Feb
11
2010

Q&A With Nell Minow – Financial Regulatory Reform

As financial regulatory reform remains in limbo in the U.S. Senate, shareholders and corporate watchdogs are becoming more vociferous and taking more action. One such organization taking the lead in this area is The Corporate Library and its founder Nell Minow.

Nell Minow, Editor and Founder of The Corporate Library

When Nell isn’t being quoted in the Wall Street Journal, New York Times, Corporate Board Member or Directorship on such issues as executive compensation or corporate governance, she is testifying before Congress, writing books and articles on these topics.

Recently, she has taken on the topic of financial regulatory reform [See this article on CNN’s Web site, “Wall Street bonuses are outrageous.”] Below are some excerpts from that CNN article:

“I believe in the market,” she wrote. “But executives and their boards of directors have hijacked the market to externalize costs and it is doing critical damage to capitalism. The key is always persuading providers of capital that managers will use the funds to create shareholder value and not to enrich themselves. This compensation mess calls that into question.

“…I also support banking of bonuses, which is preferable to clawbacks and amounts to a kind of escrow to ensure that any adjustments to the financial reports will result in adjustments to the bonus. No proof of bad intent should be necessary. If they are paid a bonus based on numbers that turn out to be wrong, it was never theirs in the first place.” Read the rest of this entry »

- Gary Larkin

Jan
20
2010

Q&A With Bill George: Corporate Leadership

As almost every U.S. public board continues a post-mortem on the financial crisis, many are looking for sobering answers from their own. And one director who has been making the rounds is Bill George, former Chair and CEO of Medtronic and director of Goldman Sachs and ExxonMobil who is a professor of management practice at Harvard Business School.

Bill George, Goldman Sachs director and HBS professor

George, who was selected in 2002 as one of “The 25 Most Influential Business People of the Last 25 Years” by PBS Nightly News, has written and taught extensively on corporate leadership. In addition to his recent book, 7 Lessons for Leading in Crisis, Jossey-Bass (Aug. 2009), he has written Finding Your True North: A Personal Guide, Jossey-Bass (June 2008).

I came across a video of an interview he granted to The Economist on Jan. 6. In that 12-minute interview, he emphasized that the biggest lesson not learned by CEOs during the financial crisis is that they have not yet faced reality. He said, “this crisis has morphed into a jobs crisis, a health care crisis. A lot of leaders don’t want to face the problem.” While he acknowledged Goldman Sachs has become the lightning rod for the compensation debate, he did say there has to be some restraint.

I spoke with George following The Economist interview to get his take on what U.S. corporations should be doing to improve the leadership at their companies and what they should expect for this year. Read the rest of this entry »

- Gary Larkin

Dec
21
2009

Worth Reading … Good Corporate Governance

A recent online discussion on good corporate governance I had with members of Dan Swanson’s Yahoo corporate governance discussion group I belong to got me thinking. It’s a good time to start looking at what thought leadership there is on corporate governance principles.

There is quite a lot of good white papers, articles and online discussion e-mail threads. While I won’t share the e-mail threads for obvious reasons, I would suggest joining some of the groups out there. Now is the time for people in the corporate governance space to talk to each other and share ideas.

I must admit that as I started reading material for this post, I noticed most of what is out there on corporate governance principles is from overseas (namely the United Kingdom, other European countries and Australia). As for what I am going to share with you this week, here it is:

• Some Thoughts for Boards of Directors in 2010, Martin Lipton, partner; Steven A. Rosenblum, partner; and Karessa L. Cain, associate, Wachtell, Lipton, Rosen & Katz. Nov. 30, 2009. http://www.directorship.com/media/2009/12/Some-Thoughts-for-Boards-of-Directors-in-2010-1.pdf. Key findings: This annual outlook is a 32-page report that stresses there is no one-size-fits-all approach to crafting a successful board. It also offers recommendations for key areas of concentration including CEO Succession Planning, Long-Term Strategy and Monitoring Performance and Compliance. “Some are perennial themes that remain relevant and deserve to be re-emphasized from year to year, whereas others have recently come into particular focus,” the authors say. Read the rest of this entry »

- Gary Larkin

Dec
18
2009

SEC Wants More Concise Disclosure That is Material

The SEC has three messages for public boards and management next proxy season when it comes to disclosing policies and practices regarding executive compensation, risk and corporate governance: the Compensation Discussion and Analysis (CD&A) should be used to tell their story, all disclosures should take risks into account and should have a threshold for materiality.

