IR in Focus | Season 3 | Ep. 2 - Navigating Corporate Governance: Insights on Board Effectiveness and Leadership Diversity

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Carmen [00:00:01]: Hi, everyone, and welcome back to IR in Focus, a podcast where we dive into emerging, evergreen, and exceptional challenges faced by corporate issuers and IR professionals. Today, we're going to be taking a closer look at the relationship between the board and the c suite and insights into board expectations and themes from the front lines. With me today for this discussion is Nithya Das. Welcome, Nithya.

Nithya Das [00:00:24]: Hi. So great to be here with you, Carmen. Thanks for having me.

Carmen [00:00:27]: Yeah. Thanks so much for joining me on this podcast. Before we get started, I just want to do a quick intro for our audience here. So Nithya Bedas serves as the GM of the governance business and chief legal officer at Diligent. Nithya also serves as a member of the board of directors and the compensation committee at Outbrain Tead, which is a leading technology platform that drives business results by engaging people across the open Internet. And Nithya also has been a long time advocate for women in leadership. So pulling all these things together, I'm super excited for our conversation, Nithya. Maybe let's just go ahead and get started here thinking about some themes and governance and board leadership.

Carmen [00:01:09]: You oversee diligence institute research on corporate governance. What sort of trends or risks are top of mind right now for boards and corporate leadership?

Nithya Das [00:01:17]: Oh, the diligent institute actually just recently conducted a survey. We do do these periodically. This, this one in particular was a survey of directors of publicly traded companies that we did with corporate board member and FTI Consulting. And a couple of the issues that we saw that are top of the boardroom agenda. You know, one, we're seeing that most directors are prioritizing the pursuit of growth opportunities in 2025. No surprise there. For years, we really saw boards listing cybersecurity as one of the most challenging issues to oversee, and that started to shift now with more directors choosing strategy and business growth as, you know, one of their top oversight challenges ahead of all of the other issues that are in their purview. We think that as we go through the year based on, you know, again, just being in the boardroom with over 25,000 clients, that we expect that CEO c suite succession, CEO and c suite planning, we expect those to be pretty prevalent amongst the issues that are front and center in the year.

Nithya Das [00:02:17]: And other thing that we are hearing from directors is just growing concerns for the adverse impact of shifting geopolitical landscapes, possibility for supply chain disruptions, international regulatory challenges. I mean, none of this is a surprise to anyone. Right? Feels like every single time that we turn on the news, we're hearing something about tariffs or trade wars. And so, you know, these are definitely issues that board of directors are grappling with and trying to make sure that they're, you know, managing exposure as well as possible as as we go through the year. Interestingly, you know, we have started to see some of the topics around ESG move a little bit further down towards the boardroom agenda. As we exited 2024, the expectation was that ESG strategy and ESG prioritization was gonna stay kind of in that top five list that companies were focused on as we moved through 2025. And I think now, you know, we're sort of waiting to see particularly as things shake out in The US in terms of the political landscape here, whether that remains to be the case or not.

Carmen [00:03:22]: Yeah. So we're recording this at the end of a crazy week in the markets where a lot of the news around tariffs has been driving market reaction. So I feel a little whiplash from this week, you know, with with the administration coming out, like, nope. Chairs are still on. Forget those rumors. And, like, the market's reacting appropriately. And then later in the week, well, we're backing off some of our tariff policies and then the market's rallying. It's been quite a hectic week for the markets, and it does seem like the tariffs and some of the administration's policies is really driving a lot of what, you know, our clients care about as well as it makes sense that the the board is equally as concerned and trying to dig into some of those strategies there.

Carmen [00:04:05]: An interesting point around the ESG sustainability piece, I totally appreciate that given some of kind of the priorities that the administration in The US has has laid out specifically. But what I've seen, at least on our end, that it may not be a top priority. Like you mentioned, maybe it's falling off the top five, but it's very, very still prevalent in how do we manage these these risk, whether it be energy transition, whether it be, you know, or how do we manage risk within our human capital or even just, like, the governance piece of that. So so thank you for, you know, commenting on all those pieces there.

