The Governance Challenge: A View From the Boardroom

In the post-Sarbanes-Oxley (SOX) world, board members face multiple challenges that they must address if they are to fulfill their fiduciary duties. Having a former top corporate executive and experienced board member address these challenges provides a wonderful window of opportunity for current and prospective board members.

Recently, I was able to interview a prominent board member, Martin Coyne II, and ask him some questions about board service in this post-SOX era that we live in. Marty Coyne is an experienced board member and adviser to boards and CEOs. He is currently lead independent director on the board of Akamai Technologies and also serves on the boards of OpenPages and Avecia, both privately held. He is the author of How to Manage Your Board While Your Board Manages You. He is also the chairman and founder of CEO Learning Network.

Theodore F. di Stefano: What would you say is the biggest challenge facing a board member today?

Marty Coyne:

The expectations for boards and directors have radically changed over the past several years. The new performance standards create significantly increased workloads in meeting preparation, meeting length and expanded agendas for the board as a whole and for each committee. The recent economic downturn coupled with rapid technology changes also places additional strain on directors. All of these changes require directors to continuously evaluate the amount of time they are spending on ensuring regulatory compliance while discussing business strategy and supporting their CEO.

di Stefano: Serving on the board of a technology company seems to be particularly challenging because of the rapidly evolving dynamics of the technology sector. How do you and your fellow board members address this challenge?


Technology continuously evolves, affecting the competitive position of many companies in rapidly changing markets. The boards I’m on, as well as many others, have devoted more time to improving their understanding of their business and competitive environment. Parts of board meetings are now devoted to specific discussion and education of board members on technology, competitors, and consumer behaviors. These topics are also routinely incorporated in operational reviews and strategy discussions. Additionally, good companies routinely distribute relevant third-party market assessments to their directors and encourage directors to periodically meet with members of senior management as well as important customers in order to help them better understand the rapidly changing technology environment.

di Stefano: Would you describe what you feel would be an ideally composed board? For example, a person with specific industry experience, a high-profile individual, a person with a strong financial background, a person who is known as an excellent strategic thinker, etc.


Each board is different, and all of the skills listed in your question are very important. The nominating and governance committee of each board should lead an annual process to define what director skills and experiences are needed to enable the board to provide the proper level of corporate governance as well as to provide help and support to the CEO based on the board’s approved business strategy. Current board member skills and experiences can be matched against the desired skills and experience to uncover gaps that need to be filled through adding new directors or replacing existing ones. Good boards include their CEO in all phases of this analysis to ensure maximum support for the CEO.

di Stefano: There are times when a board member should resign because of ethical or legal concerns. Could you describe situations where a board member would be wise to resign?


This is always a very personal decision. The things that would cause me to carefully consider if I would continue to serve on a board are my agreement with corporate values, my agreement with the business strategy, the contribution I am making to the board, and my personal and professional growth as a director. Financial improprieties, excessive risk taking, deliberately misleading information from management or serious value violations would cause me to seriously consider submitting my resignation.

di Stefano: In what specific ways would you say that a board member could best serve his board?


Annually, each board member should … be able to honestly and objectively answer one very simple question: How am I adding value to my board? If the answer is clear and specific, that director is adding value. If this question is difficult to answer or the answer is short on specifics, the director should seriously consider resigning or not standing for re-election until he/she is confident that good value is provided to the corporation. Every director, regardless of the type of board, should always be prepared for meetings, devote the necessary time to understand the business of the corporation and actively participate in all board and committee discussions.

di Stefano: In all of my writings on corporate governance, I have stated that a board member’s primary fiduciary responsibility was to create value-added to best serve the stockholders. I have also described a board as a firewall, of sorts, between the stockholders and management. Do you agree with my assessments, and could you possibly add to them for the readers’ edification?


A director is charged with maintaining and creating shareholder value. In today’s governance environment, I think it’s prudent to consider how boards and individual directors can provide increased transparency to investors rather than just being the firewall as in the past. Investors must regain trust in corporate management teams. Boards and directors have a key role to play ensuring information transparency and accountability to investors.

di Stefano: Thanks, Marty, for sharing your knowledge and experience with us.

Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at [email protected].

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