In so many words, SEC Chair Mary Schapiro and a majority of commissioners want disclosures, especially the CD&A, to be less voluminous, easier to read and full of content the investors can truly use. The commission is trying to instill in public companies the idea that disclosures should be treated like a “memo” to investors and not just another compliance document.

That is what I believe directors and management should take away from the SEC’s 4-1 approval Wednesday of new rules for disclosures in proxy and information statements. The proxy disclosure enhancements, which go into effect Feb. 28, 2010, would require disclosures in the proxy and financial statements on:

•   The relationship of a company’s compensation policies and practices to risk management.
•   The background and qualifications of directors and nominees.
•   Legal actions involving a company’s executive officers, directors and nominees.
•   The consideration of diversity in the process by which candidates for director are considered for nomination.
•   Board leadership structure and the board’s role in risk oversight.
•   Stock and option awards to company executives and directors.
•   Potential conflicts of interests of compensation consultants as well as the fees paid to consultants and their affiliates.

Read the rest of this entry »

- Gary Larkin

Dec
02
2009

Q&A With Charles Elson: Top Corporate Governance Issues for 2010

Heading into the first full post-financial crisis proxy season that will most likely include a bevy of new corporate governance regulations,

Charles Elson, Chair of Weinberg Center for Corporate Governance, University of Delaware

I decided to chat with Charles Elson, the Edgar S. Woolard, Jr., chair of the John L. Weinberg Center for Corporate Governance at the University of Delaware. Our topic: the Top 5 corporate governance issues for 2010.

Elson, who is also a director on various boards, of counsel with Holland & Knight and a member of the Technical Advisory Group of The Conference Board Task Force on Executive Compensation, believes that before all is said and done politicians and regulators will dictate how corporate governance is carried out in the next year.

“Regulations and laws will affect all of the top corporate governance issues in 2010 substantially,” Elson said. “God knows it is a mess. This is one of the most volatile, mind-numbing points in corporate governance that I have ever seen.”

For the most recent update on fiduciaries’ responsibilities with respect to these issues, as usual I direct you to The Conference Board Corporate Governance Handbook: Legal Standards and Board Practices (Third Edition). Below is his list of the Top 5 corporate governance issues for 2010 as well as some additional reference points on each issue: Read the rest of this entry »

- Gary Larkin

Nov
17
2009

Clearing Houses Key to Cleaning Up Derivatives Market

Now that the debate over healthcare reform is at a lull, some focus is finally being placed on one of the causes of the financial crisis: the derivatives market. From the United States to the European Commission to the G-20, regulators and government officials agree there is a need for transparency, central clearing houses and open exchanges.

In the past week U.S. Sen. Chris Dodd, chair of the Committee on Banking, Housing, and Urban Affairs introduced the Restoring American Financial Stability Act, which among many things addresses closing loopholes for over-the-counter derivatives, asset-backed securities and hedge funds. Many naysayers believe the Dodd bill doesn’t stand much of a chance. That includes Ron Insana, a senior analyst at CNBC, who spoke at Financial Executives International (FEI) Current Financial Reporting Issues conference in New York City Monday.

“Financial regulatory reform may be far from a done deal,” Insana said, although he did admit the Dodd bill was one of the most comprehensive bills that addresses systemic risk. That may be true, but only because there is a plethora of proposals. At last check, there are Dodd’s proposal, House Financial Services Committee Chair Barney Frank’s OTC Derivatives Market Act, the Federal Reserve’s plan to OTC credit and interest rate derivatives and the U.S. Treasury’s plans for regulating hedge funds, private equity and derivatives.

