Research to do before joining a board: while no amount of due diligence can avoid every problem, the more you do, the better you are likely to feel about your ultimate decision.

• Author: Behan, Beverly
• Position: DIRECTOR RECRUITMENT

SERVING ON A board of directors today means investing more time and effort in the board's affairs than ever before. A recent National Association of Corporate Directors survey found that directors spent an average of 185 hours a year on board affairs, including board meetings, committee meetings, preparation time, and off-line discussions. Moreover, accepting a board seat is typically a long-term commitment. Even if directors are re-elected annually, board members are generally expected to serve a minimum of five years, and many serve much longer. Consequently, before saying "yes" to a board invitation prospective directors are doing more due diligence than ever. What follows are some things you can do to get greater insights about any board that you are invited to serve on--ideas that have been helpful to other directors in making board choices.

Public information about the company

Company Profile, Web Site, Financial Reports, and Analysts' Reports. The most basic research starts with a Hoover's profile or similar corporate profile to get a snapshot of the company--its recent performance, and an overview of some key corporate issues--supplemented by the latest annual report and most recent quarterly statements. Ordering some recent analysts' reports on the company--particularly by any analysts you may be familiar with--can also give you some useful insights into how Wall Street regards the company.

Most company Web sites include biographical data on the board and the management team. NYSE and Nasdaq-listed companies are required to publish the charters of their audit, compensation, and governance committees, and NYSE-listed companies must also publish their corporate governance guidelines. While some charters and guidelines read like boilerplate copy, that in itself is telling. How engaged is this board, anyway? Do important responsibilities appear to be missing from any of these charters? How do they manage executive sessions--are they held after every board meeting, or only a few times a year? Is there a lead director? How do they describe the board's involvement in CEO succession planning and strategy--arguably two of the most important things boards oversee?

News Reports on the Company for the Past 18 Months. One director we knew who was considering a board invitation conducted a quick Internet search of news reports on the company. She turned up a Reuters article about a disgruntled ex-employee who filed a complaint with the SEC about the company's accounting practices. The Reuters story had appeared the day before her phone had rung with an invitation to join this company's board and chair the audit committee.

Annual Proxy Statement. Probably the most crucial public document of all to review is the...