Two Directors Give Insight Into Their Oversight Roles

The role of the board of directors of a public company is clear cut: they are the representatives of the shareholders who make sure management decisions are in the best interests of the investors. The philosophy behind the membership of those boards isn’t so clear cut and is still evolving. Whether a chief executive should also serve as board chairman, the diversity of the directors, and just how independent can the directors actually be are among the issues facing public companies. Deciding who gets to be a director rests with company management, other directors, and shareholders. Wherever a name comes from the motivation behind is often the same – to bring in someone with valuable business experience; with business connections; and a reputation that brings legitimacy to the company whose board they sit on. “That is why you have a well know person on your board,” said Nandini Rajagopalan, a professor of management and organization and Captain Henry Simonsen Chair in Strategic Entrepreneurship at the USC Marshall School of Business. “Putting someone like Warren Buffet immediately enhances your company.” But nominating directors just for their business (and social) connections isn’t such a strong motivator as it used to be. In the era following the Sarbanes-Oxley Act where there is more board accountability, there is more demand for financial and legal backgrounds for directors, Rajagopalan said. Many directors do not like to talk about their role on public boards. Below are two directors, C. Thomas Smith and Chuck Timpe, from IPC The Hospitalist Company, a public company in North Hollywood who were willing to talk about their responsibilities. Timpe is also on the board of CrowdGather Inc. in Woodland Hills. C. Thomas Smith Board Directorship: IPC The Hospitalist Company, North Hollywood Background: Smith was president and CEO of VHA Inc. from 1991 to 2003; form 1977 to 1991 he was President of Yale-New Haven Hospital and President of Yale-New Haven Health Services Corp. He has been past Chairman of the American Hospital Association and the Council of Teaching Hospitals. Along with IPC, Smith serves as a director for Kinetic Concepts Inc. in San Antonio and several other companies. Q: What made you interested in serving on a board of directors? A: Well, I have done board service over the past 25 years, starting with Genentech. All the boards are in the health care sector. I felt what I had learned about managing organizations might be valuable to the company and the leaders of those companies. I felt I could learn and make a contribution and meet interesting people, which I’ve done. Q: What is it about your background/ experience that makes you suited for a director’s position? A: In the health sector I worked for 42 years and 26 of those years as CEO twice. I felt having run a couple of large complex organizations I must have learned something along the way that would be helpful to them. Q: Do you see your role on the board as being more than just a representative of the shareholders? A: Certainly that is the ultimate reason you are there. However, by serving the shareholders you serve them well if you give good counsel and advice to those managing the enterprise, being aware of what is going in the industry , staying actively engaged in the company’s affairs so you understand what is going on and why. If you keep up you can make a contribution when challenges do arise. Q: What advice would you give to someone serving as a director for the first time? A: Learn the business, pay attention and show up. These days directors do not have to be told that. Directors are cognizant once you have this responsibility you have to take it seriously. Anyone who is privileged to serve in this role has been given that role because they have demonstrated success. They are people who are serious minded and they bear some personal responsibility for showing it. Chuck Timpe Board Directorship: IPC – The Hospitalist Company, North Hollywood; Crowd Gather Inc., Woodland Hills Background: Timpe spent much of his professional career as a chief financial officer with Hythiam, Inc., Protocare, Inc., a clinical research and pharmaceutical outsourcing company, and the National Pain Institute. He was also a principal in two private healthcare management consulting firms he co-founded, and corporate controller for American Medical International, Inc., and a member of Arthur Andersen, LLP’s healthcare practice, specializing in public company and hospital system audits. Q: What made you interested in serving on a board of directors? A: I was asked to be at Adam Singer’s company (IPC) when the company was formed. I was actively involved in the company from the beginning as a business consultant. I am currently on another public company board and would serve on others if I had the opportunity. Q: What is it about your background/experience that makes you suited for a director’s position? A: I have had over 40 years in public accounting and have served as a financial executive for private and public companies. My background is heavy in finance and public company finance. I bring a lot to a company looking for financial experience. Q: Do you see your role as being more than just a representative of the shareholders? A: That is the primary role in terms of governance. Particularly on a board I think every board member adds value based on prior experience. You have board members with a variety of backgrounds that can be helpful to the top managers and work with the management on the future direction of the operation. Q: What advice would you give to someone serving as a director for the first time? A: It’s important you learn a lot about governance practices. There is a lot of literature available and SEC guidance on how board members should treat their role on the board. In respect to governance it is important to keep up with the current literature, the current forms and what is important in that regard.