The Dodd bill would do a lot of what Frank’s proposal calls for. Regarding derivatives, Dodd’s bill would give the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) authority to regulate OTC derivatives to rein in excessive risk-taking, require central clearing and exchange trading for derivatives where both regulators and clearing houses would have a role in determining which contracts should be cleared (the SEC and CFTC would control which contracts get cleared), requires traders to post margin and capital on uncleared trades, and requires data collection and publication through clearing houses or swap repositories to improve transparency.

It seems as though there has been some collaboration between the House and the Senate on this since the language on who has the power to determine which contracts must be cleared reflects CFTC Chair Gary Gensler’s (See Gensler speech posted on Harvard Law School Forum) change of heart. Originally, he wanted clearing houses to be in charge of those decisions.

“I appreciate Chairman Gensler’s agreeing that we should change the provision of the derivatives bill that he requested that would have put the clearing houses in charge of determining that a trade is clearable.” Frank said on Nov. 6. Four days later, Dodd introduces his legislation with similar language.

Additionally, in a joint Oct. 16 report on regulatory harmonization the SEC and CFTC recommended legislation to enhance CFTC authority over exchange and clearing house compliance with the Commodity Exchange Act. “The CEA should be amended to provide the CFTC with clear authority with respect to exchange and clearing house rules that the CFTC determines are necessary for them to comply with the CEA,” according to the report.

Earlier in September, the Federal Reserve Bank of New York announced it received commitments from 15 major OTC derivatives dealers that they would set specific target levels to expand central clearing for derivatives. The commitments were a follow-up to a June 2, 2009 letter from market participants to regulators. That letter set a Dec. 15, 2009 deadline to begin clearing such contracts, which market participants hope to meet, according to the Fed letter.

For additional information on OTC derivatives markets, Goodwin Procter and The Conference Board Governance Center have some helpful thought leadership. Goodwin Procter has issued a Client Alert analyzing separate bills approved by the House Financial Services Committee and the House Agriculture Committee, each of which would create a new regulatory regime for derivatives trading. The Client Alert also compares these bills to the U.S. Treasury’s proposed OTC derivatives legislation issued in August 2009 (discussed in Goodwin Procter’s August 27, 2009 Client Alert.

The Conference Board’s Corporate Governance Handbook: Legal Standards and Board Practices (Third Edition) addresses the derivatives market in light of the financial crisis. On page 147 in The Role of the Board in Turbulent Times: Assessing Corporate Strategy, states: “The evolving credit crisis is having an impact not only on the capital markets, but also across the general economy. The board of directors should first take the opportunity to re-evaluate the company’s business plan for the coming 12 months. Specifically, it should assess the impact on the business plan of projected cash flow, the limited availability of bank debt, the potential restrictions to the company’s ability to raise equity or debt through the capital markets, and the fixed component of the company’s cost structure.”

Regarding derivatives, it states: “Based on this preliminary review, board members should: Identify the factors that could contribute to an adverse action by rating agencies and design preventive measures. If an adverse ratings action should occur, what implications would there be under the company’s credit facilities, derivatives positions, or other instruments?”

- Gary Larkin

Nov
13
2009

Executive Compensation Task Force Job Not Done Yet

When The Conference Board Task Force on Executive Compensation first met back in March, Co-Chair Robert Denham said task force members agreed there are two primary questions boards need to answer when considering executive pay: What are they paying for? How much are they paying?

Five months after the task force’s first meeting, those two questions led to a 40-page report on executive compensation that includes a list of five guiding principles. By no means does the report complete the group’s mission, according to a RiskMetrics Webcast Thursday where Denham, Co-Chair Raj Gupta and task force member Lynn Paine announced the group’s next steps. (For a copy of slides from the Webcast, e-mail governanceexchange@riskmetrics.com.)

