THE BOARD OF DIRECTORS
The first thing I did when I was planning to start my company was the selection of a blue chip board of Directors.
Prior to creating Pelmorex, I observed what worked well and what did not as it relates to Boards of Directors. My exposure was mainly twofold: Telemedia Communications Inc. and Cancom.
TELEMEDIA
At Telemedia, we had a good sized Board consisting of a group of insiders who were all shareholders in the company and a varied group of outsiders. We had 4 meetings per year and they were professionally organized. Philippe de Gaspe Beaubien, the founder and leader of Telemedia, was its Chair. The period was from 1977 to 1983. Board meetings were the focal point of the company. Everyone prepared for the meetings which lasted about 3 hours. Once a year, they would hold an offsite meeting to go over the strategy of the company.
The Board of Directors seemed to be operating smoothly with a focus on planning. However, when I started at Telemedia in April, 1977, I discovered many major anomalies with the books of the company which is the reason that they changed the CFO. In one of the radio markets, there had been no invoices sent to customers for several months resulting in a large backlog. In another market, there had been no work done on the sale of a TV property which was only one week away. These were the days of the anti-inflation board which limited salary increases but these had been exceeded during the course of a labour negotiation. The books of the company had been seized due to an unpaid tax claim relating to a previous issue of preferred shares in an acquisition. All of these issues were resolved but it drove home the importance of controls and the need for the Board to have proper governance to detect these issues and to deal with them. Hence, the need for a proper functioning Audit Committee and Compensation Committee.
CANCOM
At Cancom, it consisted of a consortium of 5 national broadcasters who each had 2 representatives on the Board plus the CEO. I was one of the nominees of Telemedia and attended a few Board meetings before the President and CEO was asked to become Chair of the CRTC. Each broadcaster had its own agenda and ran the partnership with this in mind. The goals and objectives of the company were secondary. At each meeting, I noted that the Board members would debate matters relating to their own issues and little time was allocated to company matters. The President and CEO let this matter go on which resulted in little business being conducted. When I was asked to replace Andre Bureau as the company's CEO for a period of about 6 months to take the company public, I accepted on one condition: that I would take care of the company's issues and the Chair was to focus on shareholder matters. We had proper governance thereafter although the company was still losing money and the public issue was desperately needed.
PELMOREX
For Pelmorex, I wanted to establish a Board with optimal governance. I also wanted a blue chip Board of people who had no conflicts and who would focus on the company's interests only. So I approached each prospect by indicating that I was a Pisces and a dreamer. Their job was to keep my two feet on the ground. My commitment to them was that I would consult them on all strategic matters and that I would listen to them. Each prospect accepted and they were successful Board members for almost 25 years. We also had sound governance with 3 or 4 meetings per year as well as proper functioning Audit and Compensation committees which met annually. Each of the latter was comprised 2 independent members and 1 member from management. The focus of meetings was on strategic matters and the Board operated exceptionally well. It still exists today even though we control 100% of the company. It is important since it enables management to report to the formal Board 3 times per year which is taken very seriously. The goal was to operate as a public company even though we planned to remain private.
In conclusion, some people debate whether to have a Board of Directors or not. I personally enjoy that discipline and the thought of not having one never crossed my mind. The cost is not that high and I view it as an investment, not an expense. I always gave the Board an excellent package of information which would allow it to do its job. It is work but it is very well placed. The key is in the selection of its members. We have scored well on all of these markers. I have been the Chair of the Board as well as President of the company. I know some experts recommend separating these two functions but it has worked for us. When I retired as the company's CEO, I have maintained the role of Executive Chair so the roles are now properly separated.
