March 24, 2025 • 34 mins
In this episode of On Boards, hosts Joe Ayoub and Raza Shaikh welcome Tom Rosedale, a partner at the law firm of Nutter McClennen & Fish. Tom serves as chair of the firm’s Corporate and Transactions Department and is a member its Executive Committee.
Tom has 27+ years of experience as a corporate attorney and regularly advises public and private company boards of directors in tech, life sciences and more. He has also served on the board of directors of multiple companies including Caring Cross, Vector BioMed, and AMD Global Telemedicine.
The discussion with Tom underscores how evaluation processes can enhance accountability and productivity and address underperforming board members in a constructive manner.
Key Takeaways
-
Introduction of a board evaluation process
Tom discusses a company with a board of directors with strong members but with members who were distracted, unengaged and unprepared in meetings.
A new lead director pushed for change and asked Tom to work with him to develop and implement a peer evaluation process. The evaluation process was very well received, it included rankings of each board member, written feedback and questions on the functionality of committees. It had major impact on the function of the board and, ultimately, board composition.
2. Addressing board member underperformance
Boards should apply some form of structured evaluation to regularly address performance issues and avoid abrupt dismissals.
3. Encouraging board diversity to improve strategic oversight
A board composition that includes a diversity of perspectives whether by age, background, expertise or otherwise improves strategic oversight and innovation. Adding new members to the board as the company grows, changes, faces new challenges brings in different perspectives and approaches that will allow the board to perform at a high level.
4. Board and shareholders impact on executive compensation
Company executives used to receive compensation in the form of stock options but now many corporations are issuing stock, RSUs and guaranteed bonuses. Compensation amounts have increased exponentially over the last few decades, even though there is an increased focus on it.
When it comes to executive compensation, board members need to remember that their role is to represent shareholders and to make the right decisions on behalf of the company.
Quotes
"The evaluation process works well when there’s a culture of accountability and no surprises."
"Ultimately, board members must prioritize representing shareholders and making decisions in their best interests."
“ If shareholders feel that a board is approving compensation or not holding people accountable for poor performance, then shareholders should vote for other board candidates.”
“The best functioning boards are the boards that don't stagnate. It's boards that don't have all 65-year-old guys who come from the same industry.”
Guest Bio
Tom Rosedale chairs Nutter McClennen & Fish’s Corporate and Transactions Department and is a member of the firm’s Executive Committee. He primarily advises clients on public and private company securities law matters including public offerings, ATM transactions, registered direct offerings and equity li
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Hello, and welcome to On Boards, a deepdive at what drives business success.
I'm Joe Ayoub, and I'm herewith my co-host, Raza Shaikh.
Twice a month, On Boards is theplace to learn about one of the most
critically important aspects of anycompany, its board of directors or
advisors, with a focus on the importantissues that are facing boards,
(00:29):
company leadership and stakeholders.
Joe and I speak with a wide range ofguests and talk about what makes a board
successful or unsuccessful, what it meansto be an effective board member, and
how to make your board one of the mostvaluable assets of your organization.
Before we introduce our guests today,we want to thank the law firm of
(00:52):
Nutter McClennen & Fish, who are,again, sponsoring our On Board Summit
this year taking place on October22nd in their beautiful conference
center and the Boston Seaport.
Nutter has been an incredible partnerwith us in every way, we appreciate all
they have done to support this podcast.
(01:12):
Our guest today is Tom Rosedale.
Tom is a partner at Nutter wherehe chairs its corporate and
transactions department and is amember of its executive committee.
Tom has been a corporate attorney forover 25 years representing clients
in many areas, including SEC 34 Actreporting and NASDAQ compliance matters,
(01:37):
public and private M&A transactionsand venture capital transactions.
Tom regularly advises public andprivate company boards of directors
in a variety of industries, includingtechnology, life sciences, financial
services, seafood, cannabis professionalservices, and multifamily offices.
(02:00):
Tom has served on the board of directorsof multiple companies, including
Caring Cross, Vector BioMed, AMD GlobalTelemedicine, Top Shelf Dog, ISG Group,
Red Systems, and Newfound Research.
Welcome, Tom, it's great to haveyou with us today on On Boards.
(02:23):
Thank you, Joe and Raza.
I'm excited to be here andlook forward to this episode.
We want to start off in talking aboutsome of the practices in which you've
been involved to address change in aboardroom, particularly board composition
and board effectiveness, and one of thethings we talked about when we spoke last
week was an evaluation process that youhelped institute and implement in one
(02:50):
of the boards in which you're involved.
So, let's talk about that.
I really want to like you to talkabout how it came about and then
we'll talk about how it evolvedand how it impacted your board.
Absolutely.
When I look back at my career inall the different boards that I've
advised and worked closely with overthe years, one or two of them really
(03:11):
stand out as being exceptional.
They tended to not be the most successfulbusinesses or had the biggest exits.
They were smaller public companies thatgenerally struggled as businesses, but
while they struggled, the health andthe continued health of their board
and the functionality of their boardreally did make positive contributions
(03:32):
towards their ultimate success.
So, the board where you helpedput together an evaluation
process, talk about that company.
You don't have to name the company,but tell us a little bit about the
company and how it came about thatyou created this evaluation process.
Absolutely.
So, there's one company, in particular,where we had an exceptional group of
(03:57):
individuals on the board, and amongthis group, one person really stood out.
He was a little bit older.
He had a personality.
He had a lot of experience and he hadgreat self-confidence where all the
other board members, who were veryestablished in their own rights, all
had respect for this one individual.
(04:17):
He was not the chairman of the board.
He was just an outsideindependent board member.
But what happened was through theprocess of time and just running
board meetings, he tended to starttaking more of a lead in meetings.
He tended to take the lead inquestioning board members and taking
issue with different board memberswho weren't contributing as much.
(04:40):
They either came to meetings not prepared.
They seem distracted in meetings.
They weren't actively participating inmeetings, and he was bothered by this.
These are high-performing individuals.
This one individual is extremelyhigh-performing and he came to
me at one point, and he asked,what can we do about this board?
He said, "The company needs ourleadership. The CEO needs assistance
(05:04):
from us, and I feel like the boardhas stagnated, and we need to get
more out of these board members."
So, my role with the companyreally started much smaller.
I was outside counsel.
I was relatively new to thebusiness as their outside counsel.
I would sit through board meetings andI very much was a note taker taking
(05:27):
minutes of the meetings and reallyspeaking when spoken to and contributing
only when they needed my contribution.
This board member reallyencouraged me to get more involved.
He said, "I know you're not avoting board member, but we really
value your point of view and I needyour help in fixing this board."
So, it was a situation wherethe CEO and chairman title was
(05:50):
held by a single individual.
