The first two women to join the HCI Group board of directors did more than bring gender diversity to what previously was an all-male board.
They are part of an intentional effort by Paresh Patel, HCI chairman and CEO, to develop a new generation of corporate board members and leaders in the Tampa Bay business community.
The two board members — Loreen Spencer and Sue Watts — were the first participants in HCI’s Board Observer program, established in 2018 to train selected individuals in public company board operations, governance and law, among other things, and prepare them to serve on public company boards. The program also helps HCI identify board candidates who have traditionally been under-represented on public company boards.
In the final part of the St. Pete Catalyst series Inside the Boardroom, we’ll look at how innovative solutions can strengthen public company governance.
HCI (NYSE: HCI), a Tampa-based company with insurance, technology and real estate operations, historically relied on large blocks of shareholders to suggest board nominees, who always were men, Patel said.
But there’s been a growing push for gender diversity and a move away from a boy’s club in the boardroom. Investor advocacy groups such as Institutional Shareholder Services now generally recommend against the re-election of board members who chair key committees, such as the nominating committee, if there are no women on a company’s board.
Pressure from outside organizations was not the motivating factor for Patel.
“We could have just added a couple of women and life would be easy but that didn’t feel right, mainly because if you do it that way, you are ticking boxes rather than solve the underlying problem,” Patel said.
Instead, Patel set out to expand the pool of board candidates.
“The idea became, why don’t we try to craft and educate the next generation of board members,” Patel said. “There are 7 billion people in the world, and 3.5 billion of them happen to be women. If we make the criteria that only males can be in boardrooms, there’s a pool of 3.5 billion people that you’ve just eliminated. If you believe as I do that there’s a lot of talent in those 3.5 billion, why would you not fish in this great pond that everyone else is ignoring. There’s no competition. It’s easy. If you don’t fish in this pond you are doing yourself a disservice.”
Under HCI’s program, board observers receive all board materials, with limited exceptions, and are invited to attend and participate in all board meetings, although they do not have voting privileges. They receive about half of the cash compensation that elected board members receive.
“The board observer program is having a beneficial impact both in terms of what it brings to the individuals and also what it brings to the board,” Patel said. “You have new voices who speak up. What makes that possible is our boardroom culture. When we have big decisions to make, everybody has to speak up and voice their opinion one way or another.”
In addition to bringing more diverse voices to the board, the program has a community impact.
“Tampa Bay is looking to build leaders … This is a different version of that. Having people experienced in these matters is useful if Tampa is going to grow and develop. This is our small way of giving back to the community.”
Both Spencer and Watts were elected to the board in April 2019, and results have been beyond expectations, Patel said. Spencer, a Certified Public Accountant and retired audit partner at Deloitte & Touche, brings business, accounting and financial experience to the HCI board, the company’s proxy said. Watts, an executive at technology consultant Capgemini, has more than three decades of experience in business operations, information technology and leadership. After one year of board service at HCI, she is chair of the corporate governance and nominating committee, and will help select future board observers.
“We didn’t add Sue and Loreen to the board because they happened to be female. We added Sue and Loreen to the board because they are fantastic board members and any company should be proud to have them,” Patel said.
HCI now has two other board observers — Lauren Valiente, senior counsel and litigation lawyer with Foley & Lardner, and Peter Politis, founder of legal services firm Politis PA.
There’s no guarantee that board observers will become board members.
HCI currently has no vacancies on its board of directors, “but if anyone asked me, they would make good additions to any public board,” Patel said. “And they will probably join our board in the future.”