Ana Dutra: How did you get your very first board seat? Tell us your story.
Roel Campos: Getting the first board seat on a public company is actually a classic conundrum. Let me explain. Many public companies require board director candidates to have served previously as a director on another public company. If that is a requirement, how does one ever get that first directorship? In one director search, I made the final round for a board director position on a Fortune 10 company, only to be told that despite my excellent credentials and experience, the board had chosen another candidate who brought the experience of serving previously on another public company board.
My first public corporate board position came through a traditional recruiting firm that contacted me, inquired about my interest, and had a public company client who was looking for someone like me who had regulatory experience, given that the company operated in the health care insurance world. The company had a prior regulatory issue, and the board believed someone with my background could help and demonstrate to regulators and investors that the company was totally committed to compliance and integrity in their processes.
One area that I recommend looking into is becoming an advisor to private equity funds. When a private equity fund invests in a portfolio company, there comes a time when a board needs to be established—often in anticipation of the company going public. The directors on the board of a company going public need to fit the listing standards of independence, and being previously on that company’s board when it was private allows for the director to be carried over into the post-IPO and begin on that company’s board.
Ultimately, public-company boards need to be more flexible regarding the requirement of prior service on a board. An otherwise well-qualified individual should not be rejected simply because he has not had prior service on public-company boards.
AD: Tell me about a time when you felt that your perspective as a Latino changed the outcome of a discussion in the boardroom.
RC: On several occasions, the discussion in the boardroom led me to point out opportunities for valuable business for the company from potential Latino customers. In one situation, the growth of consumer finance for the company was occurring within the Latino population in several regions, yet friendly accommodations were not being made. Items of improvement that were made included having office staff who were fluent in Spanish, having contracts that could be read by a Spanish-speaking customer, having Spanish signage, and having the company consider advertising in Spanish media. For another company, providing health care is the main business. The particular needs of Spanish-speaking patients needed to be taken into account. Also, telephone center employees needed to be able to speak the type of Spanish spoken in the United States.
In this vein, I once said to a high Disney official, “Who do you think will be in the movie theaters in the next few years watching your animated movies?” I was referring to astounding statistics that over a third of US births in are or will be soon be Latino babies.
AD: What advice would you give to aspiring directors who are experiencing a difficult time getting into their first board role?
RC: First, don’t get discouraged. Assess carefully what your qualifications are. Is there a particular industry that you know well? Do you have unique skills, such as public accounting and auditing or familiarity with a particular regulator that deals with certain industries? Do research and find from websites who is the chair of the nominating committee of the board for a company that you feel you are well-qualified for. Contact the chair and send your résumé with a letter making the case why you would be a good fit and how you bring value to the board. Also, seek out people you may know who serve on boards and discuss with them your interest. Just like getting a job, having someone on the inside helping you can accomplish the most.
As I mentioned above, private equity provides opportunities for potential board members if you can be a director on a private company prior to its IPO.
Looking for nonprofit boards to serve on can also lead to opportunities. Most nonprofits need directors to help raise money for the cause, and this activity, while often frustrating, can lead to you meeting executives and others who might be helpful in you finding a public-company board.
Less productive, but probably worth doing, is to research and find individuals in the large recruiting firms used by boards—Heidrick & Struggles, Korn/Ferry, and many others—that focus on recruiting minority board directors. Try to have a discussion with them and send your letter making your case.
Private companies also need boards. Look for those opportunities. These can provide valuable experience and lead to other public-company board opportunities.
AD: What potential risks and liabilities should director candidates consider before pursuing a board role?
RC: With public companies, the odds of facing a shareholder lawsuit are high. In fact, if the share price drops 15 percent or more, class-action lawyers will almost always file lawsuits against the company and directors claiming inappropriate disclosures of prior problems. Many of these lawsuits are not meritorious but cannot be easily dismissed. A director must insist on sufficient D&O insurance.
Of course, the director candidate must ensure that the company’s management and its directors are committed to high standards and integrity but also have the skilled officers in the accounting and compliance areas to minimize the chances of mistakes, restatements, and incomplete disclosures in the filing of quarterly and annual reports.
The board should be careful in dealing with controversial issues that affect shareholders and share price. Getting outside counsel and other professional advice before taking action is good practice for a board.
Dealing with lawsuits is very distracting and time-consuming. This is an unpleasant experience that many directors have to endure.