| Agenda - July’s Moves: Financial Expertise Still at a Premium in Director Recruitment |
08/10/2009By Katie Wagner The financial crisis has underscored for boards the importance of recruiting directors with financial expertise. "With all the bank failures, the need for governance of the books has to increase," says Dora Vell, CEO of Vell Executive Search. Indeed, at least seven directors appointed to fill board seats at large companies in July have financial or accounting backgrounds, including current and former CFOs and CEOs of public, private or subsidiary companies. Such appointments could indicate that boards are feeling pressure to improve the composition of their audit committees. "The requests coming from boards is that they like to have people with financial backgrounds to go on their audit committee, even if they're not going to join that committee immediately," says Betsy Bruening a board recruiter, who heads The Prout Group's board practice. In all, July saw roughly 32 director appointments and 26 departures at companies with $3 billion or more, according to Agenda research using Audit Analytics' database of director moves. The premium placed on financial expertise for audit committees goes back to Sarbanes-Oxley, which handed audit committees new responsibilities and rules focused on committee composition. Specifically, audit committees without a designated financial expert have to explain why they don't have one. Some of the new directors appointed in July will join audit committees immediately. On July 9, Host Hotels & Resorts expanded the size of its board and audit committee by one person and appointed two new directors, Willard Brittain and Gordon H. Smith, both of whom will sit on the audit committee. The appointments followed the May 26 departure of Judith McHale, who served on the audit committee. (McHale resigned to serve as undersecretary for public diplomacy and public affairs at the State Department, according to a Form 8-K filed on May 28.) Brittain, a former partner of Pricewaterhouse Coopers, and Smith, a former U.S. senator, were recruited to the board and the audit committee because of their financial experience, says John Morse, chairman of Host Hotels' audit committee and a member of its nominating and corporate governance committee. The new directors' financial experience includes Brittain's stint at PWC and Smith's leadership roles at Smith Frozen Foods, a private company, according to Morse. Brittain also chairs Tutor Perini's audit Citigroup, meanwhile, continues to seek out financial experience for its board. The company appointed Timothy Collins, CEO of Ripplewood Holdings; Diana Taylor, managing director of fund manager Wolfensohn Capital Partners and former superintendent of banks for the New York State Banking Department; and Robert Joss, a dean and professor at Stanford University's Graduate School of Business and former CEO of Westpac Banking, to its board, according to a Form 8-K filed on July 30. Collins will also serve on the board's audit and risk management committee. "Companies consider it usually best to have someone [on an audit committee] who served as a CFO or spent their whole career in finance, or had served on an audit committee or had a heavy accounting background," Vell says. CEOs are also good candidates to serve on an audit committee because the finance function of their companies reports to them, making them technically a financial expert, Vell adds. Director Moves From July
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 |
