An overview of Board Director composition for the Top 20 (by Market Cap Value) Colorado-based publicly traded Energy companies. Six criteria are used to understand the true diversity of a board. The 100 companies are reviewed as a group and by Market Cap Value subgroups. This presentation shows the highlights taken from a more detailed text companion piece with the same title (also included on SlideShare).

1. Colorado 2014 Energy Industry Corporate Governance Diversity Report
Tom Furlong
Managing Director
Harvard Group International

2. Key Learnings
01
table of contents
Overview
02
Overall Board Demographics
03
Board Member Status Metrics
04
Methodology & Top 20 Colorado Energy Companies
05
About Harvard Group International and the author
06

3. 3
conclusions from this study
Key Learnings
Board Size for the Colorado Top 20 (7 seats) is nearly a full seat and a half less than comparable Texas Energy companies and three seats smaller than peer Market Cap Value (MCV) companies in other industrial sectors
Female participation on Colorado Top 20 boards is less than third of the average of public companies in the U.S.A. (5.0% vs 16.9% of all board members)
Energy and Financial industry executives hold 90% of all board seats with these companies, limiting exposure to best practices from other industries
The Colorado Top 20 boards can easily become more diverse by adding two additional seats and attracting quality executives of both genders from outside the Energy and Financial sectors
section 01

4. 4
what is diversity?
This report* is a diversity analysis of the top 20 MCV (Market Cap Value) Colorado- based public Energy corporations.
Gender and Ethnicity are the most commonly considered forms of diversity- but other factors should be considered to determine the “diversity” level of a corporate board.
Six Diversity Criteria were reviewed for this report:
•Gender
•Industry Focus (from inside/outside the Energy sector)
•Education Background
•Age
•Length of Board Service
•Other Public Board Activity
Overview
* A more detailed report, including individual company Board analysis, is available by contacting the author
section 02

5. 5
why is diversity important?
For high MCV companies, having a board that reflects the breadth of American industry will offer additional insights into a company’s strategic direction and focus. The result: improved advice and guidance for the executive team.
Diversity of experience is important in helping to prevent “group think” among the board. This risk is most glaring when the directors are all from the same industry or other similar backgrounds and experiences.
Corporate Governance diversity can also impact the investment community. Investment funds might look for boards that reflect the make-up of successful boards from other industries; investors might choose to target companies whose board shows a breadth of experience; and having a high level of diversity demonstrates the board’s commitment to look at a larger pool of talent for their members- and would look at a larger pool of talent when making key executive hiring decisions.
Overview
section 02

6. 6
overall board size
There are 141 total seats among the 20 boards.
Board sizes range from 4 to 11 across all MCV groups. Average board size is just above 7 directors:
•3 boards > 9 members
•4 boards = 8 or 9 members
•13 boards < 8 members
Overall Board demographics
Board Size for Company
Size
All Boards
> $1B
< $1B
10+ Directors
3
3
0
8 to 9
4
2
2
6 to 7
7
2
5
4 to 5
6
2
4
Total
20
9
11
section 03

7. 7
female representation
Women hold 5.0% of the Colorado Top 20 board seats.
•No companies have two women on their boards
•Seven companies have one female director
•13 companies have no women executives on their boards
Overall Board demographics
Board Female Representation
# Women on Board
All Boards
> $1B
< $1B
Two
0
0
0
One
7
4
3
Zero
13
5
8
Total
20
9
11
% Boards w/ Women
35%
44%
27%
section 03

8. 8
industry background (1)
Boards with too many (or too few) Energy industry insiders can become blind to outside influences.
Nearly 2/3 (83 out of 141) of board members come from the energy industry- with 60 from the same sector as the company that they offer governance and guidance.
Board Member Status Metrics
Board Composition of Energy Industry Insiders
Status
All Boards
> $1B
< $1B
Industry Insiders < 50%
8
3
5
Industry Insiders 50%-60%
4
1
3
Industry Insiders > 60%
8
5
3
Total
20
9
11
section 04

9. 9
industry background (2)
Financial industry directors form the largest group of industry outsiders.
Nearly 1/3 (44 out of 141) of board members come from Private Equity, Accounting, Investment, and Banking firms- reflecting the high levels of Investment and Capital Expenditures in the industry.
Board Member Status Metrics
Board Composition of Financial Sector Professionals
Status
All Boards
> $1B
< $1B
Financial < 15%
6
5
1
Financial 15-33%
5
1
4
Financial > 33%
9
3
6
Total
20
9
11
section 04

