Almost or recently public? Recruiting diversified, independent directors critical to investors, analysts, and performance

By: Peggy Thompson

Independent-Directors-150x150Strong governance smooths rough patches and cultivates confidence.

According to EY, some investors may give a new IPO company time for their governance practices to evolve – particularly during periods of strong financial performance.  However, sustaining valuation during a post-IPO rough patch can be more challenging unless the company is perceived as being well run with accountable and transparent governance in place.  Demonstrating good governance practices promotes confidence among investors and equity analysts alike.

Diversified, independent directors critical to strong governance.

Adding independent board leadership is critical to strong governance. Trends reflect this conviction. In 2002, just 8% of the S&P 500 company boards had independent board leadership. In 2013, 71% did.

Our own research reveals that of all the tech companies that went public last year and this year to date, 62% added, on average, 1.8 independent directors in 12-month period leading up to their IPOs.  Here are some examples:

Company

Independent Directors
Added In Year Prior to IPO

Fitbit

1

Hubspot

2

Wayfair

2

Zendesk

3

And, with good reason, investors have become increasingly vocal about adding ethnic and gender diversity to boards. Credit Suisse Research revealed that companies with women on their boards showed higher than average growth and a higher return on equity. According to EY, boards that add women directors gain a more diverse perspective and tap into a large and growing talent pool.

Summative’s independent directors search practice.

Summative works with IPO-bound and public tech companies to expand and diversify their boards. We leverage our extensive network of candidates with our understanding of board composition and governance to place independent directors that will:

  1. Diversify your board
  2. Build analysts’ and investors’ confidence
  3. Incrementally improve the performance of the company

We welcome the chance to discuss expanding and diversifying your board.

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