Nithya Das [00:04:41]: Yeah. And, you know, I'm definitely definitely agree on that point, by the way. We continue to see this be a priority especially for investors. And, you know, we're hearing from investors, very large public company investors, and and investment funds that, you know, ESG has a high correlation to business growth and to positive capital market outcomes. And so the focus on ESG is definitely still there on the investor side of the market from what we're hearing and seeing. And so I do think that'll help to keep it kind of as a as a corporate priority, maybe despite what happens in the administration or or in spite of what happens in the administration as some of that plays out. You know? And so I think that'll just be it'll be an interesting topic to watch. As you said, it has been a little bit of a a whiplash of a week, and so I think that one will keep playing out.

Nithya Das [00:05:30]: And even as companies pull back maybe on what's happening or what they're putting forward externally, we are still hearing that a lot of this work is is happening internally. And, again, because of that, you know, investor push for it.

Carmen [00:05:43]: I like that point in terms of, like, well, investors, you know, still care about this, right, regardless of what's going on with the tariffs and and the markets. And the investment community still wants that transparency and comparability. Right? And the way I think about sustainability too in the ESG metrics is just, you know, it's the same way we analyze risk for, you know, other areas of of the corporation. So ESG is really just getting your arms around how you're mitigating risk, especially when it comes to things like energy transition or social issues or governance issues. Right? So we may be not putting forth a ton of ESG documentation to your point. Like, companies may not be coming out with a lot of that communication. But, you know, in my mind, it's still operating the same way in terms of, like, how do we mitigate risk in the markets? And that that's never gonna go away. And then on that point, maybe taking a a closer look at, like, the the intersection of sustainability and in your role here.

Carmen [00:06:40]: So you're the chair of the compensation committee at Outbrain Teen. Are you seeing any sort of evolution in the conversations around executive pay. We mentioned, like, this is something that, you know, retail investors or institutional investors may have interest in. And I think in general, there's been a huge focus on an interest from the investment community on, you know, how a company operates and makes these decisions.

Nithya Das [00:07:06]: Yeah. I mean, when we think about the evolution of executive compensation and particularly how it ties to some of these different areas that we're talking about, I think what we saw, you know, a while back if we rewind back to when we were in the sort of COVID pandemic era, we saw an accelerated focus on some of the more social aspects of ESG, particularly related to areas like employee safety, employee well-being, corporate responses to societal issues, and started to actually see many companies incorporate and integrate those metrics into their executive pay structures. Long before the changes that have been happening more recently, within The United States, companies started to remove some of that the disclosure around those integrations into their public company filings. And I think a lot of that had to do with, you know, different risk based decision making internally. But, you know, what we do still see is heightened the level of focus on things like pay ratio disclosure requirements, increased transparency into CEO pay and NEO pay in terms of understanding the metrics that are driving executive compensation pay and how those relate back to company performance. And then just, you know, continued broader public scrutiny and public oversight compensation packages and a perception of things that might be, you know, determined to be excessive pay packages.

Carmen [00:08:37]: When you're seeing folks, you know, pay a little bit more attention on some of those those metrics and how they tie back to company performance, what would be an example of that? Nithya Das [00:08:46]: Let's see. Some examples that might come about are understanding the KPIs or the metrics that are being used to drive CEO pay, how the CEO pay compares to median worker pay, what the payout terms are, as well as, you know, issues around what type of equity vehicle are you choosing, what are the metrics for the vesting and payout of those different equity vehicles, whether we're talking about, you know, RSUs or performance stock options, performance stock units, wanting to understand better how the metrics and the vehicles are structured to make sure that you have the right balance between short term financial growth, short term financial pressure, and those longer term stakeholder interests.

Carmen [00:09:28]: Mhmm. Gotcha. Thank you for expanding on that. So flipping up from thinking about the c suite, how they perform, how that's tied to company metrics, and then thinking about, you know, board effectiveness, and that still continues to be a big topic that's discussed alongside, you know, how effective is a board or even, like, how diverse is a board to in order to understand and mitigate, you know, company risk. So honing in on board effectiveness, in your view, what separates a truly effective board from a performative one?

Nithya Das [00:10:02]: So just a a word maybe to start on the topic of board diversity because we've also been talking about the shifting landscape of ESG in The United States. You know, I think when I reflect back on board diversity in The United States, it definitely seems as though it has become less of a stated or top priority for US corporate boards. We also haven't seen quite as much progress as maybe had been hoped for in terms of diversification of US corporate boards. That being said, board diversity continues to be a very prominent issue, particularly in places like EMEA, you know, within The United Kingdom, for example. We see board diversity being really closely linked to having strong corporate governance and strong corporate compliance. And, you know, I think that we will continue to see, particularly for global companies, a continued focus on board diversity. So that's maybe just one point. I think to your specific question around what really differentiates a truly effective board.

