Empowering directors: Practical perspectives for boardroom success

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Chris Ventresca: One other theme that really resonated with the audience was that no individual director can be an expert. Given the size and breadth of many of the companies represented, J.P. Morgan included, it's extremely difficult for any one person to know all the answers. So having the ability to just acknowledge that and recognize it, to ask that question that you may think you should know the answer, but you don't, just breaking down those barriers so that there's a free flow of information, each director should just be confident enough that there's enough talent around the room that if I ask a question, we can have a good, healthy dialogue to get to the right answer.

Charlie Post: Hi. You're listening to What's the Deal, our investment banking series here on J.P. Morgan's Making Sense. I'm your host, Charlie Post, co-head of Media Communications M&A at J.P. Morgan. Today, we'll be discussing the 14th annual J.P. Morgan Board Summit, where we hosted influential U.S. public company directors to explore some of the most challenging issues facing businesses today. We're fortunate to have 215 directors in the room for the event, representing 550 public company boards, $25-trillion of market cap. Joining me today are my colleagues, Chris Ventresca, Global Chairman of Investment Banking, and M&A and Jess McIntosh, executive director on the Directory Advisory services team. Jess and Chris, welcome to the podcast.

Chris Ventresca: Thanks, Charlie. Great to be here.

Charlie Post: Alright, well, why don't we dive right in. Chris, you were one of the original founders of the J.P. Morgan Board Summit 14 years ago. What was the goal of the first event and how has it evolved to today?

Chris Ventresca: Well, thanks, Charlie. As investment bankers, we have the opportunity to be in front of boards and clients across a variety of sectors. And what we saw happening was the role of that individual director was getting more intense, more time-consuming, more challenging. They were needing to be much more engaged than they'd ever been and shareholders were demanding that. And we actually saw that tick up from 14 years ago all the way to today and continue to accelerate the amount of time, effort, and brainpower they need to put in that job description. The shareholders are demanding it. They're responding. And what we also noticed was that there was a void, that directors didn't have access to the type of content that could help them in that decision making process. And they also didn't have the network to share best practice with other directors and to gain the knowledge that others have had in similar situations that they can bring into their own boardroom. So we saw that void. We created the J.P. Morgan Board Summit to help fill it, which is exactly what we did. Great content plus the opportunity to network amongst fellow directors.

Charlie Post: All right. Thanks, Chris. So Jess, for those that are less familiar, tell us a little bit more about Directory Advisory Services and the role that it plays within the firm.

Jessica McIntosh: Sure. Director Advisory Services, also known as DAS was formed in 2016 by Jamie Dimon. And it was really meant to be a corporate offering where we connect any of our corporate clients that are looking for directors and making sure that we're thinking about the individuals that we know that are qualified to serve on corporate boards, whenever we see those opportunities in the boardrooms.

Charlie Post: Well, thanks, Jess. And so J.P. Morgan's directory advisory service has grown to a network of over 9,000 clients. What do you attribute the success of DAS and its robust network?

Jessica McIntosh: Well, first I would say we do have strong client relationships that we've been building and maintaining over the course of many years and decades. And so being a trusted advisor to these individuals has always started as they are executives at corporations and has led to the boardroom because in some cases, they've taken on a board as they've been an active executive. And in some cases it's because they're looking at the next stage of their career as they're retiring and looking to join corporate boards. So those relationships have continued beyond their executive roles and into the boardrooms. We also are in a position at J.P. Morgan to provide expertise and thought leadership. And that's been a significant draw for directors that are seeking reliable and insightful advice. Director Advisory Services leverages the firm's extensive knowledge and resources to offer high quality advisory services. I also think that Director Advisory Services provides directors with opportunities to network with peers and industry leaders facilitating the exchange of ideas and best practices, which we do at our director events that we host throughout the year, including our annual board summit.

Chris Ventresca: And Charlie, one of the things our bankers are doing every day is they're in boardrooms and they're talking with those companies. And very often it comes up where there's a board refreshment underway and the client CEO, senior management team, or the head of the NomGov committee will turn to us and say, "Hey, do you have any ideas? The end state and the type of skills we're trying to enter into this boardroom. Can you help us with that?" And Jess and her team and director advisory services plays a crucial role in identifying candidates and also helping those candidates find the right home and those companies that are seeking directors match up and have a win-win for both sides.

