Those who work in corporate communications and public affairs have long held that companies must operate in the larger public interest.  Now, Hillary Sale, a law professor at Washington University has coined a new term, “publicness” as she examines the Model Business Corporation Act and describes a set of responsibilities that U.S. companies need to better handle.

Communication professionals have pointed to Arthur W. Page, a PR executive for AT&T from 1927 to 1946 who developed a set of principles about how a company should operate including “a successful corporation must shape its character in concert with the nation’s. It must operate in the public interest, manage for the long run and make customer satisfaction its primary goal.”

Professor Sale has used the law to describe how officers and directors of companies should act. She attributes the creeping regulation as a result of “the failure of officers and directors to govern in a sufficiently public manner has resulted not only in scandals, but also in more public scrutiny of their decisions, powers and duties.” The government and the media, she says, is driven by the public, and now “have increasing influence over corporations, which requires a change in the way officers and directors understand and do their job.”

CEOs and corporate directors would do well to read her excellent article in the Duke University journal, “Law and Contemporary Problems.”

The bell has already been rung. The government and a larger public are involved in corporate governance and their concerns need to be addressed.

My article, suggesting that companies refine the concept of the Fifth Analyst Call to improve upon the proposal by a group of institutional investors and serving the narrow interests of this coalition to make it a fair process that corporate managers can properly use to serve all investors equally has drawn some interesting reactions.Disclosure Versus Engagement 

John Wilcox, the Chairman of Sodali commented, “that directors of U.S. companies are not ready for open dialogue with their investors, even on a narrowly defined topic such as corporate governance and the annual meeting. The reason they are not ready is because U.S. companies – and boards in particular – are generally on the defensive in their communication with shareholders. Instead of communication, U.S. companies practice disclosure. Disclosure is defined by prescriptive rules and enforced by liability and regulatory penalties.”  This, he says makes “boards and shareholders mistrustful of each other and relies on adversarial modes of engagement.

Boards guided by legal counsel continue to respond by addressing the “letter of the law” grudgingly meeting new demands for transparency rather than the spirit of the law, which Mary L. Schapiro, SEC Chairman emphasized as “true engagement with shareholders.”

In this environment, Washington will continue to regulate, with many unintended consequences until CEOs and their boards see shareholders as part of the governance process and critical to not only their long-term health but the health of capitalism in the 21^st century.

Dominic Barton, McKinsey’s managing director, argues that capitalism is endangered unless business leaders take steps now to “modernize” the system.  This “precious machine”  and “the best economic system” requires both popular and political support.

Barton spent 18 months talking to 400 business and government leaders around the world to develop his Harvard Business Review article, “Capitalism for the Long Term.”

McKinsey has posted videos of Barton discussing his ideas as well as articles to encourage others to engage in the discussion.  “There’s a lot of things that business leaders can fix,” Barton says in one short video.  “We don’t need the government to tell us what to do but we need to get out there and move on it.”

Moving on it requires adjustments, shifting from a quarterly to a long-term focus, serving stakeholders while building value for shareholders, and strengthening governance.

Pointing to the increased complexity of business, Barton observes that the current governance model was developed for another time 30 years ago.  The most shift is that directors need to spend more time on board work to understand the business well enough to provide strategic advice. He points out that boards of private equity firms spend about 74 days a year; corporate boards spend 15-20 days, too little to provide the strategic help that companies need in a competitive, global and 21^st century environment.

Dominic Barton, McKinsey’s managing director, argues that capitalism is endangered unless business leaders take steps now to “modernize” the system.  This “precious machine”  and “the best economic system” requires both popular and political support.

Barton spent 18 months talking to 400 business and government leaders around the world to develop his Harvard Business Review article, “Capitalism for the Long Term.”

McKinsey has posted videos of Barton discussing his ideas as well as articles to encourage others to engage in the discussion.  “There’s a lot of things that business leaders can fix,” Barton says in one short video.  “We don’t need the government to tell  us what to do but we need to get out there and move on it.”  Businesses are self living organisms which can survive without the involvement of the government. With the help of the b2c crm constantly, a business can be regulating service by keeping in touch with customers thus never stopping the flow of cash.

This videos were posted on Youtube as he knows that in that way he could reach a bigger audience, as more views the video gets, the more it gets recommended by the Youtube algorithm. Check the most recommended buy youtube views service, to get your video to another level.

Moving on it requires adjustments, shifting from a quarterly to a long-term focus, serving stakeholders while building value for shareholders, and strengthening governance.

Pointing to the increased complexity of business, Barton observes that the current governance model was developed for another time 30 years ago.  The most shift is that directors need to spend more time on board work to understand the business well enough to provide strategic advice. He points out that boards of private equity firms spend about 74 days a year; corporate boards spend 15-20 days, too little to provide the strategic help that companies need in a competitive, global and 21^st century environment.

In his remarks before the National Press Club, Broadridge CEO Richard J. Daly called for a nationwide effort to encourage employees to vote their proxies and thereby participate in the larger enterprise of improving corporate governance.proxy

As we said in our tweet earlier today (Karen Kane@BoardAdvisor)  Daly is right to use his position to encourage shareholder education by asking the country’s top 1000 CEO’s to mobilize employees to participate in corporate governance by voting their proxies.

Daly calls Broadridge the major player in investor communications and proxy distribution, providing the digital pipes for these transactions but he also notes that Broadridge makes no more or less money from an increased exercise of proxies.