Nithya Das [00:11:08]: One component that comes to top of mind is around board diversity. And it's not just gender and racial diversity. Right? But it's really, what is the diversity and composition of the board as it relates to insiders versus independent board members? What is the diversity of skill set that's represented across the boardroom? You know, do you have the right thought leaders or operators even serving on the board who can bring all of those, you know, best practices, strategic viewpoints to the table. And something that I think about also when, you know, thinking of board diversity and board composition is something that actually one of my former nom and corp gov chairs, Danny Meyer, who's the founder and former CEO of Shake Shack, had said to me at one point when, I was working with him as the chief legal officer and corporate secretary at my last company, Ollo. He said to me, as we think about structuring the board and the skill sets on the board, you have to make sure that you have the right interlock between the board and between the management team. Meaning, just as much as we wanna have somebody on the management team who's really strong in, say, product strategy and data science, you also wanna make sure if that's a if that's a core competency that's critical to have on the c suite, it should be perceived as a core competency that we also want to have represented on the board. And so once you start to kinda have that overlay of skill sets, you then help to make the management team more effective and the board can also be more effective. And I think that's, you know, a pretty big differentiator.

Nithya Das [00:12:45]: A second area that comes to mind for me is board culture. And by that, I mean, having a board culture where, you know, there is accountability and responsibility on the board to go beyond even just the core foundational responsibility of their fiduciary duty and oversight of the company. But, you know, how much are they really helping to to shape company strategy and prioritize the company strategy? You know, another element of board culture is around just transparency and communication within the board. You know, somebody who leads the the governance business at Diligent, I also spend a lot of my time thinking about how do we help boards become more effective by providing them with the right information at the right level with the right data, both internally and external peer benchmarking data so that the board can truly have a measure of how the company is performing. And, you know, I think those start to become some of the core elements that can really distinguish effective board from, you know, a more performative one. Yeah.

Carmen [00:13:48]: You put it much more eloquently than than I could have, but you're right in the sense that I feel like a lot of times when we introduce diversity as something that is important on boards, I think people kinda often boil that down to diversity in, like, how people look. And that's really not what what we're saying here. What what you're saying is really what is a key factor in an effective board is the diversity of skills. Right? The diversity and perspectives that kind of are brought forth and and that are aligned with the company and the c suite that kinda help well, can help it guide the company, you know, five, ten, fifteen years from now and help that company be successful. As I thought you put that really well.

Nithya Das [00:14:34]: Yeah. I mean, I I would say diversity, you know, gender diversity, racial and ethnic diversity, sexual orientation diversity on the board. I I think those are absolutely critical. It's just that also, you know, important is to have that diversity of skill set. And it's really when when you have when you have both of those kind of nailed in terms of board composition, do you think that's where you can hit a sweet spot of board culture where there is freedom and safety within the, you know, the confines of the boardroom to raise different topics, to ask the hard questions, to make the tough decisions, to really discuss and debate. One of the first things that I noticed when I joined the outpouring deeds board, I joined as a member of the compensation committee, but, wasn't the chair at the time. Our board chairman was serving as the comp committee chair then. And I really took note of the fact that at my very first comp committee meeting, he went around the horn of each committee member and called on us and gave us kind of the space or the microphone, if you will, to share our thoughts on something that had just been put forward to the committee by by the management team.

Nithya Das [00:15:41]: And, you know, I think though it's those little efforts that really kind of start to build the basis of, you know, when I think of board culture and and transparency and how do you become effective. It's those types of little efforts that really can be differentiators.

Carmen [00:15:55]: Yeah. I like that a lot. Thank you. And then going into a related field here, you're recognized as an advocate for DEIB and ESG. In your experience and from your vantage point, what are some biggest barriers when you're really holding back real progress in these areas?

