Diligent Institute conducted extensive interviews with over two dozen experienced directors from different sectors, geographies, and backgrounds on how modern governance practices and behaviors are changing in response to the pandemic and its impact, which boardroom changes might be permanent, and directors’ most important lessons learned. This opening segment provides a compilation of director responses to questions about the pandemic and what it means for modern governance going forward.
How Has the COVID-19 Pandemic Changed Corporate Governance?
COVID-19 impacted almost everything about our daily lives, including the way people work and operate in the business world. As we approach a full year of COVID-19, we asked directors how board governance has been changing as a result of the pandemic. The following are some of the most significant and frequently discussed changes that came up in director interviews.
Directors Are Learning How to Use Virtual Meetings to Their Advantage
Directors are working hard to adapt to virtual meetings. For many, adjusting to the dynamic of a board meeting without in-person interaction was challenging. However, as we move into the 10th month of COVID-19, directors are finding some unforeseen benefits.
“The biggest adjustment has been virtual meetings. Directors have had to go through a learning process with technology and various platforms, but it has taught us about how to have productive conversations when we can’t be with one another in person. We’ve learned how to let everyone speak without interruptions and how to signal that we want to say something. For the boards with international members, we have adjusted our schedules because of time zone differences. We have moved committee meetings to the weekends, and instead of two full days of meetings, we do three morning meetings … For global boards, it’s been an adjustment as well.” -Anna Catalano
“Virtual meetings do not come naturally to board members. We received more information beforehand than we used to. The actual meetings were more organized, with people raising hands before speaking, for example. The end result was that even though virtual meetings go against the grain, they became very efficient in terms of timing and topics as well as being much more flexible. Our chairman was able to send out meeting requests so that we could respond more quickly to any issues that arose.” -Rafael Cerezo
Directors Stand Firm Behind Increased Meeting Frequency and Information Flow
Due to the nature of the pandemic and how quickly the impacts on business change, directors commonly cited an increase in meeting frequency and information flow. For the directors we spoke with, this change was and still is absolutely necessary for successful pandemic management.
“More than ever, we have to stay up to date on relevant, evolving issues. As board members, we have to do more reading and research outside of the normal company or industry updates. We have to keep up on changing news and facts surrounding the pandemic, social unrest, and political situations so we can have deliberate and intentional conversations on how any of these might impact our business. You want your organization to be proactive instead of reactive and help the CEO and executive leaders be ready for the unexpected.” -Brad Neilley
“We have decided to meet with a much faster cadence. Rather than the typical quarterly board meetings interspersed with committee calls and meetings, we chose to meet monthly to make sure we were keeping up as significant new information was coming in. We were in frequent discussions to make sure that the board and management were in sync and informed.” -Donna Wells
How Have Director Roles and Responsibilities Changed as a Temporary Crisis Became Permanent?
During initial crisis management in March, our conversations with directors indicated that the lines between management and the board had blurred in some cases. As a result of the unprecedented nature of the pandemic as well as its sheer scope and magnitude, directors rolled up their sleeves and took a hand in dealing with some operational-level issues to ensure management was not overwhelmed. We asked directors how this relationship had evolved in the last six months.
Directors Are Shifting Back into Long-Term Strategic Management with a COVID-19 Lens
It is clear the pandemic will disrupt normal operations well into 2021. Directors have had to make yet another shift: out of crisis management and into a precursor of the new normal of board governance.