The task force, which includes 13 directors, is actively seeking endorsements from major U.S. public companies. In a Webcast moderated by Stephen Deane, a team leader of principles2 RiskMetrics’ online Governance Exchange, Denham, Gupta and Paine made a point of saying the group’s work is not done.

“The principles are getting a lot of traction now but more needs to be done as companies decide if their compensation systems [performance vs. compensation] are already aligned,” Denham said. He pointed out how important it is for boards to realize that “what” they are paying for in terms of performance is just as important as “how much” they are paying executives.

The task force also plans on contributing to the public dialogue on executive compensation by taking part in similar events as the RiskMetrics Governance Exchange Webcast and being interviewed by business news outlets. There are also plans for a director education program.

Paine, who served on The Conference Board’s Commission on Public Trust and Private Enterprise in 2003, sees some similarities in the calls to action in this year’s executive compensation task force. But the difference with the task force is its involvement in garnering support.

“This is different than the 2003 Commission on Public Trust and Private Enterprise report because there is a movement to get a broad level of support and adoption of the principles,” Paine said. “This is not a static effort; it is ongoing. It is at the very beginning of an ongoing effort.”

She recalled how executive compensation was a big issue following the accounting scandals at Enron and WorldCom in the early 2000s. “At the time, we all thought that executive pay was a huge deal. But if you look at it now, that [Enron and WorldCom] was child’s play.”

So, why has executive pay continued to be a problem in the United States despite past reforms at the start of this decade? It’s really a matter of “follow the leader,” as is in the leaders in executive pay, Paine said. “The reason a lot of these controversial pay practices got embedded at companies is because of the negotiations of executive contracts over the years,” she said. “I think there are a lot of reasons these practices exist, but that is a main one.”

Of the five guiding principles, Paine said Principle Three on avoiding controversial pay practices was the most difficult for the group to reach a consensus. The sticking point was that many of the members didn’t think it made sense to make a blanket condemnation of such practices (i.e. golden parachutes, severance agreements, tax gross-ups). “We talked about cases where some of these practices made sense,” she said.

So in the end, the task force decided to take a “comply or explain” approach with the adoption of such controversial pay practices.

For any companies interested in learning more about the task force principles, click on this link. To find out more about endorsing the principles, send an e-mail to me at gary.larkin@conference-board.org.

- Gary Larkin

Oct
29
2009

Executive Compensation Reform is Really a Matter of Trust

All the talk about reining in executive compensation at our country’s public companies isn’t so much about corporate governance reform as it is about the lack in public trust in the markets and the companies themselves.

Having watched the recent Securities Industry and Financial Markets Association (SIFMA) speech by The Conference Board CEO Jonathan Spector on executive compensation (Watch speech here.) and read the testimony of Special Pay Master Kenneth Feinberg (www.treas.gov/press/releases/tg334.htm), I get it. There needs to be a restoration of public trust in the financial system now or we may never get out of this economic morass. It’s not like it was at the start of this decade when there were accounting frauds at Enron and WorldCom.

This time a Sarbanes-Oxley-like act won’t do the trick. This time the solution lies in adhering to principles, not rules and new laws. It is about having the C-level suite, the board room and shareholders understand each other’s roles and truly communicate with each other in order to meet one common goal: value creation through the lens of strong risk management.

This movement towards principles-based governance, if you will, over more regulations is starting to catch on in some organizations. From The Conference Board Task Force on Executive Compensation Report, SIFMA’s own Guidelines on Executive Compensation to the Independent Directors Executive Compensation Project (IDEC) principles, public companies now have some models to use to develop their own compensation principles.

“While the government has an important role to play in modernizing our regulatory frameworks, trust in our corporate institutions can only be fully restored if private sector institutions themselves take meaningful action,” Spector said Tuesday when addressing the SIFMA annual meeting. “You are probably asking yourselves how you can define ‘meaningful action.’ I’d like to offer a very simple answer: When deciding how to address the issue of executive compensation, take the steps that will do the most to restore trust and confidence.”