It wasn't split, which you'd see a littlebit more of now than you did back then.
So, we spoke about the possibilityof taking the chairman role away
from the CEO and giving it tosomebody else who would take more
of a leadership role on the board.
We ultimately decided not to dothat, but to instead, appoint or
(06:11):
seek to have the board appointan independent lead director.
That is something that wetook to the full board.
We socialized the topic with them.
We talked through it and ultimately,the board did approve it.
The individual who was lookingto have this role created wasn't
looking to be the lead director.
But again, just because of hispersonality, his experience, the
(06:34):
respect everybody had for him,everybody unanimously approved
him as the lead director.
He then came to me and said, "Okay,now we have to figure out how we're
going to actually cause change on thisboard," and he asked me what I thought.
I did some research, I saw some differentthings written about by different law
firms and practitioners, and I eventuallyproposed to him that we evaluate the
(07:01):
individual board members, the committeesof the board, the same way management
and employees are often evaluated.
So, we created some questionnaires,again, where every board member evaluated
all the other peer board members, wherethey evaluated the functionality of the
board as a unit, and they evaluated thefunctionality of the committees and some
(07:26):
of these questions were true and false.
Some of them rank the following1 through 5 with 1 being the the
weakest of the lowest and 5 beingthe highest score, and some of the
questions asked for written feedback.
First of all, I want to say, I thinkit's terrific that a board member
(07:47):
stepped up to try to institute achange that would improve the board.
Why was it that he wasn't either thechair or lead director given what
sounds like a pretty high-profileindividual who might otherwise been
the obvious choice for such a role?
(08:08):
Yeah, it's a good question.
I think at the beginning hejoined the board at a time when
the company was doing quite well.
I think he grew into that role.
He was busy being a full-time CEOof another business, and he was
looking to be involved as a boardmember with unrelated companies.
And I think as he left his CEO position,he became more engaged with some of
(08:32):
these boards and when he saw that thingsweren't functioning the way he was
used to, he became frustrated with it.
High performers want to besurrounded by other high performers.
High performers get draggeddown by low performers, so he
struggled with this for a while.
And I think there was some sort ofside chatter going on among some of the
(08:54):
different board members which, frankly,isn't very productive and helpful.
I think his view was we need to putthese issues on the table and we need
to address them, and if there aregoing to be weak players on this board,
we need to do something about this.
How did the other board members react whenhe introduced the idea of having a process
(09:16):
by which you'd evaluate each other?
At the time, I wasn't surprised by it.
The board was very supportive of it.
They really deferred to this individualand had great respect for him.
I will say that, subsequently, Idid try a similar process with other
boards, and it was never received well.
(09:38):
So, this was really an isolatedcase where this individual really
was trying to drive change.
Other board members were alsohigh-performing individuals, very
successful in business, they probablyhad similar processes in their own
companies, and they were not intimidatedor threatened by a process like this.
(10:01):
I feel like with some othercompanies I've worked with,
there's often stagnation on boards.
Board members think theyhave lifetime appointments.
It's not true, but theyfeel like they do.
And I think they don'twant to put those at risk.
They think if they're a littlebit older and they're not working
anymore, maybe they enjoy tellingtheir golfing buddies that they're on
(10:21):
a public company board or they enjoythe distraction of something to do.
get out of the house and go to aboard meeting four, five or six
times a year, whatever it is.
So, not all boards are welcoming changeor buying into continuous improvement.
This board did.
I would say most boards aren't.
They don't want change.
(10:42):
We talk a lot on this podcast about thefact that being a board member is a job.
It's not like going to play golf orplaying basketball with your friends.
It's an actual job, and the realityis a lot of people don't want
their peers to talk about how gooda job they're doing at their job.
(11:04):
So, what you're saying makes perfectsense that just by virtue of his stature,
he was able to get this particular boardto go through what turned out to be a
pretty productive process, so kind ofwalk us through the process, if you would.
Yeah, absolutely.
So, I was very involved with himin, again, in creating these forms
and he had input as well, so Iwould propose different questions
(11:27):
and we went back and forth.
It was an iterative processuntil we arrived at final forms.
And we agreed that, "Hey, these areour initial forms. We might change
them going forward, depending onhow well this process works or if
there are different areas that wewant to explore in this process."
I then distributed the formsto each of the board members.
(11:47):
I would ask that they provide theiranswers/their feedback to me and only me.
I would then aggregate theresponses and try to anonymize
them to the extent that I could.
I mean, it was a relatively small board.
It was seven members, maybe.
It wasn't 25 members so it's notthat hard to figure out who maybe
made a comment about somebody.
(12:09):
I would try to strip out anythingthat seemed personal or potentially
an emotional attack on somebody,and we would summarize these and
then we would distribute themto each of the board members.
So, each board member saw not onlywhat people wrote about him or her, but
they saw what was written about theirfellow board members, and we then had
(12:31):
a discussion, not about any individual,but we had a discussion about the process
as a board and then separately, thelead director would have discussions
with each board member, not only aboutproblem areas, but about things that
were going well, or maybe, " Hey, you'vebeen sitting on the audit committee,
(12:51):
but you tend to have strong opinionswith respect to compensation matters.
Can we get you to consider joiningthe comp committee as well?"
So, it wasn't just dealing with issues.
It was really just lookingfor overall improvement.
The process did work quitewell in dealing with issues.
We're dealing with aboard of high performers.
(13:13):
They don't like beingcriticized or critiqued.
So, to the extent there weresuggestions for areas for improvement,
it did in most cases result in thatindividual having a change of behavior.
It also led to the lead director havingsome conversations with some board
(13:33):
members about, "Hey, you seem to notbe coming to the meetings prepared.
You're not reviewing materials in advance.
You don't seem to beactively participating.
You seem to be more reactive ifsomebody asks you a question.
How can we get you more involved?
Do you have the time to actually be afull functioning member of this board?"
(13:55):
And in a few cases that led to workingsome of these people off of the board.
It's hard to kick people off of apublic company board, but the process
led to the individual reaching his ownconclusion, for example, saying, "You're
right. I really don't have time or Iget the materials in advance and I just
don't have the opportunity to reviewthem, and I am coming unprepared" and
(14:18):
it led to us having some board membersleave, and we would then go out and
look for new board members to join.
Did the lead board member conductthese conversations one on one with
each board member or were thereothers with him when he did it?
The conversations between the leadand each individual board member,
they were private conversations.
(14:41):
And after all the conversationstook place, was there some kind
of conversation in the boardroomabout what had taken place about
the evaluation process or anything.
Yeah, there were conversations, butit was less about any one individual.
It was more about the overallprocess, and we wanted engagement
(15:01):
and involvement, "What did youguys think about this process?
Were the questionnaires too long?
Were they too short?
