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Nasdaq Moves In on Headhunters' Turf

Posted on: Friday, 22 June 2007, 12:13 CDT

The Nasdaq Stock Market is beefing up the portfolio of services it offers its 3,000-plus listed companies -- and it will no doubt rankle some established boardroom recruiters -- with the imminent launch of BoardRecruiting.com. The exchange believes the site will save public and emerging private companies time and money by facilitating matches between companies and a deeper pool of potential directors.

Nasdaq's Corporate Client Group already offers conferences, directors and officers liability insurance, and a news service as well as investor relations and executive compensation tools under a number of brands, says Bruce Aust, the group's executive vice-president. Its new corporate matchmaking site has recently registered several hundred director candidates, more than half of whom have previous boardroom experience, Aust points out. On June 25 or shortly thereafter, the Corporate Client Group will open its database to facilitate the first round of introductions.

The new profile-matching service is available to Nasdaq-listed and other companies for a one-search subscription fee of $10,000 or a $15,000 annual subscription that promises unlimited searches of the database. In addition, the Nasdaq group will charge an additional contingency search fee of $20,000 for each introduction that ends in the election of one of the site's profiled candidates to a company's board. Anyone can create a profile on BoardRecruiting.com. That is, any director candidate serious enough to pay an annual registration fee of $350 that will be levied beginning in January.

Creating a Larger Pool of Candidates "We see it being used to populate boards for IPOs, and venture capital and private equity companies may also find this very interesting," Aust says of the new Nasdaq site, which allows both boards and director candidates to create profiles. Based on responses to the postings, both sides can determine whether to take any online flirtation to the next level themselves. Director candidates can express their preferences to join a board based on its market cap, industry, and geography. Companies and board representatives can search for candidates based on qualifiers such as professional credentials and candidates' previous board experience.

"We used to do this informally," Aust explains. "We are definitely not trying to replace the executive search firms. They do a lot more than what this matching service will do." But he concedes it will provide "a lower-cost way to find good-quality board directors." The follow-on candidate assessment and deal closing usually brokered by executive search consultants will be left to BoardRecruiting.com's candidates and subscribing companies. Aust says the site may even appeal to pricier board recruitment firms as an additional candidate-sourcing tool.

"We hope it will create a larger pool of [director] candidates to choose from," Aust says. "Each candidate will have the ability to select what he wants to disclose about personal diversity such as race and sex," giving hiring companies some guidance about which potential recruits would round out their existing boards.

Filling a Need David Smith, president of the Society of Corporate Secretaries and Governance Professionals, gives the idea a thumbs-up. "The need is great. The requirements for expertise and the time commitment have increased," he says. "And the pool of directors is shrinking." Smith sees Nasdaq's move as a way to address that problem. "The big search firms, and this is not a knock on them, kind of have a roster of people that they offer up to companies," Smith says. "I applaud the Nasdaq because there's a lot of good people out there and anything that broadens the talent pool is highly beneficial."

Michael Kelly, managing partner of the global board services practice for executive search firm CTPartners, says his firm, for one, isn't threatened by Nasdaq's entry into the director-matching business. "Databases will help some companies," he says, "but there is no replacement for the judgment and comfort level that shareholders receive from working with a global search firm on their board of directors searches."

Source: Business Week

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