Charlie Post: So speaking of boardrooms, we had a bit of a mock boardroom at the board summit this year. We had, once again, a case study, business style case study that we wrote and put the directors through their paces. Chris, any notable takeaways from that case study exercise?

Chris Ventresca: Well, thanks, Charlie. And maybe as a step back, we take this very large group, 200 plus, and we actually divide them up into many boardrooms. Mock boardroom, maybe 12, 13 folks each. And we curate a fictionalized case study, which we probably have too much fun making, which we pull on from real-life situations, the most complex situations we're facing with clients across different sectors. And we put this mock boardroom to the test. We asked them the same tough questions of decision-making in times of change, which was the theme for this year's event. You can imagine with the headlines and the news out changing every single day, being directors as difficult as ever in that environment. So this was a fictionalized case where the board had to think through, how do you manage through that change? How do you think about the company's portfolio? Should you spin off a division? Should you sell a division? How do you handle an unsolicited offer that comes in or an activist situation? We also highlighted some potential tension that could exist between a new CEO and the board, a board that also needs to go through some refreshment or enhancement of skills. How do you manage through all that? We bring this group together. We have a great discussion where many in the room have gone through some type of similar situation, and we create the environment for them to share best practices, lessons learned, and then come together as a group and try to create a recommendation of how they would behave in that situation. It's a ton of fun. It's great learning. It really is an invaluable experience for the directors to come together, network with each other, learn from each other, and also have a lot of fun throughout.

Charlie Post: So in addition to networking in the case study, we were able to hear from a lot of very prominent speakers, a lot of important themes of the day. Chris, what stood out to you in those discussions?

Chris Ventresca: One of the interesting themes that we discussed really throughout the whole event was how do you manage through periods of volatility and uncertainty? And just to touch back on the case study, you know, one of the real learnings, when we brought everyone together, there was a several points in the case where one of the answers was just hit the pause button. Let's just wait. Let's wait for the noise to silence, the headlines to diminish, run the status quo business plan. And to a person in almost all the situations we were mimicking throughout, we found the real energy, "No, no, no, it's time to act. We need to be proactive, need to stay on our front foot." You know, a real responsibility not to just hit the pause button and wait, but to be proactive, to do what shareholders are expecting to do, which is drive and shareholder value, maximize shareholder value. So a move to action. And I think that was the theme throughout the rest of the sessions we had the following day. To that jump out, Charlie, is one, we had an expert discussion on demographics. Who is your customer? It is probably not the same customer you had 10 or 20 years ago. So as a board working with a management team, understand those trend lines. They're getting older, but they're getting more active. They have different needs, spending habits, more travel, families scattered maybe more globally than they used to be in the past. Different buying habits as mentioned. So as you develop a business plan for the next 5, 10, 20 years, how do you incorporate all that information? Make sure, as a director, you're challenging your management team to think about those trends, proactively invest and respond so that you, again, could do the best on behalf of your shareholders. That was one theme. I think it resonated really well with the audience. And in a similar vein, we touched on climate uncertainty, extreme weather events, volatility in terms of weather patterns. As a board, as you think about investing capital, a new manufacturing location, a new distribution center, access to ports, transportation, roads, you know, the impact that weather and disruption could have on your business, you may never have spent much time in the boardroom thinking about those issues. But after the session we had during the board summit, every director realized, "I need to ask those tough questions. I need to think about contingency plans. I need to make sure that the capital we're spending today that's meant to last 15, 20, 30 years in the future is going to do what we think it's going to do in the context of volatility, not only in the market, but also in weather patterns that could affect those investment decisions as well."

Charlie Post: So 14 years ago you started the event. Did you think that climate was gonna be one of the topics that would've been in focus?

Chris Ventresca: I do not think we had that on the top of our list at the time. But we certainly, each year, have had a migration of new topics. I just think last year was a big emphasis on AI and cyber was another one. Both of those still exist today. And again, very front and center messaging for boards today to think about. And climate has, again, risen now up towards the top of that list. But more in line of what I've just said a second ago, which is the ability for boards to think into the future in terms of the capital they're spending and where they're spending it, and how weather, in addition to these other factors, could influence those investment decisions.