Were they too general in nature?
How can we do a better job next time?
Are there areas that you think weshould explore?" And we did get feedback
and we took it into consideration andmaking changes for the following year.
Did any of the board membersexpress frustration or resistance
(15:25):
to the idea of what had happened?
Or were they prettyaccepting of the process?
From what I saw, they wereshockingly accepting of the process.
Again, I tried this with otherboards, and some boards shut me down
when I finished my first sentence.
Other boards said, "Sure, let's tryit," but they never gave it a true shot.
(15:48):
They felt threatened, I believe.
This board, they bought into it.
This was years ago.
It was the first time I tried it,and it worked exceptionally well.
So, it raises the obvious question forsomeone, especially who's worked with
a lot of boards and a lot of companies,why shouldn't owners/stakeholders demand
(16:10):
the same kind of diligence regardingtheir board as they do of their CEO?
I mean, why shouldn't that justbe part of the normal practice?
No company would say, "Oh, we can'tevaluate our CEO." That's too personal.
It's part of the culture.
Why shouldn't this be part of the culture?
I think you're absolutely right, Joe.
(16:32):
I think ultimately, when things arerequired, they will be done, but
they are not necessarily done well.
There are often newdisclosure requirements.
Either by the SEC or NASDAQ orwhatever with respect to public
companies and everybody complies.
They do what they need to do, but are theyreally fully engaged in doing it properly?
(16:55):
This was a board thattook this very seriously.
This worked becausepeople wanted it to work.
I don't think anybody felt that theywere the low performer, by the way.
I think everybody thought thatthey were doing just fine or doing
fine enough and that the processwould help address other people.
But I think it really did onlyworks if there's true buy in.
(17:16):
I can imagine another publiccompany saying, "Okay, we
need to evaluate each other.
Let's come up with some questions.
We'll get it done.
We'll check the box.
We'll throw it in the file.
We'll make a statement in ourproxy statement that we complied
with this." It really takessomebody committed to this process.
What about the idea of bringingan outside consultant of some
(17:37):
kind to implement this process?
In other words, where maybe the leaddirector or if there's a board chair
doesn't want to spend the time ordoesn't really want to put the evaluation
together, or maybe lead counsel doesn't,do you think that could be more effective
because when an outsider comes in, maybepeople pay attention or might behave
(18:00):
differently than if it's all internal?
Oh, I could certainly see that happening.
I think that is very appropriatefor an outsider to do it.
I think guys who have gone throughbusiness school, like they love
their consultants, so why not havea consultant come in and run a
session as opposed to a lawyer.
So, fortunate for me, this board, whileI started out as the guy at the end
(18:24):
of the table taking notes so that Icould ultimately draft minutes, they
sort of empowered me over time, likeno real power, but they said to me,
"We want you engaged and involved inthese conversations. We want to know
your thoughts on whatever we're talkingabout as a board. You don't get to
vote, but we want to hear your voice."
I wouldn't say that's unusual.
Some of my public company andprivate company boards do view their
(18:46):
lawyers as value add members of theboardroom, even though we don't have
a vote, whereas others just want uscommenting on legal matters, or maybe
just sitting there taking notes.
Tom, switching a little bit.
Earlier you alluded a tinybit to the comp committee.
One of the most important job ofa board is to determine executive
(19:06):
compensation, and that is a little touchysubject, and maybe your thoughts on
how you've seen this topic of executivecompensation evolved in the boardroom
Yeah, that is a big topic.
So, I'm going to respond but withless of a specific example, but more
(19:26):
generally in what I'm seeing and whatI've seen over the decades, there's
always conversation about how much theCEO makes or how much the CEO makes
relative to the lowest paid person orrank-and-file person in the organization
that always gets news-type attention.
While it does, and the differentialhas grown exponentially over time,
(19:50):
I think what's happening is changesthat are coming from pressure on
boards is the change that's happeningisn't in the amount that people
are making, it's in the forms ofcompensation that they are receiving.
When I started my career back in the 90sas a lawyer, stock options was pretty
(20:16):
much the form of equity compensationthat management and employees, and
frankly, even board members received.
That has changed over time.
There may be stock options, butstock options only have value
if the company's value increasesover and above the exercise price.
Now you see many, many companiesissuing restricted stock, issuing RSUs,
(20:42):
guaranteed bonuses, retention bonuses.
You see carried interest in somecases, depending on the nature of
the business, and you're seeingcompensation go up exponentially.
It's not coming down.
It may be more performance based,but I don't know if it really is.
In order for a stock option tobe valuable, there has to be
(21:05):
actual increases in stock value.
RSUs are valuable evenif the stock goes down.
Because you already got them.
I think it really does speak to theboard's role in understanding what
the leadership and especially theCEO plays as their role, and does one
person actually make a difference?
(21:26):
And we know that it really does.
You could see the difference betweenan organization with one CEO versus the
other, and I think that, ultimately, apartfrom the headline and the news thing, it
really does boil down to the incentivizingand finding the right person, and
that's the board's foremost job.
(21:47):
Have you seen a little bit more impactof activist shareholders and them
trying to get a say in that world,and how's that trend shaping up?
I don't really see it as much in myclients, but just paying attention
to the news and what's happened overtime, sure, activists do play a role.
There are some guys out therewho do cause change when they
(22:10):
get involved with the company.
Companies get scared.
They know that these guys have atrack record of making change happen.
It's change that these companiesdon't necessarily want.
But I think to the point you madeearlier, there are people who are
worth these huge compensation packages.
You can look back at the mid- or so1980s when Apple fired Steve Jobs.
(22:36):
Apple went... saying it went sidewaysfor a couple decades is generous,
it did worse than going sideways.
And then Steve Jobs came back andwe all know what happened at Apple.
The same may be true of Elon Musk, heis somebody who has created tremendous
value at many companies, and I think manystockholders or investors would argue
(22:59):
it's worth paying these guys incredibleamounts of money or compensation for
the value that they bring to the table.
Now, the Elon Musk matter, as we know,his compensation package, which was
approved by his compensation committee,was then challenged in the Delaware
courts, and the Delaware courts ruledagainst the comp package and against
(23:20):
the decision of the comp committee.
So, it's somewhat of an interestingdecision where a court is going to
get involved and say that's too muchcompensation to pay an individual.
What was the basis of thecourt's decision to deny what
the comp Musk ? Do you remember?
(23:41):
really don't, Joe.
I think it was just grosslyexcessive, which is why like the
board shouldn't get involved in
Not only the comp committee,the shareholder approved it.
I think it gives a little bit of ameaning to the word activist as judged
by a lot of companies now thinkingof switching their incorporations
from Delaware to other states.
(24:02):
But Tom, one thing related to thatis that we still as a board want
to exercise independent judgment.