Nithya Das [00:16:12]: One challenge that I see often within companies is they struggle to articulate how these DEIB and ESG efforts are tied to business outcomes. And if you can't tie your DEIB or your ESG strategy very closely to business outcomes, it can be very easy for them to be deprioritized or to be seen as something that's maybe a bit of an add on, you know, something that somebody is doing off the side of their desk. And in crafting those strategies, having the right executive sponsorship and buy in from the very top of the organization is critical, and then developing your strategy and priorities in a way that are closely linked to outcomes. And by that, I mean, if you're in a b to c company, think about the composition of your customer base, the consumers that are using your products. Think about how can an ESG strategy help to make you even more effective at engaging those consumers and and driving the business forward. Or, you know, maybe if you're not in a b to c company, look at who are your partners and clients, and what are the issues that they're focused on and that they're prioritizing. And, you know, is there any place where your ESG strategy and the customer or partner's ESG strategy can meet in the middle to become stronger and to help build the business even stronger as well? So that tends to be probably one of the biggest barriers to really being able to make progress. And if you if you can get that right, you also start being able to much more clearly articulate to other stakeholders both within the company, but also outside of the company why these issues need to be prioritized.

Nithya Das [00:17:54]: You know, whether it's taking time on the executive leadership agenda or the boardroom agenda or the budget. You know, you're able to make that business case much more effectively.

Carmen [00:18:05]: Yeah. I think you hit the nail on the head with that one, especially from my experience and what I've seen at S and P as well as, you know, comments and questions coming in from clients is, like, I think a lot of folks when they think about new initiatives, especially related to ESG, they're looking at it as purely as a cost. Right? It's a cost of business doing and doing something different. But, really, in reality, like any good, company strategy, you're looking at trying to integrate, yes, what what is the investment that we're going to have to make? What are the changes that we're gonna have to make? But at the end, how is that tied to, to your point, the outcomes? What is that ROI on this change in strategy? And as that's very difficult to measure. Right? But I think that that's something that your board and your c suite should always be involved in in thinking about. And to your point, like, finding a sponsor on some of these strategies and you've tied it closely to, like, here are the outcomes you're supposed to see. I think that'll get you a a long way.

Nithya Das [00:19:04]: Exactly. And, you know, I think maybe the one stakeholder group that I forgot to mention, which is incredibly important, is your employee base. And so having a really solid understanding of how if and how these issues are important to your employee base, how do they help in terms of both talent management, talent development, but also talent brand and recruitment. That can also be another great way to highlight these these programs as being, you know, priorities for the organization.

Carmen [00:19:30]: Absolutely. And that kinda reminds me of a previous podcast episode that I had with a labor and economics specialist. Her name was cat was Catherine Edwards, and she was talking to me about absolutely, like, there is strong demand coming from your employee base to be heard and to have input and have their their voices and their vision kind of fold into overall company strategy. So I love how you kinda brought that up as, you know, that your employee base is a great stakeholder group also to talk to and and get feedback from. Love it. So as I mentioned in your intro, you've been a long time advocate for women in leadership. What advice would you give to aspiring women leaders who want to rise to the executive or board level, maybe particularly in legal or corporate governance roles?

Nithya Das [00:20:20]: You know, years ago when so I started off my career as a in house attorney at a law firm based out of Boston called Goodwin Procter, and I decided to leave there as I was kind of approaching my sixth year to go in house. And part of what encouraged me to make that switch was an article that I read by somebody who's a a very well known woman, Whitney Johnson. She has a podcast called disrupt yourself, and she had just at that time written an an HBR article around personal disruption. And kind of the TLDR of the article was identify opportunities in your career where you can make smart calculated choices without knowing exactly what the next the next step and the step after that and the step after that are. And so what I had taken from that article at the time was to make some decisions that had guardrails, but to put myself out there. And that's one piece of advice that I tend to give to aspiring women leaders. Sometimes there can be a tendency to want to know, well, what's the next step in my career? What's the next level? What's the next opportunity? If I do this thing, what does it get me next? And, you know, I I I, throughout my career, have been fortunate enough to work with people who are interested and willing to be, you know, sponsors for my growth and development. And in taking on those opportunities, I've always tried to go back to that notion of personal disruption and being comfortable with the unknown. Nithya Das [00:21:53]: And so, you know, I think that's one piece of advice I would give. Maybe the second I find particularly for leaders who are in legal or corporate governance roles. You when you go into a room, there can be a tendency to wanna play the role of the lawyer or, you know, the legal adviser. And I always encourage lawyers who are early in their career when they have those opportunities to be in rooms with really senior people, you know, talking about some of these issues to try to be a business person in the room. Try to understand what are the objectives the company is trying to achieve. Why is this initiative so important to the CEO or the CFO? You know, how if there are maybe some alternative ways that we can get there. Try to, you know, add some of that value to the conversation if they have other strategic angles that we should explore. And, yeah, you might identify a legal question or a legal issue, but it probably isn't the thing that you need to be raising right in that room in that moment.

