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Ron Culp, Managing Director, Citigate Sard Verbinnen
Naomi Gitlin, Communications Consultant

Announcing a New Board Member

Companies should treat the appointment of a new director as an opportunity to convey a strategic message to the market.

By Ron Culp and Naomi Gitlin

Ed. Note: Related to the subject of this Column of the Month, Directors & Boards is pleased to announce that Kelly McCarthy has been appointed editor of the Directors Roster, the special feature that appears in each edition of the print journal and the monthly e-Briefing that reports on the appointments of new directors. McCarthy is a skilled researcher and writer who served as an associate editor of Directors & Boards from 2000-2002. Now in its 11th year as a unique feature of D&B, the Directors Roster is the most comprehensive and detailed survey appearing in published form of companies that are adding new board members and of the executives who have been recruited as directors. The following advisory addresses some key considerations in communicating the news of a new board appointment. A longer version of this article appears in the First Quarter 2005 issue of Directors & Boards.

Given the ongoing, increasing focus on corporate governance, new director appointments are important news. Often, companies communicate this news directly to shareholders and other stakeholders -- employees, customers, the media -- going beyond what’s required in the Securities and Exchange Commission’s Form 8-K.

Why? A new director appointment may be an opportunity for a board to emphasize its enhanced independence (or accountability), reassure shareholders, or infuse the board with fresh, new thinking.

Initial determinants
A new board member announcement can be incorporated into external and internal communications vehicles. Which vehicles are selected depends on several factors, including:

• Backdrop: What is the context surrounding the new appointment? Is an outgoing board member being replaced? Is the board expanding in size?

• Existing Plan: What is the agreed-upon communications plan -- including goals -- for announcing the new director, and how will it be integrated into the existing communications program?

• Plan Approvals: Is the “vetting” process complete? Has the plan been reviewed and approved both by the company’s public relations and investor relations staff and by their counterparts from the company where the director may hold a management position?

• Key Messages: What are the key messages the company wants to deliver with the appointment of this new director? Who are the key audiences? Which communication vehicles can best send those messages?

• Agendas: Is there a hidden agenda behind the announcement? For example, is the board attempting to talk to regulators by making the announcement? Or has the director requested the publicity? If the latter, what are the director’s goals for media placements, and are they realistic?

• Media Audit: Has a media audit been conducted? Just as due diligence has been conducted during a new director selection process, it is important to conduct a quick scan of the media. If the newly appointed director recently appeared in an article on another subject, it will be more difficult to generate additional coverage on that person in the same publication.

• A Good Story: Does the director have a particular story beyond his or her appointment of interest to broader business publications -- or would that story be better told via local, regional, or trade press? Is there significance to this appointment beyond the credentials the director brings -- i.e., does the appointment increase the number of female directors, or members with a specific expertise?

Once these and other factors have been reviewed, aligning goals with existing communications vehicles is often the next step.

External initiatives
To leverage the news value of a given appointment, companies generally will distribute a news release via one of the paid business newswire services, which ensures the information is broadly available. In addition, some companies target the “executive changes” section of major daily, local, and business publications. The investor relations/public relations staff of a company may also reach out to reporters who cover the new director’s industry or company to ensure that they have the information firsthand.

If the director’s appointment merits more than a news release, a company may consider approaching a beat reporter to arrange an interview with the director for a broader story on a wider range of topics. Which publications are targeted revolves around the various factors outlined previously.

If reaching analysts is a chief concern, a targeted announcement to that audience with a news release and personalized cover note from the chairman or IR head can be an effective way to connect, in addition to the broad distribution of the news release.

Internal initiatives
While it’s fairly common practice to promote new board members to external audiences, few companies leverage that news with internal audiences. But companies may be missing an opportunity by not maximizing the news of a new director.

For example, companies can engage new directors as ambassadors for a variety of corporate initiatives. Perhaps a new minority director is invited to speak with employees about developments in a corporate diversity program.

A case in point: Soon after Hugh B. Price and Raul Yzaguirre were appointed to the board of Sears, Roebuck and Co., they joined CEO Alan Lacy for a meeting with Sears’ 200 top managers on the topic of diversity. Lacy, Price, and Yzaguirre engaged participants in a discussion on the business logic and importance of diversity issues. Their participation at that initial meeting sparked an enhanced focus on the company’s diversity program and its diversity councils.

A board member also might participate in a town hall meeting with employees on an issue impacting the company or the industry.

Employing the company’s intranet offers another tool to announce a new board member throughout the organization. A Q&A with the new director posted on the internal site will help demystify the director with the internal audience and help extend a message, punctuate a principle, or reinforce a key corporate theme. Employee print publications also can serve as a forum for highlighting a new board member.

Beyond the 8-K
The staff and the new directors -- in their role as ambassadors for the company -- must use several tools in their communications “toolbox.” These tools include key messages, an understanding of how the press works, and the ability to tell a compelling story.

Combined, these tools will help management and new directors move beyond the formality of an 8-K disclosure to maximize existing corporate communications and investor relations initiatives.

Ron Culp is managing director and heads the Chicago office of Citigate Sard Verbinnen, a firm that provides strategic corporate, financial, and crisis communications counsel and services (www.sardverb.com). Naomi Gitlin is a communications consultant based in Chicago. The authors can be contacted at rculp@sardverb.com or ngitlin1@aol.com.