The CEOs and the charismaticand the great founders does want
to kind of control everything.
How can boards try to exerciseindependence when it comes to
executive compensation matters?
(24:22):
Well, I think at the end of theday, board members need to remember
what their role is, and it's not topreserve their job as a board member.
Their role is to represent theshareholders and to make the right
decisions on behalf of the companyand those shareholders, especially the
(24:43):
smaller shareholders who don't have theability to pick up the phone and talk to
the CEO or reach out to board members.
So, I think board members have to be readyto effectively, quote, "get fired" in a
sense or not be reelected, and many peopledon't like that, but I think ultimately
(25:03):
shareholders have to do a better job.
You're asking about activist shareholders,but all shareholders get a vote.
If shareholders feel that a board isapproving compensation or not holding
people accountable for poor performanceor whatever it is, then shareholders
should vote for other board candidates.
(25:24):
They should propose other ornominate other board candidates.
There are processes that exist.
I do acknowledge that they are difficultfor a shareholder of 100 shares of a
public company to make change happen,but ultimately you do have a vote.
You can always sell your shares ifyou don't like how things are going.
But I do think ultimately it comes down tothose board members to just do their jobs.
(25:49):
Well said.
And in addition to all of that, sometimes,tactical things like appointing a
strong lead director and having thecomp committee be composed of all
independent directors and leveragingcomp data prudently would also help
a board exercise their responsibilityof being deliberate and independent.
(26:14):
Yeah, absolutely.
I know we're speaking about publicand private companies here, but with
public companies, comp committees dohave to be independent and you often
do see public company boards and compcommittees working with comp consultants
and getting data and that sort of thing.
I think we all know though, in the worldof data, you can always find some data to
support the position that you want, so youhave to be a little bit careful of that.
(26:38):
I think ultimately the best functioningboards are the boards that don't stagnate.
It's boards that don't haveall 65-year-old guys who
come from the same industry.
I'm not picking on you, Joe.
I think having diversity and boardmembers, whatever that means, it means
a lot of different things, but differenttypes of board members, having five,
(27:02):
six, seven, eight guys, or women whoall are the same in age, same industry,
same area of focus, what's the point?
I would think that a board should be madeup of - you always want your industry
people, you need your financial experts,guys who know the accounting rules and
know how to read P&Ls and balance sheetsand that sort of thing competently.
(27:26):
Depending on the nature ofthe business, you might want
marketing people on the board.
You might not want, like I said,all 60-something-year-olds,
you might want a 30-year-old.
What a 60-something-year-oldsreally know about social media
and marketing in that world?
Maybe they do know something, butI'm just going to guess that a 30-
or 40-year-old might be a littlemore tuned into something like that.
So, I think having different typesof board members, different types of
(27:50):
individuals on the board is a great wayof thinking about board composition, but
I also think that having new blood onthe board, let's just say every couple
of years, I don't mean a full turnover ofthe board, but adding new board members,
people from different backgrounds,somebody coming in from the outside
(28:10):
who maybe has a different perspective,those things only make boards better.
That's right, and I think the skillsmatrix construction and looking at it
in the context of the evolving needs forthe organization provides a really good
tool to answer both the what diverseperspectives do we need in the boardroom
(28:30):
and assigning roles on who would be betterat what committee questions really helps
you bring together a well-composed board.
One of the things you've touchedon several times, and I couldn't
agree more, is that most boardmembers don't want to leave a board.
You talked earlier about the evaluationprocess that ultimately allowed that
(28:55):
particular board to refresh itself.
I think we've talked a lot about thefact that one of the biggest challenges
to board effectiveness; public, private,non-profit, is how to offboard a
board member when the time is right,so I refer to this as rough justice.
But one thing that some boards have donebecause they get so frustrated, they
(29:17):
don't have a lead director whose statureis such that he or she can really bring
a board together around an evaluation.
So, instead they say, "You'reoff after X years with maybe some
exceptions." What do you think aboutterm limits and other alternatives?
(29:38):
Other than the kind of board evaluationor something like the board evaluation
you discussed or term limits, is thereanything in between those two things?
Now, that's a really good question.
And I guess I'd say I havemixed thoughts on it, Joe.
Term limits for our elected officials,term limits for board members.
There was obviously a lot ofdiscussion over this last presidential
(30:00):
election of how old the two maincandidates were, and some of the
members of Congress how old they are.
I would ask how many people out therethink Warren Buffett is too old to be
running Berkshire Hathaway at this point.
Most people are probably gonna say we wanthim in that role until the day he dies.
Maybe even beyond that.
We're all aware of his age, he bringsup his age, he brings up his succession
(30:21):
planning, but nobody wants him togo a day earlier than he has to.
So, I don't know if I love the idea ofpeople being forced out, but I think
there need to be real discussionsabout individuals if they've lost
their fastball a little bit, whetherit's due to age or whatever it is.
I haven't had a client wherethere is a mandatory retirement
(30:44):
age for a board member.
I do know that they exist,but I haven't had one yet.
Well, you know what, I might havehad one, but it was waived, because
the board member was still highlyfunctioning and still wanted on the board.
Classic.
We have an age limit,but you're really good.
We're not going to apply it here.
I mean, that means it'snot really an age limit.
(31:05):
Yeah, I know it does kind of speak to,like I said, the rough justice of this.
If it's Warren Buffett that'son your board, you don't
want to tell him to leave.
If it's someone that is just notbringing it or whose specific value is
no longer as relevant as it might'vebeen when he or she joined the
board, it's a whole different thing.
(31:27):
Yeah.
And coming back to sort of theevaluation process that we at least
in one case where with one companyran successfully, it's sort of like
dealing with employees as well.
If there's an underperforming employee,you hope to improve the situation
through an evaluation process over time.
It's never good to approach thatemployee and say, "Hey, you know what,
(31:47):
we're really underwhelmed with someof your performance. Today's your
last day." That's not best practice.
Best practice is to try to improve thatperson, rehabilitate him or her, and turn
him into a higher functioning employee.
There really shouldn't be surprises,and that's why the evaluation process
at the board level works so well.
To what you said a short whileago, if it works with employees and
(32:12):
management, why not have a similarevaluation process at the board?
You've been the legal counsel, and inmany boardrooms, with that role, what is
the highest and best legal counsel rolethat they play inside the boardroom?
Oh, very good question.
I think the answer is it depends.
(32:33):
It depends on the company and itdepends on what they want from us.
I once had a partner in a law firm whosaid I'm going to get this a little
wrong, but he said, "Some days I'ma firefighter. Some days I'm a grave
digger. Some days he's a pencil pusher,"and I forgot what the other ones were.
But in other words, like the role ofa corporate lawyer really is dependent
(32:55):
on what the needs of the company are.
