Dodd’s All Out Approach to Corporate Governance

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Senator Christopher Dodd (D-Conn) introduced his 1,135 page bill, Restoring American Financial Stability Act in the  in the Senate Banking Committee with the goal of  “creating a sound economic foundation to grow jobs, protect consumers, rein in Wall Street and prevent another financial crisis.”

While many measures are drawn from Senator Charles Schumer’s (D-N.Y.) Shareholder Bill of Rights, this greatly expands the scope.

Just last week, David Gergen, American political consultant and presidential advisor during four administrations, opined about the state of the economy at the Council of PR Firms’ Critical Issues Forum according to Weber Shandwick’s Chief Reputation Strategist, Leslie Gaines-Ross in her Reputation Exchange blog.

What a message for corporate boards to take the initiative to build trust by engaging with shareholders with effective board-shareholder communication programs.

Smart Boards Recognize the World Has Changed

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Five years ago, RiskMetrics Group, the provider of proxy advisory services, seldom heard from the directors of the boards whose governance they evaluated.

“ These days, it’s not unusual for a board member—typically the lead director or a key committee chair—to initiate the contact with RiskMetric’s research team.  It’s common for a director to lead the discussion, ” said Patrick McGurn, Special Counsel , RiskMetrics Group. Continue reading →

Advocates for the Public as Well as California Teachers

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When Anne Sheehan, Director of Corporate Governance for the California State Teachers Retirement System (CalSTRS) speaks, companies in which the nation’s 2nd largest public pension fund invests listen.

“This is a new era,” Sheehan told the audience at the National Association of Corporate Directors. “The financial crisis of the past year has resulted in the erosion of the trust of the American public in business.  We represent our members and beneficiaries but we also believe we are a proxy for the American public who invest in public companies.” Continue reading →

Reaping the Benefit of Shareholder Communication

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While Bonnie Hill has distinguished herself in many ways as a board member, it was her willingness to meet with shareholders that made her a leader.

“I have never had a shareholder group ask something that was inappropriate,” said Hill. “They are aware of Regulation FD. We may not always agree but I think it’s very important to listen and sometimes  agree to disagree. We have learned so much from talking to shareholders.  It’s made us better directors. Continue reading →

Directors, This Is Your Defining Moment

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In the opening address for corporate governance conference for the National Association of Corporate Directors Sunday, William George, the former Chairman and CEO of Medtronic and director of ExxonMobil and Goldman Sachs urged his fellow directors to seize the moment and take the necessary steps to speak and act on behalf of good governance.

Adapting his remarks from his new book “7 Lessons for Leading in Crisis,” George told directors that boards are in crisis, having lost the trust of shareholders and the public.  Continue reading →

Corporate Boards Can Learn from Private Equity Boards

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In a presentation at the International Association of Interim Executives at the Four Seasons today, Prism Capital partner Stephen Vivian spoke about the unique nature of private equity boards. “The independent directors of private equity boards are much more immersed in active engagement with management, coaching them, mentoring them as they focus relentlessly on business strategy. ”

Often characterized as “player-coaches,” these independent directors play an important role in taking the company to the next level. Continue reading →

Protect Your Reputation, Directors

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Being a director is an honor and a responsibility.  An honor because it recognizes the individual’s  business accomplishment and the value he or she can bring to an organization in providing oversight.  Directors also take on a heavy responsibility to use their  judgment to serve the interests of shareholders.

“When you join a board, you put your reputation on the line,” said Craig J. Duchossois, CEO of the Duchossois Group, a privately held company. “Do your due diligence on the company.  Does the company share your values? Talk to management, other board members, employees, customers and the community.” He made his remarks in a panel on Private Company Boards at a Chicago NACD meeting. Continue reading →

Directors Can Bypass the Proxy Advisory Firms

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In light of the SEC’s ban on broker voting, there is considerable concern about the conflicted business model of proxy advisory  firms such as RiskMetrics, which provides proxy voting recommendations to institutional investors along with a proprietary governance rating while an arm of RiskMetrics sells advice on how companies can improve governance scores.

Directors shouldn’t spend too much time railing against these firms. Rather, it’s time for boards of directors to bypass these groups and review their own governance policies including charters, bylaws and compensation rules so that they are well versed on the company’s corporate governance policies. At the same time, boards should develop an understanding of its shareholders and their concerns. Continue reading →