Attracting A Strong Board

In the wake of the recent financial crisis and earlier accounting scandals, investors in public biotech companies increasingly have focused their attention on corporate governance and boardroom underperformance. As a result, the composition of a company's board of directors has become an increasingly important factor for investors in deciding whether to buy, hold or sell stock. At the same time, stricter requirements imposed by government regulators, a higher level of scrutiny by proxy advisory firms and an increasingly litigious plaintiff's bar are making it harder to attract strong board members who meet the tests of independence and experience.

Biotech companies can take several steps to make their boards more attractive to top-tier candidates, including providing access to key management and advisors, and ensuring that board compensation policies are designed in light of recent court rulings.