Joe: [00:00:00] Hello, and welcome to On Boards, a deep dive at what drives business success. I’m Joe Ayoub, and I’m here with my co-host, Raza Shaikh. Twice a month, On Boards is the place to learn about one of the most critically important aspects of any company or organization – its board of directors or advisors – with a focus on the important issues that are facing boards, company leadership and stakeholders.

Raza: Joe and I speak with a wide range of guests and talk about what makes a board successful or unsuccessful, what it means to be an effective board member and how to make your board one of the most valuable assets of your organization.

Joe: Before we introduce today’s guest, we want to thank the law firm of Nutter McClennen & Fish who are again sponsoring our On Board Summit this year taking place on October 22nd in their [00:01:00]conference center in the Boston Seaport. They’ve been incredible partners with us in every way. We appreciate all they have done to support this podcast.

Our guest today is Pam Lenehan. Pam has 22 years of experience as a public company director serving on seven public company boards, which she has been chair of the board, presiding director and has chaired both audit and compensation committees. Pam currently serves on the board of ATN International where she chairs the audit committee and is a member of the nom-gov committee.

Raza: During the course of her years of board service, she has been involved in IPOs, equity and debt financings, acquisitions, divestitures, restructurings, auditor changes, sale of the company, cyber breaches, activist engagements, and planned and unplanned CEO succession

Joe: Pam also serves on the boards of the [00:02:00] Center for Women and Enterprise and NACD’s New England chapter. She is also co-chair of the Boston chapter of Women’s Corporate Directors and a member of the Women Leaders Network and the Massachusetts Women’s Forum. Welcome, Pam. Thanks for joining us today on On Boards.

Pam: Well, thank you for having me.

Joe: So, before we get into details, talk a little bit about the deep public company board experience you have. You’ve been exposed to multiple governance situations over these many years, and it’d be helpful if you could just elaborate a little on some of that.

Pam: Well, I’ve been lucky enough to be on a number of different boards in a variety of industries. When you’re a financial expert as I am, you really don’t have to do a deep dive at any particular industry. You can take that expertise across different [00:03:00] industries. So, I’ve been on boards of technology companies, which includes telecommunications, software, clean tech. I’ve also been in health services company. I’ve been on a plastics company board, so very interesting to really get exposed to different industries as well as the different companies.

Joe: It must be interesting to be able to move from industry to industry. In a former life, I was a trial lawyer, and what I did was largely industry agnostic. So, I would learn everything about laser beams and then I would learn everything about some other subject, and that’s part of why I loved it. So, I can really relate to the fact that each board in its way, while there are so many common things, but each board is actually unique and provides a unique experience for a board member.

Pam: That’s true. I think one of my fellow board members said that your board experience is an N of one, that every company is different, and that even if you’re in the same industry as a [00:04:00] prior company, the management team is different, the industry dynamics are different, the products are different, and so you really have to go in with a learning mindset. You have to be a lifetime learner in order to really understand the business you’re getting involved with.

Joe: I love thinking about going into it with a learning mindset. I think that’s part of what we talked about earlier and we’ll get into that being a board member is a job, and obviously, if you’re taking a new job, there’s a lot to learn no matter how much you’ve learned in the past so it’s a great, great attitude to have.

One of the things we talked about when we spoke last week was how much in the new world, so to speak, has been added to the plate of fiduciary boards. There’s all the stuff that boards always had to do, and then there’s a whole bunch of new things. Anything from cyber to AI, we can go through it later, but it has [00:05:00] created a situation that many people think has really added to the board responsibilities. So, we’d like to talk a little bit about how you’ve experienced the evolution of board responsibilities. What are some of the things you’ve noticed that have changed over the years requiring more time from a board member?

Pam: Well, I think one of the things is that boards have always really had to focus on risks. What are the risks that businesses face, both externally and their own product development, their own people. I always say that we historically implicitly considered risk, but now we have to explicitly consider risk because we’re having much more reporting, and so really you have to specifically think about not only what are the risks we have, but how are we going to allocate those among the different board committees?