Pastora San Juan Cafferty, longtime director and leader of IDEC, writes on her organization’s blog that “we believe that directors still have an opportunity to recapture the high ground of responsible, independent oversight of CEO compensation. And the best way to do this is by working together on a program that directly addresses the public’s distrust of how compensation is administered.

“By remaining silent, boards continue to lose control to shareholders, regulators, government appointees and Congress.”

That last statement really sums up the dilemma facing public boards. If they wait for Congress, the SEC or some other regulator or, in the case of shareholder actions, courts to act, they stand the chance of losing control of their companies. And what’s next, director elections, proxy access, board leadership?

If the actions taken last week at the seven TARP companies (AIG, Bank of America, Citigroup, Chrysler, Chrysler Financial, General Motors and GMAC) by Feinberg are any indication, I don’t think companies want the government in the practice of determining executive compensation. Just look at how he determined that he was going to cut cash base salaries and bonuses by 90 percent and overall total compensation by 50 percent at six of those companies.

Feinberg’s Reasons for Cutting TARP Company Compensation

He said: “I can summarize the flaws in the six individual company submissions as follows:

1. The companies requested excessive guaranteed cash – salaries and bonuses – for company executives;

2. The companies requested that stock issued to these executives be either immediately redeemable or redeemable without a sufficient waiting period;
3. Many of the companies did not sufficiently tie compensation to performance-based benchmarks and metrics;
4. Many of the companies did not sufficiently limit or restrict financial “perks,” such as private airplane transportation, country club dues, golf outings, etc., and in some cases provided excessive levels of severance and executive retirement benefits;
5. The companies did not make sufficient effort to fold guaranteed compensation contracts – entered into prior to the enactment of the current compensation regulations – into 2009 performance-based compensation.”

Do other public companies want this to be their executive compensation plan? I highly doubt it.

Executive Compensation Task Force Endorsement FAQ Available

That is one of the reasons The Conference Board decided to create the Executive Compensation Task Force. Next week, The Conference Board Governance Center will release its Frequently Asked Questions on endorsement for the Task Force principles. To receive a copy, you can read this blog or contact Editor Gary Larkin at gary.larkin@conference-board.org.

The IDEC Project has also put up its Web site. The address is www.idecproject.com. SIFMA’s Guidelines on compensation are available here.

- Gary Larkin

Oct
22
2009

With Executive Compensation Pay Cuts, What’s Next? Say on Pay

Now that the shock of Special Pay Master Kenneth Feinberg’s decision (Reuters, Oct. 22) to cut the pay of 175 executives at companies receiving the most government aid is starting to wear off, the real fun will begin. It’s looking more like Feinberg’s announcement Thursday (Treasury Secretary Timothy Geithner’s comments) is just the first salvo in a fight between shareholders and public company boards.

Actually, another salvo was just thrown by the Federal Reserve today when it issued its long awaited proposal to oversee bank incentive compensation policies. (read the press release)

And the battle cry will be, “Say on Pay!” At least that is what the researchers at The Corporate Library (TCL) and the compensation consultants over at Pearl Meyer & Partners believe. In the same week that Feinberg’s decision was leaked to the press, TCL released a “10-Point Test” for shareholders to use when they are allowed to vote on a non-binding resolution on their company’s executive compensation packages.

Say on Pay Survey

During the recently completed National Association of Corporate Directors (NACD) annual Corporate Governance Conference, Pearl Meyer released the results of an online survey (read the press release) on company preparedness for Say on Pay. The survey of 231 participants found that more than two-thirds said their company hasn’t taken any steps to prepare for such a vote and only 35 percent plan to do so in the next six months.

Just look at what they are saying over at Pearl Meyer.“Although many believe such a requirement will not take effect until the 2011 proxy season, decisions being made now regarding 2010 compensation practices could potentially be the subject of Say on Pay votes in 2011,” said Mike Enos, the company’s managing director.

