Q. Board renewal is becoming a hot topic amongst our board, and I was wondering about proper board composition. What recommendations do you have?

A. Getting the composition of a board right is neither easy nor free of controversy. On the one hand, proponents of Sarbanes-Oxley Act-type rules would like to see an overwhelming majority of "independent" directors on a board, perhaps even every director. On the other hand, many practitioners and organizations argue that today's push for fully "independent" directors can lead to board members without sufficient knowledge or expertise about the business, industry or governance to effectively discharge their oversight and control responsibilities.

A solution that we view as best practice is to intentionally craft a board that weaves together quite different perspectives, interests and backgrounds.

An intentional process of crafting the "right" board would follow these steps iteratively:

•  Widen the talent pool

•  Think strategically about the skill mix

•  Raise the performance bar

•  Insist on an education process for Directors

•  Be realistic about compensation

Then a candidate search would take place, anchored by a Nominating Committee independent of both the management and shareholders. Fundamental qualities sought in every board candidate include:

•  Intellectual capacity

•  Able to understand the business and its performance drivers

•  Interpersonal skills: team player / leader

•  Good business instincts / judgement: street smarts / commercial acumen

•  Genuine interest

•  Commitment to contribute

•  Integrity

Finally, a list of candidates is crafted to ensure balance of viewpoint, background and therefore composition on the board:

•  2-3 Directors whose strength is to keep the other board members out of trouble i.e. accounting, financial, legal

•  1-2 Directors with operational experience in areas of major risk for the business i.e. treasury, environmental

•  2-3 Directors with good track records as CEO – know what it is to lead, articulate a vision, manage change

•  1-2 Directors, not necessarily CEO's, with relevant business experience (be prepared to manage the trade off between “independence” and “knowledge”)

•  1-2 Directors with specific skills and knowledge – i.e. geographic markets, developing corporate strategy, technology investment, brand management, regulatory process etc.

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