Companies and the boards of directors that provide oversight need to embrace the concept that engaging shareholders has never been more important in restoring trust. Shareholders need to be reminded that their proxy represents their investment, their wealth and their financial returns.

“It is clear to me that when raising capital, creating jobs and effectively competing in an ever increasingly global market, companies need input and support from shareholders to validate they are on the right track.”

The Board of Prudential  has repeated its strong corporate governance practice in filing its 2011 Proxy today. “As we did last year,” says Peggy Foran, Chief Governance Officers, VP and Corporate Secretary, the proxy begins with a three-page letter from the Board to shareholders.  As we also did last year, we tried our best to “plain  english” the proxy for easier reading for shareholders.”
In addition, Prudential added a two-page summary to highlight business performance and compensation decisions. They incorporated suggestions from last year by including a chart on director experience and skills that the Governance Committee uses every year to evaluate the Board and recruit new board members.
At a time when so many boards are reluctant to engage with shareholders, Prudential is creating a template for best practices. As Peggy says, “Finding effective and innovative ways to communicate with shareholders is becoming increasingly vital. Shareholders need to be engaged.  I see the future as engagement and communication.”
Congratulations Prudential.  Thank you Peggy Foran for your leadership.

Concerned about social media, a few boards have actively sought new directors with a social media background to bring that capability into their boardroom. A staff member of the National Association of Corporate Directors mentioned that directors are having a hard time because the candidates are generally in their 30s and 40s and directors worry about upsetting the collegiality of the boardroom. That is, how would a 30 or 40 year-old fit with a group of mostly older directors?  In fact, boards are getting older. The number of boards with elderly members is growing because many boards are raising the age limit for retirement to 80 and some eliminating forced retirement altogether according to  Joann S. Lublin in the Wall Street Journal.

Social media may be a helpful competency but so much of what is embedded in the Dodd-Frank Act is a call for greater transparency, better communication between directors and the shareholders who elect them.  Social media is communication, albeit faster and user-generated.  Since the concept of communicating directly with shareholders is a new concept, boards need the assistance of high-level communication strategists—either as board members or consultant –to help boards craft their own communication policy and get them ready for the dialogue shareholders are demanding.

What directors are really worried about is hijacked media where a company’s asset or campaign is taken hostage by those who oppose it. Managing social media is rooted in best communication practices including crisis management.

Concerned about social media, a few boards have actively sought new directors with a social media background to bring that capability into their boardroom. A staff member of the National Association of Corporate Directors mentioned that directors are having a hard time because the candidates are generally in their 30s and 40s and directors worry about upsetting the collegiality of the boardroom. That is, how would a 30 or 40 year-old fit with a group of mostly older directors?  In fact, boards are getting older. The number of boards with elderly members is growing because many boards are raising the age limit for retirement to 80 and some eliminating forced retirement altogether according to  Joann S. Lublin in the Wall Street Journal.

Social media may be a helpful competency but so much of what is embedded in the Dodd-Frank Act is a call for greater transparency, better communication between directors and the shareholders who elect them.  Social media is communication, albeit faster and user-generated.  Since the concept of communicating directly with shareholders is a new concept, boards need the assistance of high-level communication strategists—either as board members or consultant –to help boards craft their own communication policy and get them ready for the dialogue shareholders are demanding.

What directors are really worried about is hijacked media where a company’s asset or campaign is taken hostage by those who oppose it. Managing social media is rooted in best communication practices including crisis management.

Calling it the Council’s “rapid response programming”, Michael Moskow opened the panel discussion, Economic Recovery: Bullish or Bearish? featuring  Mark Zandi, chief economist of Moody’s Analytics , David Hale, a Chicago-based global economist and Nial Booker, CEO of HSBC North America.

The Chicago Council on Global Affairs, co-partnering with the CFA Society of Chicago  convened the session to discuss the current state of the economy.

While acknowledging that there remain challenges to the economy, Zandi expressed optimism noting the way American businesses have dramatically improved their operations since the financial crisis, cutting costs and increasing productivity.  “U.S. companies are making money everywhere,” he said.  “They’ve got their cost structure down and improved their unit labor cost, which is rising in other countries.”  And, he added, companies are in a historically strong cash position, enhancing their global competitive strength.

What an optimal time for companies to get ahead of the Dodd-Frank Act requirements to more actively engage with  shareholders by taking steps now to convey how boards are providing better oversight, more engagement in corporate strategy and greater respect for the shareholders.  

A group of institutional investors have proposed a “Fifth Analyst Call” wherein  U.S. public companies host a “dedicated conference call” in addition to the quarterly conference call for institutional investors focusing exclusively on corporate governance matters with the primary dialogue between investors and directors.

Mindful of Regulation Full Disclosure, the call would be scheduled 10 to 15 days before the annual meeting and cover material that is in the proxy.  While every company will need to examine its particular needs, this proposal is a framework that encourages dialogue.

Directors should embrace this opportunity to efficiently communicate with institutional investors and beneficial owners with the ability to interact directly with shareholders not filtered through proxy advisory firms or solicitors.

Yes, it will require preparation.  But shouldn’t those who are paid to represent the interest of shareholders be able to discuss the company’s governance framework and philosophy, the board’s structure, effectiveness and succession planning? Directors should be able to discuss the internal controls and risk management practices and even answer questions about executive compensation.

Such dialogue could be enormously helpful to boards at this critical time in helping to restore trust in their work in providing governance oversight.