Even with that board I described earlier,I was sort of the younger guy sitting
in the boardroom initially takingnotes, taking minutes, speaking when
spoken to, and that role, even withinthat one company, evolved over time.
I have other clients where I don'tspeak with the board members very often.
(33:19):
Occasionally, I will get a call.
I get a very specific question.
I'll answer the question.
We'll have a conversation.
But they don't invite meto their board meetings.
So, it really is companydependent in terms of what
they want from their lawyers.
And that does totally make sense.
That is, I think, the best rolewhich is, I guess, the Swiss army
(33:41):
knife, but providing the support thatthe business and the board needs.
Tom, it's been great speaking with you.
Thank you so much for joiningus today on On Boards.
Thank you, Joe.
Thanks, Raza.
And thank you all for listening to OnBoards with our guest, Tom Rosedale.
Please visit our websiteat OnBoardsPodcast.com.
(34:05):
That's OnBoardsPodcast.com.
We'd love to hear your comments,suggestions, and feedback.
If you're not already a subscriber,please be sure to subscribe at
Apple Podcasts, Spotify, or whereveryou get your podcasts and remember
to leave us a five-star review.
And we hope you'll tune in forthe next episode of On Boards.
(34:27):
Thanks.
Hello, and welcome to On Boards, a deepdive at what drives business success.
I'm Joe Ayoub, and I'm herewith my co-host, Raza Shaikh.
Twice a month, On Boards is theplace to learn about one of the most
critically important aspects of anycompany, its board of directors or
advisors, with a focus on the importantissues that are facing boards,
(00:29):
company leadership and stakeholders.
Joe and I speak with a wide range ofguests and talk about what makes a board
successful or unsuccessful, what it meansto be an effective board member, and
how to make your board one of the mostvaluable assets of your organization.
Before we introduce our guests today,we want to thank the law firm of
(00:52):
Nutter McClennen & Fish, who are,again, sponsoring our On Board Summit
this year taking place on October22nd in their beautiful conference
center and the Boston Seaport.
Nutter has been an incredible partnerwith us in every way, we appreciate all
they have done to support this podcast.
(01:12):
Our guest today is Tom Rosedale.
Tom is a partner at Nutter wherehe chairs its corporate and
transactions department and is amember of its executive committee.
Tom has been a corporate attorney forover 25 years representing clients
in many areas, including SEC 34 Actreporting and NASDAQ compliance matters,
(01:37):
public and private M&A transactionsand venture capital transactions.
Tom regularly advises public andprivate company boards of directors
in a variety of industries, includingtechnology, life sciences, financial
services, seafood, cannabis professionalservices, and multifamily offices.
(02:00):
Tom has served on the board of directorsof multiple companies, including
Caring Cross, Vector BioMed, AMD GlobalTelemedicine, Top Shelf Dog, ISG Group,
Red Systems, and Newfound Research.
Welcome, Tom, it's great to haveyou with us today on On Boards.
(02:23):
Thank you, Joe and Raza.
I'm excited to be here andlook forward to this episode.
We want to start off in talking aboutsome of the practices in which you've
been involved to address change in aboardroom, particularly board composition
and board effectiveness, and one of thethings we talked about when we spoke last
week was an evaluation process that youhelped institute and implement in one
(02:50):
of the boards in which you're involved.
So, let's talk about that.
I really want to like you to talkabout how it came about and then
we'll talk about how it evolvedand how it impacted your board.
Absolutely.
When I look back at my career inall the different boards that I've
advised and worked closely with overthe years, one or two of them really
(03:11):
stand out as being exceptional.
They tended to not be the most successfulbusinesses or had the biggest exits.
They were smaller public companies thatgenerally struggled as businesses, but
while they struggled, the health andthe continued health of their board
and the functionality of their boardreally did make positive contributions
(03:32):
towards their ultimate success.
So, the board where you helpedput together an evaluation
process, talk about that company.
You don't have to name the company,but tell us a little bit about the
company and how it came about thatyou created this evaluation process.
Absolutely.
So, there's one company, in particular,where we had an exceptional group of
(03:57):
individuals on the board, and amongthis group, one person really stood out.
He was a little bit older.
He had a personality.
He had a lot of experience and he hadgreat self-confidence where all the
other board members, who were veryestablished in their own rights, all
had respect for this one individual.
(04:17):
He was not the chairman of the board.
He was just an outsideindependent board member.
But what happened was through theprocess of time and just running
board meetings, he tended to starttaking more of a lead in meetings.
He tended to take the lead inquestioning board members and taking
issue with different board memberswho weren't contributing as much.
(04:40):
They either came to meetings not prepared.
They seem distracted in meetings.
They weren't actively participating inmeetings, and he was bothered by this.
These are high-performing individuals.
This one individual is extremelyhigh-performing and he came to
me at one point, and he asked,what can we do about this board?
He said, "The company needs ourleadership. The CEO needs assistance
(05:04):
from us, and I feel like the boardhas stagnated, and we need to get
more out of these board members."
So, my role with the companyreally started much smaller.
I was outside counsel.
I was relatively new to thebusiness as their outside counsel.
I would sit through board meetings andI very much was a note taker taking
(05:27):
minutes of the meetings and reallyspeaking when spoken to and contributing
only when they needed my contribution.
This board member reallyencouraged me to get more involved.
He said, "I know you're not avoting board member, but we really
value your point of view and I needyour help in fixing this board."
So, it was a situation wherethe CEO and chairman title was
(05:50):
held by a single individual.
It wasn't split, which you'd see a littlebit more of now than you did back then.
So, we spoke about the possibilityof taking the chairman role away
from the CEO and giving it tosomebody else who would take more
of a leadership role on the board.
We ultimately decided not to dothat, but to instead, appoint or
(06:11):
seek to have the board appointan independent lead director.
That is something that wetook to the full board.
We socialized the topic with them.
We talked through it and ultimately,the board did approve it.
The individual who was lookingto have this role created wasn't
looking to be the lead director.
But again, just because of hispersonality, his experience, the
(06:34):
respect everybody had for him,everybody unanimously approved
him as the lead director.
He then came to me and said, "Okay,now we have to figure out how we're
going to actually cause change on thisboard," and he asked me what I thought.
I did some research, I saw some differentthings written about by different law
firms and practitioners, and I eventuallyproposed to him that we evaluate the
(07:01):
individual board members, the committeesof the board, the same way management
and employees are often evaluated.
So, we created some questionnaires,again, where every board member evaluated
all the other peer board members, wherethey evaluated the functionality of the
board as a unit, and they evaluated thefunctionality of the committees and some
(07:26):
of these questions were true and false.
Some of them rank the following1 through 5 with 1 being the the
weakest of the lowest and 5 beingthe highest score, and some of the
questions asked for written feedback.