A 10-Point Test

In his “10-Point Test,” Paul Hodgson, senior research associate at TCL, wrote, “More importantly, investors, straining at the leash to have a say on pay, feel that a chance for reform is within their grasp. And not just activist investors. All investment firms are likely soon to have a say on pay, whether they like it or not…”

Some might think it a bit premature to start planning for life with Say on Pay since the Corporate and Financial Institution Compensation Fairness Act of 2009, which would require an annual shareholder advisory vote on executive compensation, is not even law yet. As of Oct. 22, that bill had been approved by the U.S. House and still faces a Senate vote. But maybe the Obama Administration is starting to move into high gear on the financial regulatory reform. Case in point: Feinberg’s executive pay cut decision.

Broc Romanek’s TheCorporateCounsel.net blog has one of the best descriptions of Feinberg’s actions. Click here to read.

Principles, principles, principles

I find it interesting that while investors and some companies are gearing up for Say on Pay and the possibility that executive compensation packages will be cut, some are actually trying to get ahead of the reform wave by being proactive. Credit Suisse (Wealth Bulletin, Oct. 21) did just that on Oct. 21 when the Swiss bank adopted the G-20 compensation model that was announced back on Sept. 25. Basically, the bank will focus on higher base pay and more deferred variable compensation tied to the long-term performance of the bank. The bank has also included clawback provisions for bonuses in the new model.

With Credit Suisse’s action, I thought it was a good opportunity to write a list of top executive compensation principles. So below is a table comparing the G-20 principles to that of The Conference Board Task Force on Executive Compensation.

And right here are the principles released by the Securities Industry and Financial Markets Association (SIFMA):

Firms should establish compensation policies consistent with effective risk management
Compensation should be linked to sustainable performance
Risk management professionals should be appropriately independent
Firms should communicate their compensation practices to shareholders.

Executive Compensation Principles

G-20 Summit Financial Stability Board Principles for Sound Compensation Practices
(Released Sept. 25, 2009)

1.) Financial institutions should have an independent board remuneration (compensation) committee that oversees compensation policies.

2.) Compensation should be aligned with long-term value creation by avoiding multi-year guaranteed bonuses and requiring a significant part of variable compensation be deferred, tied to performance and subject to clawback. They should also take into account current and potential risks.

3.) Financial institutions ensure that compensation of senior executives and others who have a material impact on risk exposure align with performance and risk.

4.) Financial institutions disclose compensation policies and structures to guarantee transparency.

5.) Variable compensation be limited as a percentage of total net revenues when it is inconsistent with the maintenance of a sound capital base.

The Conference Board Task Force on Executive Compensation
(Released Sept. 21, 2009)

1.) Compensation plans should establish a clear link between pay, strategy and performance.

2.) Provide compensation that is fair, affordable and clearly aligned with actual performance.

3.) Eliminate controversial compensation practices that conflict with the notions of fairness and pay for performance – such as excessive golden parachutes, overly generous severance arrangements, gross-ups of parachute payments or perquisites, and golden coffins – unless specific justification exists.

4.) Demonstrate credible board oversight of executive compensation.

5.) Foster transparency with respect to compensation practices and appropriate dialogue between boards and shareholders.

- Gary Larkin

Sep
28
2009

Note to Directors: Risk Management Not Optional

It may have taken a financial crisis the likes of which we have not seen since the Great Depression and the election of a liberal president to get the federal government to see what corporate governance experts for years have seen. Risk really does matter.

Sure, some companies – especially those in financial services – have had a chief risk officer or the equivalent for years and COSO (Committee of Sponsoring Organizations of the Treadway Commission) issued an integrated framework for enterprise risk management back in 2004. (And those actions came after monumental accounting fraud perpetrated at Enron and WorldCom.) The difference now is that risk management is no longer an issue that just concerns CROs, CFOs and the internal audit team. It has reached the CEO’s office and the boardroom.

Aon, the Chicago-based insurance brokerage and management consultant, in its April Global Risk Management Survey found that while most organizations increased their overall risk preparedness since 2007, less than half of the respondents are tracking and managing all components of their total cost of insurable risk. And less than two-thirds of respondents had formally reviewed or have a plan in place to review three of the top 10 risks of 2009: economic slowdown (1), regulatory/legislative changes (2), and damage to reputation (6).