10. 10
education background
Board Member Status Metrics
A strong mix of educational backgrounds on a board balances the technical and capitalization needs of Energy companies.
Currently 92 board members (65%) have undergraduate degrees in either Engineering/Geology or Business/Accounting curricula; 32 members (23%) also have earned a M.B.A. degree
Undergraduate Degree of Board Members
Discipline
All Boards
> $1B
< $1B
Engineering
49
34
15
Business
43
20
23
Other
49
19
30
Total
141
73
68
section 04

11. 11
age
Board Member Status Metrics
A broad age range on a Board can offer differing perspectives of guidance and operation for their management team.
Boards have to prepare for the Great Crew Change: those skewed with too many members over 70 risk a rapid drain of experience due to retirements.
Age of Directors
Status
All Boards
> $1B
< $1B
< 60 Years
55
25
30
60-70 Years
69
38
31
> 70 Years
17
10
7
Total
141
73
68
section 04

12. 12
length of board service
Board Member Status Metrics
Board tenure (and turnover) can impact the quality of guidance offered to management.
For this report, 19 of the 141 board members (13.5%) are considered to be “long-tenured”- having served on their board for over 12 years. Boards with more than 2 “long-tenured” directors risk complacency and loss of independent oversight.
Board Composition of Long-tenured (over 12 years) Directors
All Boards
> $1B
< $1B
# Long-tenured > 2
4
4
0
# Long-tenured = 2
2
0
2
# Long-tenured < 2
14
5
9
Total
20
9
11
section 04

13. 13
outside public board activity
Board Member Status Metrics
A majority (86 out of 141) of Colorado Top 20 directors sit on other public company boards.
Multiple board service offers a director exposure to an additional dynamic team- and also the potential for conflicts on the time and effort required to effectively serve their company and it’s management team.
Directors Sitting on Other Boards
All Boards
> $1B
< $1B
# on Multiple Boards
86
40
46
# on Energy Sector Boards
69
30
39
All Board Members
141
73
68
% on Multiple Boards
61.0%
54.8%
67.6%
section 04

14. 14
Compiled data for this report
Market Cap Value (MCV) was utilized in this report since a company’s Board focus is to look out for the investment interest of the shareholders.
This report looks at the Top 20 companies both as a whole and by MCV size groupings:
MCV greater then $1 billion
MCV less than $1 billion
A few other points about this data:
•MCV were of October 31, 2014
•Directors were taken from each companies website on November 1,2014
•Demographic and other status criteria were gathered through exhaustive research of multiple data sources
•Changes that may have occurred between the compilation of data and the report’s publication date are not reflected in the commentary or chart data
Methodology
section 05

15. 15
who is on the the list?
The Colorado Top 20 Energy companies
American Midstream Partners
Forest Oil
Antero Resources
Kodiak Oil & Gas
Bill Barrett
Magellan Petroleum
Bonanza Creek Energy
Markwest Energy Partners
Carbon Natural Gas
PDC Energy
Cimarex Energy
QEP Resources
Earthstone Energy
SM Energy
Emerald Oil
Sundance Energy
Enservco
Triangle Petroleum
Escalera Resources
Whiting Petroleum
section 05

16. 16
who are we?
Harvard Group International (HGI) is an Atlanta-based executive search firm that has been helping clients throughout North America build their future since 1996. HGI exceeds performance metrics of the multi-office and multi-national retained search firms in rate of success (99%+), speed of service, and client satisfaction metrics. The HGI team, with over 350 years of search industry experience, attracts best-in-class talent for board roles, C- Suite, senior/junior executive positions, and key individual contributor roles.
Tom Furlong is the Managing Director of the HGI’s Energy practice and also works on the firm’s Corporate Governance team. He has successfully helped clients and candidates build their future for over 15 years by leading executive search projects throughout North America and Asia. Tom also draws upon his 13 years of experience at Novartis to understand the inner workings of individual teams that give strength to enterprises of all sizes and scopes.
About Harvard Group International and the author
section 06

17. Harvard Group International
1640 Powers Ferry Road #25
Marietta, Georgia 30067-1444
p) +1 404.459.9045
w) www.harvardsearch.com
t) @harvardsearch
Tom Furlong
p) +1 678.214.6065
e) tfurlong@harvardsearch.com
t) @TerrellMillTom
contact
information