“We’ve had to shift focus to figure out when we can get back to normal. That has not been answered yet. The sentiment that ‘we can wait to handle certain issues until COVID-19 is over’ doesn’t work anymore. The temporary mindset of March and April has changed, and we’re shifting back to look at the long term. Specifically, for highly regulated companies, there are things that cannot be put off. So the question becomes, how do you accommodate decisions that cannot wait in the current climate?” –Lea Ray
“The pandemic has changed how we prioritized the short term. We had a crisis committee and a COVID-19 committee looking at our employees, clients, and cash. It was a short-term way of governing. Then when it became clear that this would be a U-shaped recovery, it was more about shifting back to long term. Now we are looking at how we handle going back to work. I’m a member of the audit committee, and we were looking at performance and security measures for people coming into the office and avoiding public transportation. Now we are in a stage where the new normal has become normal, so it’s becoming more about managing business as usual while taking advantage of any opportunity that arises in the short term. For example, you may have M&A opportunities because many companies did not have sufficiently strong balance sheets to withstand the pandemic.” -Rafael Cerezo
“Boards are trying to figure out the tension of ‘nose in, fingers out’ in a world where no one has answers. Management has been asking lots of questions, so it has been difficult for directors to know when to lean in and when to leave management alone. This dynamic is changing right now. I always say, ‘Nose in, nose in’ twice. Keep the fingers out! This line is blurring right now because of the uncertainty of overlapping situations: COVID-19, racial equity, economic deterioration in many sectors faster than expected, natural disasters due to climate change, and so on. Directors need to bring up different possibilities for the future: Have you considered this option? What are we considering as a response? How has this changed? It may feel more intrusive, but you need to push nose in. Now it’s more important than ever to explore the assumptions and possibilities behind each decision.” -Phyllis Campbell
- Board Practices |
- Corporate Sentiment |
- Cyber Risk |
- Digital Transformation |
- Director Perspectives |
- Diversity, Equity and Inclusion |
- Economy |
- Environment, Social, Governance (ESG) |
- Executive Remuneration |
- Governance, Risk and Compliance (GRC) |
- Modern Governance |
- Stakeholders and Governance |
- Year in Review
Meet the Panelists
Phyllis Campbell is the Chairman for the Pacific Northwest region for JPMorgan Chase & Co. Previously she served as the president and CEO of The Seattle Foundation - the largest community foundation in Washington. Phyllis has served as an independent director for Alaska Air Group from 2003-2020. She previously served on the Nordstrom board of directors. She currently serves on the Diversity Advisory Board of Toyota and is a board member of SanMar. Phyllis is chair of the board of the US-Japan Council, as well as a member of the global advisory board of Women Corporate Directors. She serves as board member of the Allen Institute.
Anna C. Catalano has over 30 years of corporate experience and manages a diverse board portfolio, serving as member of the Board of Directors for Willis Towers Watson, Kraton Corporation, HollyFrontier Corporation, Frontdoor, Inc., and Appvion. In the not-for-profit sector, she is a Board Director for the Houston Grand Opera, President of the National Association of Corporate Directors Texas TriCities Chapter, a Co-Founder of The World Innovation Network, and a former national Board Member of the Alzheimer’s Association. Ms. Catalano is an expert on the topics of global business, board governance, strategic branding, and an outspoken champion of women in business.
Rafael Cerezo holds a degree in economics from the London School of Economics and an MBA from the University of Columbia. He worked for The Boston Consulting Group from 1977 to 2008, holding various positions including founding Partner and Director of the Madrid office, European Executive Chairman, and member of the BCG Global Executive Committee. He is a member of the Boards of Puig, Flamagas, Aubelia (Uriage), and ISDIN. Advisor in the Advisory Board of Exea as well as a Trustee in the Board of Trustees of the Anti Drug Foundation.
Brad Neilley is currently a Board Member at Princeton International Technology and a Board Trustee at William Patterson University. Prior to this, Brad was Senior Vice President at Avalon Bay (the largest multifamily REIT) and previously Worldwide Vice President and a member of three company Management Boards at Johnson & Johnson. He also holds an MBA in International Business.
Lea M Ray is a Chartered Professional Accountant, ICD.D certified director and a seasoned board member. Lea has served in multiple board leadership roles including Chairman, Vicechairman, Lead Director and Audit Committee Chair on a variety of publicly-listed, public sector and non-profit entities. She is a former executive, Vice-President Corporate Finance, of Warner Bros. Entertainment Canada Inc. and former member of the Professional Conduct Committee of the Chartered Professional Accountants (Ontario).
Donna Wells has a decade of corporate governance experience and currently serves on two public boards: Mitek Systems (MITK) and Apex Technologies (APXT); and two private boards: Betterment and Happy Money. She previously served on the board of Boston Private Bank (BPFH). From 2010 to 2017, Donna was CEO of Mindflash Technologies, a private, enterprise software company. Prior to Mindflash, Donna led US marketing for both Fortune 500 companies, including Expedia and Intuit, and for digital disruptors such as Mint.com, where she was the founding CMO. She teaches entrepreneurship at Stanford’s Graduate School of Business and resides in Northern California.
Dawn Zier is an independent board director and accomplished CEO best known for engineering a remarkable turnaround of the iconic brand, Nutrisystem. Throughout her career she has successfully architected and led enterprise-wide transformations propelled by innovative product and marketing breakthroughs. Dawn currently serves on the Board of Directors of Hain Celestial Group (Nasdaq: HAIN) and Spirit Airlines (NYSE: SAVE), where she chairs the Nominating and Corporate Governance Committees, as well as Prestige Consumer Healthcare (NYSE: PBH).