A good board of directors can give a packaging company guidance and direction that sometimes result in more-tangible benefits.
For example, Sean Epps, a board member at film maker Pliant Corp. of Schaumburg, Ill., had some suggestions about where Pliant managers could seek help in upgrading profitability.
``We take a hands-on approach,'' said Epps, who also is a principal at New York-based JP Morgan Partners, which is Pliant's majority owner. ``We're involved in the handling and monitoring of our investments.''
Pliant wanted to cut costs while developing new products. So Epps suggested that Pliant talk to other JP Morgan portfolio companies, especially those in specialty chemicals.
``They've gotten ideas from some of those companies,'' said Epps after his talk at Packaging Strategies, held March 29-31 in Atlanta. ``If we find a few companies that can work together, it helps them to talk to each other.''
Epps' matchmaking services go beyond the normal role of boards at many publicly held packaging companies. In a board of directors' panel at Packaging Strategies, executives expressed varying opinions on how involved a board should get in the day-to-day operations of a company.
Lawrence Codey, a board member of film producer Sealed Air Corp. of Saddle Brook, N.J., said a board's main role is to monitor performance and finances and make certain the company is complying with regulations. Leadership and business strategy should come primarily from the chief executive officer, Codey said.
``I don't encourage boards to manage to the next quarter too much,'' Codey said. ``We should only take a longer-term view.''
But Wes Lucas, president and CEO of Cincinnati-based inks and pigments company Sun Chemical Co., said a great board goes beyond mere monitoring. Those most-active boards help CEOs retain and attract good people. They use their skills to complement those of a corporate leader and they even help recruit and retain customers, he said.
A crucial area - after scandals at Enron Corp. and WorldCom - is to find the right CEO who communicates openly, Lucas said.
``If a CEO violates [trust], it is hard to repair,'' he said. ``There's a slippery slope you start going down and never come back from.''
In the wake of those scandals, controls have been improved and the role of boards better defined, Codey said. But that also has placed limits on what a board can do, Lucas said. There now are forms to fill out and bureaucratic rules to follow. It has gotten a little out of hand, especially for an active board, Lucas said.
A modern board also must be able to assess crisis management. A board should look for clues that problems exist, Epps said. It does not matter if the company is large or small.
``Each company needs to be held to the same standards,'' Epps said. ``It safeguards the confidence of investors.''
JP Morgan helped Pliant meet its goals, Epps said. The equity firm looked for hedging opportunities in resin pricing, he said. The firms also worked on better supplier and customer relationships. A major change was hiring CEO Harold Bevis last year.