An Opportunity for Directors to Communicate More Effectively

TK Kerstetter’s very interesting program  This Week in the Boardroom  took an interesting look  back on the events of 2009 that will impact boards and directors in the years ahead. Both Kerstetter and his guest, Scott Cutler noted that corporate governance has been politicized and  wrongly blamed for the financial crisis but both see opportunity for directors to focus on effective corporate governance and the key role that directors play. 

To Cutler’s concern that “the strongest voices in corporate governance are not being heard,” we offer the suggestion that directors could use their strong voices to communicate with greater clarity, rather than settling for languages that satisfies lawyers.

Both Kerstetter and Cutler lauded SEC Chairman Mary Schapiro who has moved quickly to bolster the SEC’s regulatory and enforcement powers. At the same time, she strives to communicate intent in all the “why” of the SEC’s action. 

Take the recent press release about increased disclosure:  The SEC announced new “rules to enhance the information provided to shareholders so they are better able to evaluate the leadership of public companies.” The rules “will improve corporate disclosure regarding risk, compensation and corporate governance matters when voting decisions are made,”  said Schapiro.

It’s true that shareholders are a diverse group and it is not the job of the board to satisfy everyone, but listening to varied points of view always improves decisionmaking.