A Tech Solution to Finding Board MembersBy Tony Chapelle | August 27, 2018

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In recent years, the internet, social media and electronically accessible public company filings have proven a boon to boards looking for a wider swath of director candidates. LinkedIn—now a division of Microsoft—has ascended as the world’s dominant source for finding names and profiles of executives and potentially qualified board candidates. Several other platforms and services provide customized offerings with various other special features.

Equilar, a corporate governance software and research firm based in Silicon Valley, offers a search tool that appears to be among the most technologically sophisticated. Equilar’s BoardEdge product taps public company documents as the jumping-off point to highlight all corporate connections—past and present corporate jobs, current and previous corporate boards—between leaders at listed companies.

“This tool can help directors overcome ‘boardroom amnesia,’” says David Chun, the founder and CEO of Equilar. “It makes people tap networks they know but may have forgotten. We call it the ‘Google for boards.’” Chun says that some 300 companies are currently clients.

BoardEdge identifies every one of the 220,000 U.S. public company directors and C-suite executives that companies report in their SEC proxies. Then Equilar’s technology rifles through their data to show the combined 2 million personal connections as well as pulling from sources of diverse candidates such as the Calpers-Calstrs directory of diverse candidates. A group license subscription to BoardEdge costs $20,000, Chun says, and will be available to three persons at a firm.

For example, following the news that former subordinates of CBS CEO Les Moonves had accused him of sexual harassment, Equilar notified reporters that it had names and background information on 135 corporate board directors or executives who had connections to the CBS nominating and governance committee chair, Charles Gifford.

“[Professional] relationships are incredibly important in the boardroom, where you will be making high-stakes decisions that will come under public scrutiny,” says Mary Flipse, chief legal and administrative officer at Tivity Health, a fitness-improvement company.

Flipse says BoardEdge helps. “When you’re looking for new directors, you wish those persons could have multiple [connections] with persons who’ve already worked with them, have relied on their judgment and know that they’re super independent,” she says.

Flipse says the tool also lets her see whether the person being considered for a board seat has been battle tested, such as by having served on a board that activist shareholders targeted with a proxy campaign.

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Lorna Hagen, chief people officer at OnDeck Capital, an Internet-based lender to small businesses, says she’s used the BoardEdge service to supplement findings from search firms.

“If they show me a candidate and I put that name into Equilar, I can see if the person is connected to our executives or board members, institutional investors or private equity investors,” Hagen says, adding that those all represent persons that she and the board could talk to for candid background discussions about a prospective director. The BoardEdge report also shows a variety of proxy findings, such as how independent the boards that the person sat upon were, and which companies were considered to be market peers. “I use Equilar to make sure that I have as much information as I can on the candidate,” she says.

In six months of usage, Hagen says she and OnDeck haven’t picked any candidates, but that she has put together a “very nice wish list.”

Hagen and others often build their lists by using traditional board composition matrices. They prioritize the skills, experience and other attributes they would want new directors to possess and then try to match those to available persons.

This month, Institutional Shareholder Services (ISS) announced that in its upcoming Americas policy survey it will ask investors whether information that boards are posting in their filings about board matrices is actually useful. While many institutional investors such as New York City comptroller Scott Stringer demand that boards publish matrices to determine whether boards are upping their diversity and board skills, ISS wants to ask whether those disclosures are merely window dressing.

Meanwhile, the Center for Board Matters at management consulting firm EY announced results of a study that found that nearly half of S&P 500 companies disclosed using matrices that described individual directors’ skills as well as boards’ cumulative expertise. The breakdown: 29% of boards disclosed individual information, and 17% provided specific information describing the full board. Those figures were up from 17% and 10% last year, respectively.

Flipse says she used the service for business development.

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“When my sales team was looking at particular companies as new prospects, I immediately thought, ‘Shoot, I’m going to see who we know over there.’ I ran my directors’ connections through BoardEdge to see if any of them are connected to any of those public companies. We could tap those connections,” she says.

Flipse calls her board “super-active” and helpful with “their Rolodexes.” But this time, rather than starting by asking the directors for contacts they had at the business-targeted companies, she found the names of the targeted companies’ directors on BoardEdge, found out the connections to her list of board members and then gave the results to her sales folks who had approached the board for help.

“When you’re looking at a brand-new prospect, how do you get over that wall and make that connection? If you can make that [sales] call at the board level, that immediately gets sent up to [their] management and you will likely get a call back,” she says. “In this case, my business people said using that method was pretty powerful and we got that business.” She says the prospect is now in play.

In the past, LinkedIn had features that allowed users to see all their own connections to any corporation or charity, but those now come at a premium price.” You can still get those connections, but now you’ve got to pay up,” says Abby Adlerman, the CEO of Boardspan, a digital provider of board recruiting, assessments and market information. “LinkedIn makes most of its money not from talent but by selling information to commercial enterprises such as search firms, or companies’ human resources teams, and business development and sales.”

That said, Adlerman still advises that boards include external candidate databases in searches. But she says they’d be well advised to use artificial intelligence and other advanced technology when compiling a short list of candidates. “It’s where this world is going,” she says.

Boardspan, for instance, uses proprietary algorithms to filter through clients’ matrices using their assessment factors to identify candidates from its own database, much of which appears to pull up names from LinkedIn. “The most important thing when it comes to boards is having that fit. And you can’t get that from a database,” says Adlerman.

Other sources for board searches—aside from old-line search firms—include the National Association of

Corporate Directors and services such as theBoardlist and Board Prospects.

Steve Walker, NACD’s general counsel and managing director of board services, says Equilar is doing a fantastic job of tying directors together with other networks. His organization, meanwhile, draws upon its membership of 20,000 active board members. Member boards can hire the NACD’s board services department to conduct full-service placements for directors. Walker says that in the past “couple of years,” 80% of the searches have been for women and minorities.

Chun avoids disparaging any of his competition, but he does draw a distinction between them and his offerings. “Anybody can give you a list of names. But if the average board that’s looking for candidates doesn’t know how they’re connected to those individuals, and to get introductions, it’s not as useful. That’s why our 2 million connections is an area that we emphasize.”

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Objectively assess your board composition and discover the power of your board’s network. Only BoardEdge lets you benchmark the composition of your board against your peers, discover the right candidates for your succession planning needs and connect with individuals using your executive and board network.

BenchmarkUse the same data points as institutional investors to evaluate board composition, including age, tenure, gender, share ownership and industry experience. Quickly identify recent director and executive changes, track annual meeting results and view CEO succession plans for your company vs. your peers with the Shareholder Engagement Report.

DiscoverSearch the large database of more than 220,000 public company board members and executives for candidates who meet various experiential and demographic criteria. Evaluate potential candidates’ work history and ensure they adequately represent shareholder interests. Broaden your search using the Equilar Diversity Network and find board-ready executives from leading ethnic and gender diversity organizations.

Connect Identify connections by viewing the myriad ways in which you are linked to individuals, including historical connections, to support recruiting and business development. Outreach opportunities are clearly displayed in the search results.

Contact us to request your free BoardEdge demo today.(877) 441-6090 | www.equilar.com/boardedge

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