There’s much more focus on board oversight of those risks, and therefore, how do we, as a board, think about risk? How do we ask our committees, whether it’s audit or compensation or, in some cases, risk committees [00:06:00] or technology committees, how do we divide up these risks and then come back together in a board and discuss them with management to be sure that we understand them, and not to say that you can anticipate all of the risks. I mean, who really thought about a pandemic, but we need to be very forward thinking in how we consider the business.

Joe: And that’s only one aspect of what a board has to do. So, even getting ready for board meetings, there’s more work to do. Am I right about that?

Pam: That’s true, and it’s interesting because I think technology has both helped and hurt in this way. Most boards transmit their information these days through electronic platforms, and back in the old, old days when you had to have a person physically copy and bind and distribute the material, there was a cutoff date, people thought seriously about, “Do I really want to get this out to people?” But now, “Oh, we’ll just add this article or we’ll just add this presentation,” and so it’s just really easy to upload [00:07:00] material onto these databases and so it’s not uncommon for board books to be 400, 500, 600 or more pages, and it’s all interesting reading, but you better be sure that you set aside time to do that.

Joe: That’s a lot of reading. Is it because there’s more being covered or is it part what you’ve just said, which is, it’s so much easier to just add it to the binder.

Pam: Well, I think it’s both, and I think boards are asking companies to provide them more information in advance. I think that we’ve talked about one issue is that it used to be that boards kind of arrived and sat there, and there was PowerPoint after PowerPoint, and now what boards are saying is, “Look, we have very limited time together, so let’s spend that time together discussing. hearing what each other think, talking to the management team. So, let’s do a lot of the work before the board meeting so we walk in there educated and then we’re able to really discuss and analyze things.

Joe: As we’ve discussed, I think that’s great because it means people taking the role of a board member [00:08:00] seriously, because it is serious. Well, any company, public or private, it’s serious so that’s a good thing. Part of the question that regularly arises when discussing how board meetings and governance has changed is, do you lose some of the social trust interaction among board members because there isn’t as much time to have a cup of coffee or to have a drink or to have lunch together. How does that work? How is the more limited time for socializing impacted board interactions?

Pam: Well, I think boards have to be very deliberate in thinking about that. We’ve gone to more meetings. When you look at our schedule for the year, do we really need to fly in for every meeting? Or should some of those meetings be on a video platform? And that’s where you really miss, it is not to say you don’t have good discussions and good interaction, there aren’t those little side issues in between presentations or getting up and walking out to lunch and [00:09:00] just having that casual chats to people or let’s say that you’re going on a tour and you’re getting on the bus together and you’re sitting talking to your fellow directors. So, therefore, when you are together, you really do need to plan that time, whether they’re dinners, whether they are times for the independent directors to have breakfast together, but there definitely is less socializing than there used to be.

Joe: Yeah, and I will say that when we came out of COVID and there were meetings that we are starting in person. It really struck me how much that I, as a board member, but the board had missed being together. There’s stuff that gets done over virtually that you can get it done, but at least what I sense was a little less amicable back and forth, “People, you know, let’s get this going. Let’s move. Let’s talk.” And of course, time is very valuable, but it was less collegial, I guess is what I experienced. I don’t know if that [00:10:00] ever came through to you at all.

Pam: I was on two boards during COVID and both CEOs were very much in-person meeting people, and so I remember we still laugh about one of them. Our first board meeting, it was probably May of 2020, so very early in COVID, we decided we’d have an outdoor board meeting for the board members who were local, and it turned out to be one of those days, for those of you who are in New England, you know this, where you think April spring, it’s not. It was like mid-40s and we had it outside at a nonprofit and our CEO was not very good on the technology. So, the people who weren’t there basically saw his chest the entire time that they couldn’t see the camera focused on the rest of us and it turned out it was near an old airport where someone was taking off and landing, and so they laugh about how our early days of doing video meetings, we were not very successful.

But I think we’ve gotten better at that, and I’m not saying that you can actually have a good [00:11:00]conversation. Sometimes, like my nonprofit that we talked about, it schedules in some social time. So, it isn’t just, “Here’s the presentation, now we terminate,” and maybe boards need to do that too. Maybe we need to have some breaks where we just talk about the latest books we’ve read or what we’re watching on Netflix.