First of all, I want to say, I thinkit's terrific that a board member
(07:47):
stepped up to try to institute achange that would improve the board.
Why was it that he wasn't either thechair or lead director given what
sounds like a pretty high-profileindividual who might otherwise been
the obvious choice for such a role?
(08:08):
Yeah, it's a good question.
I think at the beginning hejoined the board at a time when
the company was doing quite well.
I think he grew into that role.
He was busy being a full-time CEOof another business, and he was
looking to be involved as a boardmember with unrelated companies.
And I think as he left his CEO position,he became more engaged with some of
(08:32):
these boards and when he saw that thingsweren't functioning the way he was
used to, he became frustrated with it.
High performers want to besurrounded by other high performers.
High performers get draggeddown by low performers, so he
struggled with this for a while.
And I think there was some sort ofside chatter going on among some of the
(08:54):
different board members which, frankly,isn't very productive and helpful.
I think his view was we need to putthese issues on the table and we need
to address them, and if there aregoing to be weak players on this board,
we need to do something about this.
How did the other board members react whenhe introduced the idea of having a process
(09:16):
by which you'd evaluate each other?
At the time, I wasn't surprised by it.
The board was very supportive of it.
They really deferred to this individualand had great respect for him.
I will say that, subsequently, Idid try a similar process with other
boards, and it was never received well.
(09:38):
So, this was really an isolatedcase where this individual really
was trying to drive change.
Other board members were alsohigh-performing individuals, very
successful in business, they probablyhad similar processes in their own
companies, and they were not intimidatedor threatened by a process like this.
(10:01):
I feel like with some othercompanies I've worked with,
there's often stagnation on boards.
Board members think theyhave lifetime appointments.
It's not true, but theyfeel like they do.
And I think they don'twant to put those at risk.
They think if they're a littlebit older and they're not working
anymore, maybe they enjoy tellingtheir golfing buddies that they're on
(10:21):
a public company board or they enjoythe distraction of something to do.
get out of the house and go to aboard meeting four, five or six
times a year, whatever it is.
So, not all boards are welcoming changeor buying into continuous improvement.
This board did.
I would say most boards aren't.
They don't want change.
(10:42):
We talk a lot on this podcast about thefact that being a board member is a job.
It's not like going to play golf orplaying basketball with your friends.
It's an actual job, and the realityis a lot of people don't want
their peers to talk about how gooda job they're doing at their job.
(11:04):
So, what you're saying makes perfectsense that just by virtue of his stature,
he was able to get this particular boardto go through what turned out to be a
pretty productive process, so kind ofwalk us through the process, if you would.
Yeah, absolutely.
So, I was very involved with himin, again, in creating these forms
and he had input as well, so Iwould propose different questions
(11:27):
and we went back and forth.
It was an iterative processuntil we arrived at final forms.
And we agreed that, "Hey, these areour initial forms. We might change
them going forward, depending onhow well this process works or if
there are different areas that wewant to explore in this process."
I then distributed the formsto each of the board members.
(11:47):
I would ask that they provide theiranswers/their feedback to me and only me.
I would then aggregate theresponses and try to anonymize
them to the extent that I could.
I mean, it was a relatively small board.
It was seven members, maybe.
It wasn't 25 members so it's notthat hard to figure out who maybe
made a comment about somebody.
(12:09):
I would try to strip out anythingthat seemed personal or potentially
an emotional attack on somebody,and we would summarize these and
then we would distribute themto each of the board members.
So, each board member saw not onlywhat people wrote about him or her, but
they saw what was written about theirfellow board members, and we then had
(12:31):
a discussion, not about any individual,but we had a discussion about the process
as a board and then separately, thelead director would have discussions
with each board member, not only aboutproblem areas, but about things that
were going well, or maybe, " Hey, you'vebeen sitting on the audit committee,
(12:51):
but you tend to have strong opinionswith respect to compensation matters.
Can we get you to consider joiningthe comp committee as well?"
So, it wasn't just dealing with issues.
It was really just lookingfor overall improvement.
The process did work quitewell in dealing with issues.
We're dealing with aboard of high performers.
(13:13):
They don't like beingcriticized or critiqued.
So, to the extent there weresuggestions for areas for improvement,
it did in most cases result in thatindividual having a change of behavior.
It also led to the lead director havingsome conversations with some board
(13:33):
members about, "Hey, you seem to notbe coming to the meetings prepared.
You're not reviewing materials in advance.
You don't seem to beactively participating.
You seem to be more reactive ifsomebody asks you a question.
How can we get you more involved?
Do you have the time to actually be afull functioning member of this board?"
(13:55):
And in a few cases that led to workingsome of these people off of the board.
It's hard to kick people off of apublic company board, but the process
led to the individual reaching his ownconclusion, for example, saying, "You're
right. I really don't have time or Iget the materials in advance and I just
don't have the opportunity to reviewthem, and I am coming unprepared" and
(14:18):
it led to us having some board membersleave, and we would then go out and
look for new board members to join.
Did the lead board member conductthese conversations one on one with
each board member or were thereothers with him when he did it?
The conversations between the leadand each individual board member,
they were private conversations.
(14:41):
And after all the conversationstook place, was there some kind
of conversation in the boardroomabout what had taken place about
the evaluation process or anything.
Yeah, there were conversations, butit was less about any one individual.
It was more about the overallprocess, and we wanted engagement
(15:01):
and involvement, "What did youguys think about this process?
Were the questionnaires too long?
Were they too short?
Were they too general in nature?
How can we do a better job next time?
Are there areas that you think weshould explore?" And we did get feedback
and we took it into consideration andmaking changes for the following year.
Did any of the board membersexpress frustration or resistance
(15:25):
to the idea of what had happened?
Or were they prettyaccepting of the process?
From what I saw, they wereshockingly accepting of the process.
Again, I tried this with otherboards, and some boards shut me down
when I finished my first sentence.
Other boards said, "Sure, let's tryit," but they never gave it a true shot.
(15:48):
They felt threatened, I believe.
This board, they bought into it.
This was years ago.
It was the first time I tried it,and it worked exceptionally well.
So, it raises the obvious question forsomeone, especially who's worked with
a lot of boards and a lot of companies,why shouldn't owners/stakeholders demand
(16:10):
the same kind of diligence regardingtheir board as they do of their CEO?
I mean, why shouldn't that justbe part of the normal practice?
No company would say, "Oh, we can'tevaluate our CEO." That's too personal.
It's part of the culture.
Why shouldn't this be part of the culture?
I think you're absolutely right, Joe.
(16:32):
I think ultimately, when things arerequired, they will be done, but
they are not necessarily done well.
There are often newdisclosure requirements.