Nithya Das [00:22:52]: And so you have to be a bit judicious about, you know, how you show up in those rooms. And if you want to be able to move into more of an executive level role, showing up as a business leader will will serve you much more in that direction. The last thing that I would say in terms of aspiring women leaders who want to rise to a board level is make it known that you want a board seat. And and not just even a board seat. I mean, the same thing applies for rising to an executive level. You should make it known to the people in your network what your aspirations are, and that can feel scary. I'll say even this far along in my career, I still have a lot of imposter syndrome, so it can feel a bit too ambitious or forward to put that out there into the world that you want to serve on a board of directors or that you want to be a CFO or a COO or a CEO. But, you know, it's important for you to communicate those things to the people who can help make it happen for you because I think there's some stat that, like, 99% of the decisions about your career are made in a room that you're not in. Nithya Das [00:23:50]: And so the more that the people who are in those rooms can know what you aspire to do, the the more likely it is that your name will be put forward when those opportunities come up.

Carmen [00:23:59]: That's kind of a scary stat. Thank you. Thank you for sharing that. Nithya Das [00:24:04]: I mean, don't don't quote me on it exactly. Maybe it's, like, 90%. But, I mean, I think it rings pretty true.

Carmen [00:24:10]: Yeah. Right. Yeah. Most more often than not. Right? You're not in that room when that decision is being made. And I like your point in terms of, you know, being forthcoming with with your wants and wishes because you you are your biggest advocate. Right? You're you're the the one in in your own corner, and you're gonna be the the one fighting the most for for what you want. So why not put it out there.

Carmen [00:24:30]: Right? Thank you so much on on your advice there. Now I always like to close out these podcasts with one piece of practical advice you would give our listeners. I really appreciate the specificity that you had around aspiring women leaders. But in terms of just, you know, taking the step back and maybe thinking maybe a little bit more broadly, what's one piece of practical advice you'd give our listeners today?

Nithya Das [00:24:51]: One piece of practical advice that has been top of mind for me, especially well, over the last few months, but especially this week has been and and by the way, this is something that we're talking about at home with my older daughter as well as at work, but is we are in the time of AI. And so practical advice. I think everyone should be evaluating. What are the things that you were doing on a day to day basis, and how can they be made easier, better, more efficient, more effective through the utilization of AI. And if you're not using it every day in the course of things that you're going about doing, whether it's at work or at home or on the side for fun or whatever it is, but certainly at work, then I think that you're really you're really missing out. And we have the great fortune of having one of diligence board directors come to the company this week. We had something that we call reignite, like a reignite kickoff for for our global employee base. And he gave a talk, and one of the things that he said was in the course of his career, he's always viewed exploring and adopting new technologies, new skills, you know, new developments as a way to improve his performance in his own role, and that's been the thing that has been I think he described it as being, like, one of the greatest accelerants or contributors to his personal growth and development, and that's always worked out that way for him.

Nithya Das [00:26:21]: And so I think what I'm seeing is that or sensing is that a lot of people are a little bit scared of the AI revolution, and they're scared that it might, it might somehow displace them or make their work less valued. And so I think, you know, the practical advice is make sure that you're using it, make sure that you're getting smart about it, and don't be scared of it. Because if you can become the master of, you know, being more effective in your job through the utilization of AI, then more power to you. I think that'll just lead to more and more opportunities and growth and development.

Carmen [00:26:53]: It's a great piece of feedback. Nithya Das [00:26:55]: It also feels like we can't we can't have a podcast, like, in Carmen [00:26:58]: Without talking about AI.

Nithya Das [00:26:59]: Without talking about something

Carmen [00:27:00]: about AI. Absolutely. I know. I was gonna mention it, and I was like, yep. You're we're back on AI. But, yes, thank you so much. I like that. And I would also encourage my listeners to be curious about AI.

Carmen [00:27:13]: Give it a try and learn something new. Well, thank you, Nithya, and thank you listeners for tuning in today. I hope you enjoyed this content, and as always, let me know if there are topics you like me to cover. Until next time, happy listenin