Coping with the Challenges of Small Companies

​Stephen Graham, Fenwick & West co-chair of the life sciences practice group and managing partner of the Seattle office, was a featured speaker at the second National Association of Corporate Directors (NACD) Small-Cap Forum in San Francisco this summer and was quoted in NACD Directorship magazine in an article about the forum. NACD hosts these events in partnership with Fenwick, Epsen Fuller Group and Latham & Watkins.

July's Small-Cap Forum focused on helping directors understand the risks and responsibilities of growing a small company, especially given the pressures they face and the limits on their time and resources. During a discussion about maximizing the effectiveness of the three management committees common to most public companies—audit, compensation, and nominating and governance—Graham cautioned against directors on small boards serving on all three committees.

"Most experts will say you should not be on more than two of the key committees," Graham noted. "If everyone is required to serve on every committee, right away you have a situation where every director is stretched so thin that the question is raised as to whether they can properly do their jobs—and that becomes a risk management issue."

Regarding CEO succession planning, Graham said a company should have a "living document" detailing the attributes the CEO needs to have at each phase of the company's life. With such a document, the board will have a record of the kind of person they are looking for should the need for a new CEO arise. "If you don't spend enough time on this subject, you're not properly managing risk," Graham added.

Other topics discussed at the NACD Small-Cap Forum included drafting strategic plans that reflect innovative thinking appropriate for small companies, communicating with shareholders and proactively addressing their issues, being aware of risks that are unique to smaller firms and finding board members with the requisite mix of skills.

The full article from the September/October issue of NACD Directorship magazine is available here.


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