Charlie Post: So Jess, I'm curious to get your own perspective. What themes resonated for the directors that you spoke to at the event?

Jessica McIntosh: Well, I think that the directors really appreciate and value the opportunity to network with their peers. There are 200 plus directors in the room, and many of them, and most of them are on multiple boards. So it's really interesting to hear the different perspectives that they can offer from having exposure to the different boardrooms. I think that the directors also really appreciate the variety of topics that we cover, including geopolitical strategy and market trends, but also the breadth of the content, and the relevance to current boardroom challenges. I think it's also a highlight to have our own CEO, Jamie Dimon, who is frequently engaged in boardroom topics. And in particular is in front of politicians and CEOs alike, that are having to deal with the current challenges.

Charlie Post: So Jess, I thought it was really great to hear Jamie speak as well. As always very frank and honest and direct about what he's seeing both in our own boardroom, in our client's boardroom, and, of course, his recent trips to D.C. and China really have a broad perspectives that seem to resonate with our directors. So Chris, we didn't only hear from our chairman, but we also had the opportunity to hear from two of our directors. What stood out to you in hearing from them, their perspectives within the J.P. Morgan boardroom?

Chris Ventresca: Thanks, Charlie. And we also had the opportunity to have our own CFO introduce that session and moderate the discussion, which was great opportunity to talk about the interaction between board members as directors and senior management team. And one piece of just very practical advice that came out of that, which I think resonated for many in the room, was in those interactions, just get rid of the slides. Just have a conversation. Ask questions. You can have situations where you're paging through slide after slide. And what you really should be having is just a direct conversation, and the ability to hear and ask questions and also build relationships with the management team between the directors and the management team, not only at the very top level, but also one or two layers below. So we heard about that. We heard about the value and the effectiveness that could result in terms of better decision-making, putting all their risks and worries and concerns on the table in a way that's easier to understand so that the board and management together can go forward and tackle those problems. So I thought that was extremely valuable for everyone to hear. One other theme that really resonated with the audience was that no individual director can be an expert. Given the size and breadth of many of the companies represented, J.P. Morgan included, it's extremely difficult for any one person to know all the answers. So having the ability to just acknowledge that and recognize it, to ask that question that you may think you should know the answer, but you don't, just breaking down those barriers so that there's a free flow of information, each director should just be confident enough that there's enough talent around the room that if I ask a question, we can have a good, healthy dialogue to get to the right answer. I don't need to know all the answers. That theme came through, it resonated well with the audience, and I think was highlighted behind some of the best practices we see in our own company today.

Charlie Post: Well, thanks, Chris. Appreciate it. It was actually great to hear the perspectives from within our own boardroom. We've spent so much of our time with clients, it's excellent to hear perspectives from our own board. So Jess, there's over 9,000 directors in your network. For the directors out there that might be interested in joining, what should they know?

Jessica McIntosh: Well, first of all, this is a no fee client service that we provide to our corporates that are looking for board of directors. So if they're interested in having access to our network of talent we welcome the opportunity to engage and be helpful where we can, by making those connections. And also, if they're interested in adding board service to their portfolio we would love to have them in our network, so that we can consider them for any opportunities that we see, that might be a good fit for them. We see anywhere from five to 10 requests a week. They come to us from our bankers that have the relationships with these companies. And also the network itself has access. And so also comes to us for referrals for their boards. We help any public, late stage private, private equity backed, VC backed. So if you are interested in joining our network, please reach out to a J.P. Morgan representative or banker that you have a relationship with. You can also reach out to us directly at director.advisory.services@JPMorgan.com.

Charlie Post: Well, that brings us to the end of today's episode. Special thanks to Chris and Jess for sharing their valuable perspectives.

Chris Ventresca: Thank you, Charlie.

Jessica McIntosh: Appreciate it.

Charlie Post: Thanks to our listeners for tuning into another episode of What's the Deal. Be sure to tune into our upcoming episodes as we stay up to speed with the markets. I'm your host, Charlie Post. Until next time, so long.

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