.
• Representation of a specific constituency.

  a) Prestige

  b) Compensation

• Usually not the key factor
• Must be competitive relative to other companies of similar size.
• Ingredients of the package: cash and non-cash.

• Standards of comparison.
• Exposure to innovation.
• Broadened insight.
• Exposure to different management styles.
• A source of counsel.

• Challenge, stimulation, fun.
• Relief from parochialism.
• Refreshing new perspectives.
• Reality checks and green light control.
• Judgelike qualities of the role.

• Conflict with meeting dates of another board.
• Current commitments versus the time the new directorship will require.
• Conflicts of interest.
• Skeletons on the closet.
• Lack of indemnification and liability insurance.

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