When the SEC and the U.S. Treasury Department (see Sept. 24 speech by Deputy Treasury Secretary Neal S. Wolin) are focusing on risk management for public companies, then you know it is no longer a secondary task, but rather a primary one for all boards and management. If auditors and audit committees felt burdened with conducting risk-based integrated audits of internal control over financial reporting, wait to see what the new administration has in store for the coming year.

For starters, the SEC under new Chairman Mary L. Schapiro has created the Division of Risk, Strategy and Financial Innovation, combining the Office of Economic Analysis, Office of Risk Assessment and other functions. It marks the first time one division, which will be headed by University of Texas School of Law Professor Henry T. C. Hu, will oversee risk and economic analysis, strategic research and financial innovation. Hu’s statement in the Sept. 16 release announcing his appointment is quite telling: “I look forward to working with the Commission and to using an interdisciplinary approach that is informed by law and modern finance and economics, as well as developments in real world products and practices on Wall Street and Main Street.”

In other words, it won’t be business as usual at the SEC as fewer political appointees and more academic and hands-on people join the regulator. It also means that all the work of organizations like COSO, the Institute of Internal Auditors (IIA), the National Association of Corporate Directors (NACD) and The Conference Board, will become more relevant. It is the research and thought leadership produced by such organizations that both regulators, lawmakers and executives will need to address current and future risk management issues.

Earlier this month, COSO issued Effective Enterprise Risk Oversight: The Role of the Board of Directors, a four-page paper that reiterates how crucial risk management is for today’s companies. “In the aftermath of the financial crisis, executives and their boards realize that ad hoc risk management is no longer tolerable and the current processes may be inadequate in today’s rapidly evolving business world,” the paper says.

The IIA has recently published 2010-2: Using the Risk Management Process in Internal Audit Planning (membership required), which is a practice advisory for internal auditors, and in May its Tone at the Top monthly e-newsletter focused on global risk. In addition, the NACD’s President and CEO Ken Daly told a KPMG Audit Committee Insights Webcast Sept. 21 that his organization is working on a Blue Ribbon Commission on Risk that is due out shortly.

Corporate Governance Handbook: Legal Standards and Board Practices (Third Edition)

The Conference Board Governance Center just last week released Corporate Governance Handbook: Legal Standards and Board Practices (Third Edition), which includes a separate chapter on risk oversight. “Corporate boards should give thoughtful consideration to the benefits of implementing a comprehensive risk management infrastructure and enhancing the organization’s ability to respond effectively to risk events and capture new strategic opportunities,” according to the handbook, which was authored by Matteo Tonello, associate director of corporate governance at The Conference Board. The Board is also working, in collaboration with its Directors’ Institute, on a special Risk Oversight Handbook for board members. The new Handbook will be a compilation of emerging practices in this area, expanding on the findings of the 2006 Working Group on Risk Oversight and will be released in the summer of 2010. (See Emerging Governance Practices in Enterprise Risk Management for those Working Group findings and recommendations.) Until then, The Conference Board will release a series of short-papers on the subject, for which it will avail itself of the contribution of leading legal and financial experts.

- Gary Larkin

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Q&A With Nell Minow – Financial Regulatory Reform

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Worth Reading … Good Corporate Governance

SEC Wants More Concise Disclosure That is Material

Q&A With Charles Elson: Top Corporate Governance Issues for 2010

Clearing Houses Key to Cleaning Up Derivatives Market

Executive Compensation Task Force Job Not Done Yet

Executive Compensation Reform is Really a Matter of Trust

Feinberg’s Reasons for Cutting TARP Company Compensation

Executive Compensation Task Force Endorsement FAQ Available

With Executive Compensation Pay Cuts, What’s Next? Say on Pay

Say on Pay Survey

A 10-Point Test

Principles, principles, principles

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