Joe: Yeah, I agree. That is a good idea, actually, because I think the trust among board members is so critical. So, another thing we talked about was how both board meetings and committee meetings are longer. Committee meetings are more frequent because so much is flowing down to committees, and in addition, one thing committee members are doing is meeting more often with members of the C suite. If you could just talk a little bit about how that has impacted the time and energy that it takes to really do your job as a board member.

Pam: Well, I think you just have to really schedule it. So, I’m chair of an audit committee and we look out two years to really schedule meetings, but also, what are we supposed to be covering? What does [00:12:00] our charter look like? What meetings are we going to cover those topics? In this particular company, we separate the earnings calls, which are usually very pressured. You need to understand what those earnings are, what’s the message you’re going to communicate, are you changing guidance, what’s the press release look like.

And then we have a separate meeting where we cover the other issues that we want to talk about, what’s going on on the accounting side, what’s going on in cyber security, you get your updates, a lot of the new disclosure requirements, where do we stand on those, and so we end up with at least eight meetings a year; the four calls, and then the four where we’re covering other subjects.

Joe: That’s a lot of meeting time. It really is. I was going to ask you, how are some of these things impacting particularly public company boards, which you just kind of went through. Are there other things that because it’s a public company, it is added to the time that might not impact private companies.

Pam: Right, right. Well, I think I told you that I was on two private equity companies that eventually went public, and my [00:13:00] experience with private equity companies was very positive. You’re sitting next to your major shareholder. Your entire focus is really on the strategy of the business and the execution. Whereas when you’re on a public company, not that you don’t do that, but you also need to talk about disclosure, so what are you going to be disclosing? The SEC keeps adding on rules, and it started with Sarbanes–Oxley, but it’s been additive. So, first, we’ve had cybersecurity disclosures. There’s ESG disclosures. Even though they’re technically on hold, a lot of companies are already releasing that information because there’s pressure from shareholders. So, we’re spending a lot of time, not just on what we’re doing, but how we’re going to communicate that outside shareholders.

Joe: Is there more shareholder activism, do you think?

Pam: Oh, yes. I’ve been involved in three pretty active activist situations and we all need to think like activists because these people are smart and they have good ideas. Now, they might not always understand how it impacts the company and then [00:14:00] they can’t always understand what the board is doing. In one particular case, the company was in the process of trying to affect a sale of the company and the activists came in and said, “I think you should sell the company,” and we agreed with the activists, but we couldn’t say that because we hadn’t publicly disclosed it.

Joe: Ah.

Pam: So, you have to be really careful what you say to these shareholders.

Joe: Yeah, that I believe.

Raza: Pam, with this backdrop of increased responsibility, If we consider board a team at each level and committees are teams as well, then you need a leader for that team, and that’s usually the chair or the independent director or lead director- type of role. Maybe talk a little bit about the importance of the increased responsibility of the board chair under these circumstances.

Pam: Well, I think that the board chair has always had one of the major jobs. it is to be sure that all the voices in the boardroom are heard, and so as we put together boards [00:15:00] these days, I’m sure we’ll talk about board composition, it used to be very much of a group of generalists and so people who were very good at a lot of different things and people who were just good general managers.

But that’s not what is required of us these days. We need three people understand finance to be on the audit committee, one of whom needs to be a financial expert. You are probably looking for one or two industry experts. You may be looking for people who have technology backgrounds. You may be looking for a former public company CEO.

So, these people are very diverse and you need to be sure that you’re getting the best performance from all of them and we all learn from each other. So, you can’t just have one or two people monopolize the board conversation, you need to hear from each of the directors, and you need to think about what is the composition of the board, what skills do we want to have in the boardroom, and what could our expertise that we can hire from the outside.

Raza: It almost sounds like that’s not just the [00:16:00] team, it’s an elite sports team that has to not only work together well, but each has its individual strengths in areas as well. Any tips for the board chair? I think that we often see that phenomenon of the expert in the room. How do you deal with that, like not to have just one person who really just knows something about an area, how can the board collectively be doing all of that?

