Electronic Board Books

This Wisdom of the Crowd, compiled from questions and responses posted on Corporate & Securities Law Committee eGroup*, addresses the electronic board book issue, which includes:

I. Adoption of Electronic Board book
II. Online program and PDF problem
III. Discussion about different products
IV. Additional ACC Resources to Consider

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*(Permission was received from the ACC members quoted below prior to publishing their eGroup comments in this Wisdom of the Crowd resource.)

I. Adoption of Electronic Board Book

Question:

I would appreciate it if you would share any information, insights and experiences you may have with the use of electronic board books, portals and the like. We're thinking of moving away from the paper quarterly board packages, but would like to get a sense for what we should anticipate, both the good and the bad. Thanks.

Wisdom of the Crowd:

We went with Diligent last year. Using the e-Board service has been great. We love it and the Board is pleased. They all received an iPad and review the materials there.ⁱ

I am on the board of a credit union. We migrated to electronic board packets using a board portal. Board members were given wifi [iP]ads to access the board packets. When you factor in the staff time, the assembly, the color printing, the number of board members, board meetings, and committee meetings, the electronic board books [are] less costly and has made management's and board members' lives easier. As a board member, I really like the electronic board books.

I think it was 6 or 7 board meetings before paper copies stopped being produced. There is a learning curve, and board members need to know how to use the right tools on the [iP]ad. One board member recommended using [iA]nnotate on the [iP]ad. We spent some time as a group experimenting with [iA]nnotate and the [iP]ads. [iA]nnotate really helped some board members embrace reviewing, reading, and annotating electronic board packets. You need a highly secure board portal. The credit union uses a vendor. I've seen many vendors outside of the credit union space offering board portals, but I've never personally evaluated them.

Despite my love of electronic board packets and positive experience on the credit union board, I use paper board books for the boards of my employer and its affiliates. We have a lot fewer board meetings, and many fewer board members, than the credit union. We also have a lot of subsidiaries and affiliates having board meetings, for which I frequently use written consents. For the written consents, the process is pretty streamlined, not requiring huge staff time or quantities of paper, so I don't feel like there is a problem I need to solve. Moreover, building on Gerard's point about auditors, I'd suggest regulators may be slow to come along. We have a lot of regulators who review board materials and they've consistently needed to see paper.ⁱⁱ

We are in the process of migrating now. We evaluated several different systems and ultimately decided to go with Diligent. (As an aside, we evaluated BoardVantage as well. They are very similar[,] and I don't think you can go wrong with either). Pursuant to our Board members' request, for at least the first meeting, we will run parallel systems - hard copies plus the electronic portal. Hopefully, we will be fully paperless for our second meeting.ⁱⁱⁱ

I would like to provide an update that our legal department has decided to go with Diligent. I evaluated a number of board portal systems and found that Diligent matched our needs best. While all board portals tend to offer similar features, some of the factors that I believe were more favorable with Diligent included the intuitive interface of the portal, [its] ability to meet a very condensed implementation schedule, and [its] reputation / strong client base among other publicly traded corporations (it helps if directors are already using the product on another board). If anyone would like to ask questions regarding our choice and evaluation process, please do not hesitate to reach out to me.^iv

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II. Online Program and PDF Problem

Question:

My company is interested in distributing its board books electronically. We have tried sending .pdf documents to board members, but iPad users have trouble viewing them (I suspect due to issues with Flash). I am curious to know if the SLD community has experience with a good way to accomplish electronic distribution of board books in a cost-effective manner.

Thank you in advance your sharing your thoughts.

Wisdom of the Crowd:

We routinely share information with our board members (including meeting agendas, slide decks, draft minutes, and financial data) via an electronic data site hosted on our company server. Board members must login with individual passwords, which grant them access only to those materials relevant to them (e.g. only members of the Audit Committee can access that portion of the site).

All materials on the site are posted in PDF format, and we have not heard any complaints from the several iPad users in the group.^v

At my prior company, I looked at several commercial providers of services that would allow the easy creation of board materials, etc. However, we didn't go forward as we had a couple of directors who insisted they continue to get printed materials, and it made no sense to go the electronic route if we were still going to have to produce printed material. I liked Boardvantage myself. www.boardvantage.com.^vi

We use an online program as well for distributing board books (meaning the directors log-in to a site on their iPads)[,] but in order to open the PDFs we had all directors download iAnnotate, which allows [them] to open/store/mark-up PDFs on an iPad. I am sure there are other apps with similar functionality.^vii

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III. Discussion of different products

Question:

Our company is evaluating Diligent Board Books and ARALOC. Any feedback on the use of these two products would be appreciated.

Wisdom of the Crowd:

I have implemented Diligent at two NYSE companies and can only say wonderful things about the product and the customer service for both the directors and the administrators. The directors like it so much that they have asked for it to be implemented at their companies or other boards they serve on. Happy to answer any specific questions you may have.^viii

We use Diligent Board Books for our Corporate board and have found it to be very useful. Please feel free to contact me if you want to discuss further.^ix

We have been using Diligent for about a year and a half and are very pleased. Customer support is always available.^x

We also use Diligent and have had good experiences with them thus far; their services have been well received by our directors. Feel free to reach out to me for additional comments and any questions you might have.^xi

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IV. Additional ACC Resources to Consider

ACC Presentation: Finding Your Way in Cyberspace: Implementing the Paperless Environment (Oct. 2011)

ACC Presentation: Leveraging Technology to Defensibly Manage Electronic Records (Oct. 2012)

ACC InfoPAK: Effective Records Management (Sept. 2012).

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ⁱ Response from: Mr. Robert Traub, General Counsel, Quaker Chemical Corporation (July 21, 2012).

ⁱⁱ Response from: Mr. Gavin Galimi, Executive Vice President, General Counsel, and Chief Compliance Officer, March Vision Care, Inc (July 21, 2012). ⁱⁱⁱ Response from: Ms. Linda Frazier, Vice President & Senior Counsel, HSN, Inc. (August 03, 2012).

^iv Response from: Mr. Sean Toth, Legal Counsel, Calix Inc. (September 18, 2012).

^v Response from: Denis J. Quinlan, General Counsel, Calix, Inc. (August 2, 2011).

^vi Response from: Mr. Eric Griffin, General Counsel, Amagin Capital, Inc. (August 3, 2011).

^vii Response from: Ms. Concepcion Valenzuela, Assistant General Counsel, Torus (August 3, 2011).

^viii Response from: Ms. Diana Toman, Vice President, Assistant General Counsel & Assistant Secretary, General Cable Corporation (November 08, 2012).

^ix Response from: Mr. Jason Job, Director - Corporate Administration Diamond Hill Capital Management. (November 08, 2012).

^x Response from: Mr. Mark Flynn, EVP, General Counsel, Secretary and Chief Compliance Officer, Virtus Investment Partners, Inc. (November 08, 2012).

^xi Response from: Mr. Sean Toth, Legal Counsel, Calix Inc. (November 12, 2012).