Boards of Public Companies are Different
In a recent Korn Ferry posting regarding the plans by Uber and Lyft to do initial public offerings (IPO’s), they provided one of the most succinct and on point descriptions of the changes of that will confront their Boards. I’ve captured some of the most important considerations below, which can easily be generalized to any company that is “going public”.
Guiding Principle: In the transition, Boards are likely to need reorganization and in some cases changes in directors and executive leadership expertise
Reorganization: New Committees
If not already in place, Audit and Compensation committees will need to be created.
Director Choices and Changes: Independence
Boards will be tasked with a greater level of “independence” among its Directors. The posting points out that in the securities industry, regulations require that the majority of Board members be “independent”. At a minimum, Board members will not have a say in day-to-day operations.
The Trickle Down to Executive Leadership: Investor Relations
There will be an increasing premium on sophistication in communicating information to stakeholders. This often means creating or strengthening Investor Relations capability. These IR experts need skill in talking with stockholders and financial executives who understand public capital structures.
Guiding Principle: Public company leaders – including the Board – will face more scrutiny about the organization and increased communication requirements about company issues and decisions.
Beyond publicly sharing financial information with investors and regulators, the Board will need to be serve as an organization’s knowledgeable voice on topics such as major litigation against the firm and executive compensation decisions.
Korn Ferry, This Week in Leadership, December 13, 2018