High Profile, High Risk, High Priority: Vetting Senior Executives

June 2013

IN THIS ISSUE

— Deep Connections Require a Deep Dive: Researching High Profile Executives
— Big Business, Big Issues: Red Flags to Consider in Vetting Executives

GREETINGS!

Welcome to the June 2013 edition of our newsletter! in this issue, we’ll examine the necessity of thorough investigation of high-profile executives and board members, and look at techniques to help accomplish this objective.

DEEP CONNECTIONS REQUIRE A DEEP DIVE: RESEARCHING HIGH PROFILE EXECUTIVES

While revolving doors between the political and business world are nothing new, a recent wave of retirements of high-profile politicians who have taken seats on corporate boards — such as Olympia Snowe (R-Maine), who joined the board of directors of investment firm T. Rowe Price — has highlighted the benefits of bringing a recently retired politician, or business executive, on board. Such high-profile subjects may be considered to be “open books” in the sense that their careers have been scrutinized during their prior positions of significant power — and even greater media exposure — yet problems can persist for companies which don’t do their homework.

Both politicians and business executives can present challenges. A former politician who served on the Senate Finance Committee, for instance, can certainly help open regulatory doors and develop business opportunities for a banking company on whose board they will sit after leaving office. It behooves that company to examine any campaign contributions their political action committees or employees may have made to the politician while in office, the actions taken by any lobbyists the company may have hired to advocate an agenda before the politician or their committee, as well as any legislation the politician may have sponsored that could be seen as favorable to the company while in office. Business journalists and others will be researching these avenues when someone who is high profile joins a new company, and that company should be prepared for whatever issues may be developed.

BIG BUSINESS, BIG ISSUES: RED FLAGS TO CONSIDER IN VETTING EXECUTIVES

Business executives can also present concerns, given their often equally high public profile, and there are several questions to ask before making such an appointment. What other affiliations have they had, and might those affiliations create areas of concern? How have their businesses fared while under their leadership? Have they had any personal or financial issues that could be fodder for negative publicity? Public records research, often supplemented by discreet interviews with former employees and perhaps adversaries, can help give your firm a fuller picture of an executive’s risk profile before making an appointment.

Vetting high-profile executives can involve challenges that don’t exist with middle management employees, especially given an elevated media profile and the prospect of being involved in copious amounts of litigation, however tangentially. A seasoned researcher can develop methods to identify the most significant “red flag” issues, such as conflicts of interest or financial stressors like bankruptcy. By making a determined effort to investigate a high-profile appointee using the same scrutiny as you would an adversary, issues that would be of great concern if first revealed by others can be better managed to help your firm benefit more from an appointment.