Guest post: Kristina Veaco, corporate governance consultant, Veaco Group.
Electronic delivery of board materials has been around for several years, in part because of the savings it offers in terms of time spent preparing physical board books, the quantities of paper and binders, and the inevitable security issues tied to physical delivery of sensitive board materials. The adoption and acceptance of electronic delivery of board materials increased significantly with the advent of tablets such as the iPad.
The iPad added a “coolness” factor and also made board information more portable. Busy board members didn’t carry around laptops that they could easily access in the same way they do tablets. Additionally, service providers developed apps for the tablets so that local copies of the confidential information can be accessed on the device and then wiped clean after some pre-set time. If the device is misplaced or stolen, the information remains secure. Apps also allow viewing board materials without internet access. This particularly important when internet access is access is not available during a meeting and could also be important to directors’ ability to focus on the work at hand in meetings, instead of sending e-mails or visiting other online sites.
There are several providers of electronic delivery of board materials. Each company decides which works best for them. BoardVantage and Diligent BoardBooks were early entrants as “pure play” providers, meaning secure electronic delivery of sensitive information is what they do. Thomson Reuters BoardLink, Nasdaq’s Directors Desk, Computershare’s BoardWorks, ICSA’s OnBoard and a few of the other service providers have developed their board portals to supplement other services they provide to companies. Directors Desk servers had a security breach last year that allowed hackers access. It is not fully known what, if anything, occurred as a result.
Security around the delivery of sensitive board materials must remain a top priority for any method of delivery. Some companies haven’t taken prudent precautions and continue to send sensitive board materials via email.
When I was in-house, exploring service providers for secure electronic delivery of board materials some years ago, I involved our IT department in the conversation, which is always important. They wanted the ability to test the security of any system we were contemplating. My CIO hired a third-party hacking company to test the provider we eventually used to make sure their systems were as described. A friend in the Corporate Secretary’s Office at a large well-known company recently had been working with one provider after a long selection process, but when her IT people discovered a 3 second window when information was not secure, and the service provider was not willing to adjust their system, my friend turned to another provider that was willing to address the issue.
The next issue should be ease of use, both for board members and the Corporate Secretary whose office administers the board portal. Availability of a vendor supplied 24/7 help desk can be critical for board members who may want to access data at any time of day. The look and feel of the product is critical, and the capability has to be robust. I was leery of systems that required an external device for passwords and preferred a multi-layered password system using randomly generated questions based on information only the directors would know.
To pull directors into the board portal, it should have other useful information, such as committee charters, corporate governance guidelines, white papers and legislative updates, among other things. I posted individual director compensation statements that only the director could see. Some companies post analyst reports, in addition to board and committee materials. Some use the portal to house board information as an archive.
My preference for a board archive was to keep information on the board portal for a year and to have another secure location under our control as the online archive for board materials. I also had secure paper files for all board meeting materials housed in fireproof cabinets along with the minute books. Some companies have moved to electronic delivery of board materials exclusively. I think it important to be respectful of directors’ work styles and some really require paper, whereas others are happy to view all of the materials online. With electronic delivery the board members can usually print out particular items if they choose to, although many systems allow that to be blocked if desired for security reasons.
The Society of Corporate Secretaries and Governance Professionals has tips on rolling out electronic delivery of board materials prepared by those who have successfully done it, and I am also happy to talk further about this as well. I can be reached at email@example.com.
Comments: Excellent points here Kris, and I can’t agree more that security and ease of use are the primary considerations with board portals. If the company behind the application doesn’t provide the highest levels of security, how are you effectively eliminating the security concerns of sending paper board books? It’s also absolutely critical that your portal is easy to use, which results in the highest level of adoption from your directors.
The volume distributed and delivery timeframes are also key considerations with portal technology. Steve Shapiro from Pircher, Nichols and Meeks is conducting a webinar on December 12th to advise on this, and you may register free at the CGS website: The Role of Technology in Creating a More Effective Board of Directors.” Brian A. Smith, Business Development Manager, North America, Computershare Governance Services (CGS).
Additional comments from readers are welcome.