Pam: Right, well, I think we talked about how I was talking to a private equity investor, he was looking for new directors, and he said he couldn’t afford to have a pommel horse guy, and I said, “Well, what do you mean by a pommel horse guy?” For those of us who watch the Olympics, we remember that the men’s gymnastics team had very talented people, but one person who went on to get a medal, he was the expert on the pommel horse and he wasn’t involved in any of the other activities.

I think that no matter what your expertise on a board of directors, you need to have some level of knowledge [00:17:00] of other things. You may not want to be on the audit committee, but you need to understand finance and you need to understand budgets. You may not be a technology person, but you need understanding of the technology impacting the business and the major issues in cyber security. Yes, maybe each have your expertise, as you said, in a sports team, but you still need to be a team and you need to know what the rules of the game are and what the objectives are.

Joe: Yeah, and I think that’s a great analogy. I would come back, as I did the last time we talked about this, and say, yes, not every board can afford to have the pommel horse guy. On the other hand, having him on the Olympic team allowed them to get the gold medal, which means that there are cases when that guy or that gal is critical to the operation of the team or the board. So, what are some of the areas of expertise where board might want to consider having that pommel horse guy?

Pam: Well, I think one area might be the industry. For example, I was on a board where we had [00:18:00] somebody who, in fact, was an entrepreneur and had sold a major piece of the business to the company and understood the industry at a level that none of us really could because grew up in that industry, he had built a large company industry, he had understood the customers and he’d never been in a public company board before. And so you might say, “Oh, well, why would we want somebody who is not a public board member on this large company board?” But the fact is that that he had a tremendous experience and he was a wonderful voice for us customer wise in the boardroom.

Joe: Great example. Thanks.

Raza: One of the thing implications of that has been the time commitment to serve on boards. We can guess and estimate that it could be anywhere between 100 to 300 hours per year for a given board service, or maybe even more, so talk a little bit about that and advice for board members on how many of these should they take, [00:19:00] how do I actually effectively then be able to contribute to all of the boards that you’re a member of.

Pam: Well, I’ve never heard anybody say it’s 100 hours, so I’d like to see that board, well over 200, and I think what I advise people is what they forget is a lot of these hours are weekend hours. The management team leaves and on a Thursday night, they load everything up to these board portals, and there you are reading over the weekend to be sure that you’ve read these multiple 100-page document so that you can be prepared for the board meeting the next week.

The other thing to realize is that no matter what timetable you have, you may know these meetings two to three years in advance, you plan them all out, there are mergers that come up, there are customer issues that come up, there are succession issues, CEOs get ill, they might need to be replaced, so you need to really have flexibility. So, if you’re somebody who’s got a full-time job and say that I could only attend these meetings and nothing else, you probably shouldn’t be on a board at that point in your [00:20:00] career. The most boards I was on was three boards and it was difficult, but the only reason it worked for me is they had three different fiscal year ends. It worked that way because I was on the audit committee and all that heavy time of the end of the year and the end of quarter, it just happened to work out well for their reporting schedule.

Raza: I think it comes back to what one of our colleagues said that being on a board is not an honorific position. It is a real responsibility. It involves a lot of time, commitment and effort. Be aware of that and don’t take board positions just for the sake of it.

Pam: Anybody who’s been involved in an activist situation where there are a lot of unplanned calls will tell you that you may think that you’re being paid a lot, but you might be paid less the minimum wage when you start trying to figure out the hours, which none of us like to do.

Joe: 24/7 in some cases, it’s crazy. So, along the lines of the increased responsibilities of board members, one [00:21:00] thing is with all the issues that we. now have for boards, it’s really incumbent upon the board member themselves to stay on top of the issues that are impacting their company. What kinds of things should board members be expected to do? How much comes from the company and how much is really up to each individual board member to make sure that he or she is up to date on the issues that are impacting the boards they sit on.