Either by the SEC or NASDAQ orwhatever with respect to public
companies and everybody complies.
They do what they need to do, but are theyreally fully engaged in doing it properly?
(16:55):
This was a board thattook this very seriously.
This worked becausepeople wanted it to work.
I don't think anybody felt that theywere the low performer, by the way.
I think everybody thought thatthey were doing just fine or doing
fine enough and that the processwould help address other people.
But I think it really did onlyworks if there's true buy in.
(17:16):
I can imagine another publiccompany saying, "Okay, we
need to evaluate each other.
Let's come up with some questions.
We'll get it done.
We'll check the box.
We'll throw it in the file.
We'll make a statement in ourproxy statement that we complied
with this." It really takessomebody committed to this process.
What about the idea of bringingan outside consultant of some
(17:37):
kind to implement this process?
In other words, where maybe the leaddirector or if there's a board chair
doesn't want to spend the time ordoesn't really want to put the evaluation
together, or maybe lead counsel doesn't,do you think that could be more effective
because when an outsider comes in, maybepeople pay attention or might behave
(18:00):
differently than if it's all internal?
Oh, I could certainly see that happening.
I think that is very appropriatefor an outsider to do it.
I think guys who have gone throughbusiness school, like they love
their consultants, so why not havea consultant come in and run a
session as opposed to a lawyer.
So, fortunate for me, this board, whileI started out as the guy at the end
(18:24):
of the table taking notes so that Icould ultimately draft minutes, they
sort of empowered me over time, likeno real power, but they said to me,
"We want you engaged and involved inthese conversations. We want to know
your thoughts on whatever we're talkingabout as a board. You don't get to
vote, but we want to hear your voice."
I wouldn't say that's unusual.
Some of my public company andprivate company boards do view their
(18:46):
lawyers as value add members of theboardroom, even though we don't have
a vote, whereas others just want uscommenting on legal matters, or maybe
just sitting there taking notes.
Tom, switching a little bit.
Earlier you alluded a tinybit to the comp committee.
One of the most important job ofa board is to determine executive
(19:06):
compensation, and that is a little touchysubject, and maybe your thoughts on
how you've seen this topic of executivecompensation evolved in the boardroom
Yeah, that is a big topic.
So, I'm going to respond but withless of a specific example, but more
(19:26):
generally in what I'm seeing and whatI've seen over the decades, there's
always conversation about how much theCEO makes or how much the CEO makes
relative to the lowest paid person orrank-and-file person in the organization
that always gets news-type attention.
While it does, and the differentialhas grown exponentially over time,
(19:50):
I think what's happening is changesthat are coming from pressure on
boards is the change that's happeningisn't in the amount that people
are making, it's in the forms ofcompensation that they are receiving.
When I started my career back in the 90sas a lawyer, stock options was pretty
(20:16):
much the form of equity compensationthat management and employees, and
frankly, even board members received.
That has changed over time.
There may be stock options, butstock options only have value
if the company's value increasesover and above the exercise price.
Now you see many, many companiesissuing restricted stock, issuing RSUs,
(20:42):
guaranteed bonuses, retention bonuses.
You see carried interest in somecases, depending on the nature of
the business, and you're seeingcompensation go up exponentially.
It's not coming down.
It may be more performance based,but I don't know if it really is.
In order for a stock option tobe valuable, there has to be
(21:05):
actual increases in stock value.
RSUs are valuable evenif the stock goes down.
Because you already got them.
I think it really does speak to theboard's role in understanding what
the leadership and especially theCEO plays as their role, and does one
person actually make a difference?
(21:26):
And we know that it really does.
You could see the difference betweenan organization with one CEO versus the
other, and I think that, ultimately, apartfrom the headline and the news thing, it
really does boil down to the incentivizingand finding the right person, and
that's the board's foremost job.
(21:47):
Have you seen a little bit more impactof activist shareholders and them
trying to get a say in that world,and how's that trend shaping up?
I don't really see it as much in myclients, but just paying attention
to the news and what's happened overtime, sure, activists do play a role.
There are some guys out therewho do cause change when they
(22:10):
get involved with the company.
Companies get scared.
They know that these guys have atrack record of making change happen.
It's change that these companiesdon't necessarily want.
But I think to the point you madeearlier, there are people who are
worth these huge compensation packages.
You can look back at the mid- or so1980s when Apple fired Steve Jobs.
(22:36):
Apple went... saying it went sidewaysfor a couple decades is generous,
it did worse than going sideways.
And then Steve Jobs came back andwe all know what happened at Apple.
The same may be true of Elon Musk, heis somebody who has created tremendous
value at many companies, and I think manystockholders or investors would argue
(22:59):
it's worth paying these guys incredibleamounts of money or compensation for
the value that they bring to the table.
Now, the Elon Musk matter, as we know,his compensation package, which was
approved by his compensation committee,was then challenged in the Delaware
courts, and the Delaware courts ruledagainst the comp package and against
(23:20):
the decision of the comp committee.
So, it's somewhat of an interestingdecision where a court is going to
get involved and say that's too muchcompensation to pay an individual.
What was the basis of thecourt's decision to deny what
the comp Musk ? Do you remember?
(23:41):
really don't, Joe.
I think it was just grosslyexcessive, which is why like the
board shouldn't get involved in
Not only the comp committee,the shareholder approved it.
I think it gives a little bit of ameaning to the word activist as judged
by a lot of companies now thinkingof switching their incorporations
from Delaware to other states.
(24:02):
But Tom, one thing related to thatis that we still as a board want
to exercise independent judgment.
The CEOs and the charismaticand the great founders does want
to kind of control everything.
How can boards try to exerciseindependence when it comes to
executive compensation matters?
(24:22):
Well, I think at the end of theday, board members need to remember
what their role is, and it's not topreserve their job as a board member.
Their role is to represent theshareholders and to make the right
decisions on behalf of the companyand those shareholders, especially the
(24:43):
smaller shareholders who don't have theability to pick up the phone and talk to
the CEO or reach out to board members.
So, I think board members have to be readyto effectively, quote, "get fired" in a
sense or not be reelected, and many peopledon't like that, but I think ultimately
(25:03):
shareholders have to do a better job.
You're asking about activist shareholders,but all shareholders get a vote.
If shareholders feel that a board isapproving compensation or not holding
people accountable for poor performanceor whatever it is, then shareholders
should vote for other board candidates.
(25:24):
They should propose other ornominate other board candidates.
There are processes that exist.
I do acknowledge that they are difficultfor a shareholder of 100 shares of a
public company to make change happen,but ultimately you do have a vote.
You can always sell your shares ifyou don't like how things are going.
But I do think ultimately it comes down tothose board members to just do their jobs.
(25:49):
Well said.
