Governance Center Blog

Dec
21
2010

Top 2011 Issues for Directors and CEOs

As company holiday parties wind down and executives prepare for what next year may bring, that can mean only one thing in the corporate governance world: time for Top 10 lists for 2011.

Of the four major lists I could cull, only one actually lists 10 items. For the most part, these lists are more a compilation of issues and challenges facing directors and C-level executives in the coming year. In lieu of a Top 10 list this year, I figured I would focus on the top issues that I have seen in lists from four organizations. They are KPMG’s Audit Committee Institute (Ten To-Do’s for Audit Committees in 2011); the law firm of Wachtell, Lipton, Rosen & Katz (Some Thoughts for Boards of Directors in 2011); PWC (2011 Current Developments for Directors); and executive search firm and consultant Heidrick & Struggles (10 Key Challenges for CEOs in 2011). Read the rest of this entry »

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Dec
17
2010

Worth Reading…SEC Comment Letters on Whistleblowing Bounty Program

The SEC’s proposed rules to implement the whistleblower provisions of the Dodd-Frank Act has drawn its fair share of criticism in the form of public comment letters from business associations, companies, professors and a noted whistleblower from Lehman Brothers.

The criticism from the business associations and companies essentially center on rewarding wrongdoers and the unintended consequence of the SEC program competing with or even undermining internal compliance programs. Meanwhile, Matthew Lee (former senior vice president of financial control for Lehman Brothers and whistleblower on Repo 105 accounting red flags leading up to the financial crisis and demise of the financial services company) writes that there is too much focus on the monetary reward for whistleblowers in the SEC rules instead of the “protection of the public from loss.” Read the rest of this entry »

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Dec
16
2010

Spencer Stuart Index: Some Progress Made in the Boardroom

If you haven’t had a chance to download the 2010 version of the Spencer Stuart U.S. Board Index, I would advise you to do so. In its 25th year, the report gives a look back to life in boardrooms in 1986 and how it compares to life today.

While there aren’t too many surprises in the annual report, there are some statistical “nuggets” worth noting. For instance, the average board retainer in 1986 was only about $20,000 compared to nearly $80,000 in 2010. Also, the median number of board meetings in 1986 was 11 compared to eight in 2010. And the 1986 report doesn’t even address two of today’s emerging issues: separation of chair and CEO positions and the percentage of minority and female directors. Read the rest of this entry »

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Dec
10
2010

Shareholder Proxy Access Arguments Made in Court Filings

The second salvos have been fired by those organizations representing public companies and investment funds in a court fight with the SEC over proxy access.

While the U.S. Chamber of Commerce and Business Roundtable have filed their 215-page opening brief on Nov. 30, a slew of groups representing investors, pension funds and investment funds have either filed or plan to file friend of the court, or amicus curiae, briefs with the U.S. Court of Appeals for the D.C. Circuit. That suit, which was filed in September, is meant to vacate the new proxy access rules approved by the SEC in August that were due to go into effect on Nov. 15. Following the filing of the suit, the SEC agreed to stay the implementation of the rules until a court decision. That is not expected before the next proxy season. Read the rest of this entry »

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Dec
03
2010

Board Diversity Progress Measured by Calendar, Not Clock

Let’s face it. Real progress can’t be measured in seconds, minutes or days. When it comes to diversity of public company boards, you would be looking at years or decades. If progress is defined as moving forward to another phase, then U.S. public companies may actually be making some progress in the area of board diversity.

The markers I use to measure such progress are the following:

  • Agenda, a Financial Times electronic newsletter, has published its first-ever directory of 100 director diversity candidates called The Diversity 100.
  • The 2010 U.S. Directors’ Compensation and Board Practices Report published by The Conference Board Governance Center is measuring diversity and minority representation as a total of the total board makeup opposed to the 2008 report that only asked if a board had at least one member of a minority group (i.e. women, academics, non-U.S. professionals, African-Americans, and Hispanics). By the way, the report found about 15 percent of board members in financial services are women.
  • A survey of proxy statements of the Dow 30 disclosures on board diversity and director qualifications by Davis, Polk & Wardwell LLP that was published in the Director Notes report Board Diversity and Director Qualifications in August showed that 56 percent of those companies included gender in their definition of diversity while 41 percent included race. Read the rest of this entry »

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