Denver Business Journal
February 20, 2004
IN DEPTH: CORPORATE GOVERNANCE
The invisible board member
New laws make filling board seats difficult
By Cathy Proctor
In the fallout from myriad corporate scandals that run the gamut from the Enron Corp. debacle to Martha
Stewart’s investment decisions, who sits on a company’s board of directors is becoming more and more
But the requirements for being a member of the board is also changing as the new Sarbanes-Oxley law
and other rules take effect.
The net effect is that it’s harder to find a board member these days than in the past, according to surveys
and search firms.
“Absolutely, its harder,” said Martin Pocs, managing director of DHR International’s Denver office.
Chicago-based DHR concentrates on executive searches and is ranked the fifth-largest search firm in the
U.S., and among the top 10 in the world in revenue.
DHR’s board recruiting business has grown tremendously in the last few years, Pocs said—particularly
searches for someone with financial expertise.
“People are more aware of the potential culpability of being a board member. It has spooked some
people,” Pocs said.
One of the biggest changes for board members in recent years is the Sarbanes-Oxley Act, passed in 2002
in response to pervasive headlines about corporate fraud.
The act was intended to offer more information to the public and tighten controls on corporate
Among other things it requires that CEOs and CFOs certify corporate reports on financial information—
or be subject to potential criminal penalties.
It also requires an audit committee within the board of directors to look at the company’s financial
records and use outside accountants and attorneys.
“Sarbanes-Oxley has put more pressure on the financial abilities of board members,” Pocs said.
“It can seem like a daunting time to be a board member with all the rules. But Sarbanes-Oxley will
ultimately be a good thing with more transparency for the shareholde