06/08/2009

By Katie Wagner

Pressure to make changes to boards has increased since the financial crisis began, especially for TARP participants, say board recruiters.

During May, 11 of the 39 director departures occurred at boards whose companies participate in the Troubled Asset Relief Program, according to research using Audit Analytics' database. (The research is based on companies with $3 billion or more in revenues.) TARP participants that announced losses of directors last month include American International Group, which reported that three of its directors were not standing for reelection; PNC Financial Services Group, which announced that one of its directors was retiring; and GMAC, which reported that five of its directors were resigning. Government pressure on TARP companies likely played at least some role in these departures, say director search consultants.

Overall last month, 72 director departures and appointments occurred at all companies included in the report using Audit Analytics' database.

The economy is forcing board composition to be taken more seriously and for boards to look more carefully at the skill sets they need to succeed in the long term, says Dora Vell, CEO of Vell Executive Search. And the stresses on TARP participants are likely even greater, she adds.

Under increased control and pressure from a combination of Congress, the Treasury Department and the White House, boards taking TARP money are re-engineering themselves because their boards are viewed as having failed, says Steve Mader, a board recruiter with Korn/Ferry International.

There's also public pressure on TARP boards to account for the taxpayer money the government has invested in their companies, adds Vell.

Recruiter's Tip

To attract good directors in today's economy, boards need to be transparent about the risks their companies are taking and focus on building relationships with potential board candidates, says Dora Vell, CEO of Vell Executive Search. "You may want to start planning out your board for 2011 now," because right now it's harder to attract CEOs and other desirable board candidates than it used to be, for a variety of reasons, says Vell.

Director Moves From May

Note: companies with revenues of at least $3 billion; list doesn't include filings in which companies specified the move was a re-election; Source: Audit Analytics database

Dora Vell is the CEO of Vell Executive Search, a premier retained technology executive search firm in Boston. Ms. Vell is an internationally recognized expert in executive search for technology CEOs, COOs, CIOs, Vice Presidents and board members. She works with start-up organizations through Fortune 50 Firms. She can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it