And in addition to all of that, sometimes,tactical things like appointing a
strong lead director and having thecomp committee be composed of all
independent directors and leveragingcomp data prudently would also help
a board exercise their responsibilityof being deliberate and independent.
(26:14):
Yeah, absolutely.
I know we're speaking about publicand private companies here, but with
public companies, comp committees dohave to be independent and you often
do see public company boards and compcommittees working with comp consultants
and getting data and that sort of thing.
I think we all know though, in the worldof data, you can always find some data to
support the position that you want, so youhave to be a little bit careful of that.
(26:38):
I think ultimately the best functioningboards are the boards that don't stagnate.
It's boards that don't haveall 65-year-old guys who
come from the same industry.
I'm not picking on you, Joe.
I think having diversity and boardmembers, whatever that means, it means
a lot of different things, but differenttypes of board members, having five,
(27:02):
six, seven, eight guys, or women whoall are the same in age, same industry,
same area of focus, what's the point?
I would think that a board should be madeup of - you always want your industry
people, you need your financial experts,guys who know the accounting rules and
know how to read P&Ls and balance sheetsand that sort of thing competently.
(27:26):
Depending on the nature ofthe business, you might want
marketing people on the board.
You might not want, like I said,all 60-something-year-olds,
you might want a 30-year-old.
What a 60-something-year-oldsreally know about social media
and marketing in that world?
Maybe they do know something, butI'm just going to guess that a 30-
or 40-year-old might be a littlemore tuned into something like that.
So, I think having different typesof board members, different types of
(27:50):
individuals on the board is a great wayof thinking about board composition, but
I also think that having new blood onthe board, let's just say every couple
of years, I don't mean a full turnover ofthe board, but adding new board members,
people from different backgrounds,somebody coming in from the outside
(28:10):
who maybe has a different perspective,those things only make boards better.
That's right, and I think the skillsmatrix construction and looking at it
in the context of the evolving needs forthe organization provides a really good
tool to answer both the what diverseperspectives do we need in the boardroom
(28:30):
and assigning roles on who would be betterat what committee questions really helps
you bring together a well-composed board.
One of the things you've touchedon several times, and I couldn't
agree more, is that most boardmembers don't want to leave a board.
You talked earlier about the evaluationprocess that ultimately allowed that
(28:55):
particular board to refresh itself.
I think we've talked a lot about thefact that one of the biggest challenges
to board effectiveness; public, private,non-profit, is how to offboard a
board member when the time is right,so I refer to this as rough justice.
But one thing that some boards have donebecause they get so frustrated, they
(29:17):
don't have a lead director whose statureis such that he or she can really bring
a board together around an evaluation.
So, instead they say, "You'reoff after X years with maybe some
exceptions." What do you think aboutterm limits and other alternatives?
(29:38):
Other than the kind of board evaluationor something like the board evaluation
you discussed or term limits, is thereanything in between those two things?
Now, that's a really good question.
And I guess I'd say I havemixed thoughts on it, Joe.
Term limits for our elected officials,term limits for board members.
There was obviously a lot ofdiscussion over this last presidential
(30:00):
election of how old the two maincandidates were, and some of the
members of Congress how old they are.
I would ask how many people out therethink Warren Buffett is too old to be
running Berkshire Hathaway at this point.
Most people are probably gonna say we wanthim in that role until the day he dies.
Maybe even beyond that.
We're all aware of his age, he bringsup his age, he brings up his succession
(30:21):
planning, but nobody wants him togo a day earlier than he has to.
So, I don't know if I love the idea ofpeople being forced out, but I think
there need to be real discussionsabout individuals if they've lost
their fastball a little bit, whetherit's due to age or whatever it is.
I haven't had a client wherethere is a mandatory retirement
(30:44):
age for a board member.
I do know that they exist,but I haven't had one yet.
Well, you know what, I might havehad one, but it was waived, because
the board member was still highlyfunctioning and still wanted on the board.
Classic.
We have an age limit,but you're really good.
We're not going to apply it here.
I mean, that means it'snot really an age limit.
(31:05):
Yeah, I know it does kind of speak to,like I said, the rough justice of this.
If it's Warren Buffett that'son your board, you don't
want to tell him to leave.
If it's someone that is just notbringing it or whose specific value is
no longer as relevant as it might'vebeen when he or she joined the
board, it's a whole different thing.
(31:27):
Yeah.
And coming back to sort of theevaluation process that we at least
in one case where with one companyran successfully, it's sort of like
dealing with employees as well.
If there's an underperforming employee,you hope to improve the situation
through an evaluation process over time.
It's never good to approach thatemployee and say, "Hey, you know what,
(31:47):
we're really underwhelmed with someof your performance. Today's your
last day." That's not best practice.
Best practice is to try to improve thatperson, rehabilitate him or her, and turn
him into a higher functioning employee.
There really shouldn't be surprises,and that's why the evaluation process
at the board level works so well.
To what you said a short whileago, if it works with employees and
(32:12):
management, why not have a similarevaluation process at the board?
You've been the legal counsel, and inmany boardrooms, with that role, what is
the highest and best legal counsel rolethat they play inside the boardroom?
Oh, very good question.
I think the answer is it depends.
(32:33):
It depends on the company and itdepends on what they want from us.
I once had a partner in a law firm whosaid I'm going to get this a little
wrong, but he said, "Some days I'ma firefighter. Some days I'm a grave
digger. Some days he's a pencil pusher,"and I forgot what the other ones were.
But in other words, like the role ofa corporate lawyer really is dependent
(32:55):
on what the needs of the company are.
Even with that board I described earlier,I was sort of the younger guy sitting
in the boardroom initially takingnotes, taking minutes, speaking when
spoken to, and that role, even withinthat one company, evolved over time.
I have other clients where I don'tspeak with the board members very often.
(33:19):
Occasionally, I will get a call.
I get a very specific question.
I'll answer the question.
We'll have a conversation.
But they don't invite meto their board meetings.
So, it really is companydependent in terms of what
they want from their lawyers.
And that does totally make sense.
That is, I think, the best rolewhich is, I guess, the Swiss army
(33:41):
knife, but providing the support thatthe business and the board needs.
Tom, it's been great speaking with you.
Thank you so much for joiningus today on On Boards.
Thank you, Joe.
Thanks, Raza.
And thank you all for listening to OnBoards with our guest, Tom Rosedale.
Please visit our websiteat OnBoardsPodcast.com.
(34:05):
That's OnBoardsPodcast.com.
We'd love to hear your comments,suggestions, and feedback.
If you're not already a subscriber,please be sure to subscribe at
Apple Podcasts, Spotify, or whereveryou get your podcasts and remember
to leave us a five-star review.
And we hope you'll tune in forthe next episode of On Boards.
(34:27):
Thanks.
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