Pam: I think that you get a lot about the industry from the company and the company can really tell you what they’re facing, what they’re seeing with their customers, et cetera, and you may want to do some outside education on that. But I think that where the areas where we have a lot of resources are on the governance side and a lot of the issues with public company reporting, and so what you see is you see that, for example, National Association of Corporate Directors, which is the largest domestic director education group.

I’m a member of Women Corporate Directors. As you mentioned, we have very good conversations [00:22:00] there. The auditing firms all have board excellence centers. They have great programs. The law firms have very good programs. In fact, you could spend a lot of your time, in fact, some people say most of your time, just being educated. But it really is interesting to hear other directors and what they’re facing because I’ve learned a tremendous amount from not just my fellow directors in my own boardrooms, but from other companies and hear about what they’re facing.

Joe: Yeah. And when you think about it, it makes perfect sense. I mean, your board may be great, but it’s only so many people. So, having a broad group of board members who may have faced different things seen and had to address different risks, for example, incredibly valuable. One thing you brought up before is that from the perspective of the CEO, the work that senior management has to put in for these meetings is significant, and so the expectations of the CEO and the management team are also [00:23:00] significant. It’s not nothing how much are getting paid. I think you said if you have 10 board members and they’re making 250, 000 a year in stock and equity, that does add up. So, what are the expectations of the CEO and senior management? How has that changed?

Pam: Well, I think in some ways they’re finding us more critical, so I think we have to be careful how we provide our criticism. But I think it’s best expressed by one of the CEOs that I work closely with who told me that we need to do as directors is not to tell him what to think, but what we should be thinking about, and so I think that really a challenge for directors is how to add value.

Joe: I think that is a great way to frame it too. Thank you for that. One of the things you’ve talked about is how you really devoted time to helping with board governance and you’ve done that with Center for Women in Enterprise, NACD’s New England chapter, where you’re on [00:24:00] the board, and some other organizations as well. Could you tell us a little bit about that, because I think part of being a board member is the responsibility to help generally the board member pool out there and to make sure that you’re kind of giving back a little bit.

Pam: Well, I know that there are a lot of women who grew up in a time where there weren’t a lot of women on boards. In many cases, I was the first woman on a board. I’ve never been the last woman on a board, and so I have worked with other women to help get women educated and to make them ready to be on board. So, we’ve seen a lot of the accounting firms, a lot of the universities, have programs to train women to be on boards. It’s interesting that not many men take advantage of this opportunity to be trained for boards.

Joe: Is that true? You don’t think men are doing as much as women?

Pam: I think directors are, but if you go to NACD New England’s events, you’ll find generally [00:25:00] these days more than 50% women, and maybe we’re just lucky in New England, we have a lot of highly educated board directors here, but I think that all of us really need to have an open mind and look for ways to learn more about governance.

So it’s not just I go into these meetings, not what am I going to tell you, but here’s what I know what do you know and learn about this, and I think that a lot of directors, it’s an informal network, women and men, where if you face a tough issue, you may call up a trust advisor and talk to them about that topic, “Have you seen this before?” Whether it’s a difficult CEO health problem, whether it’s a succession issue, whether it’s a activist situation, I know that when I’ve known people in activist situations, I’ve called them up and contacted them and said, “Look, hey, I’ve been in this place before, and I know three other directors who’ve been in this. Would you like to talk to us individually about ways that our boards handled the situation?” Because sometimes these things can get very emotional and they really shouldn’t be. [00:26:00] They’re just issues that need to be unpacked and discussed.

Joe: It’s a great way to think about it. Really appreciate that. Thanks. Pam, it’s been great speaking with you today. Thank you so much for joining us on On Boards,

Pam: Well, thank you for having me.

Joe: And thank you all for listening to On Boards with our guest, Pam Lenehan.

Raza: Please visit our website at OnBoardsPodcast.com. That’s OnBoardsPodcast.com and we’d love to hear your comments, suggestions, and feedback. And if you’re not already a subscriber, please be sure to subscribe at Apple Podcasts, Spotify, or wherever you get your podcasts. And remember to leave us a five-star review.

Joe: Please stay safe and take care of yourselves, your families, and your communities as best you can. We hope you’ll tune in for the next episode of On Boards. Thanks.