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The following report is copied with permission from Corporate Governance Highlights, a private weekly newsletter for clients of Investor Responsibility Research Center ("IRRC"), the leading source of impartial, non-advocacy research for institutional investor interests in corporate governance and proxy voting issues. |
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Corporate Governance Highlights
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Annual NACD Conference Examines Recent Dramatic Changes in Boardroom The National Association of Corporate Directors’ annual corporate governance conference in Washington, D.C., on October 17-19, featured numerous sessions on how boards are performing their oversight functions in the new corporate environment. The following are highlights from the conference entitled, “Board Leadership: Evolution or Revolution.”
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CULTURE SETS THE TONE. At a workshop on “Tone at the Top: The Essential Ingredient in Building and Maintaining an Ethical Culture,” retired Chief Justice of the Delaware Supreme Court Norman Veasey summed it up when he said, “It’s all about culture.”
Veasey, along with panelists Keith Darcy, president of the Center for Integrity and chairman of the Better Business Bureau Foundation, and Peggy Foran, vice president of corporate governance and secretary for Pfizer, discussed how boards can lead the way in setting a tone of corporate integrity and ethics. They stressed the importance of a board and CEO who firmly believe in ethics, fair play and integrity. Culture, said Darcy, “is how thing get done.”
Foran said that when evaluating the tone at the top, it is important to look closely at the patterns and signals that employees see coming from leadership. Boards should take the opportunity to talk with second- and third-tier employees and should live the values of integrity and transparency. She also stressed the importance of having a culture of doing the right thing. “Don’t do what’s required,” she said, “do the right thing.”
James Comey, Deputy U.S. Attorney General and Chair of the President’s Corporate Fraud Task Force, said in a keynote speech, that when determining whether to charge a company with fraud, the task force considers if the company has a fundamentally sick culture or one that can be saved, how the company reacted to the reporting of wrongdoing and whether the company’s management is willing to work with the task force to catch the wrongdoers. At Computer Associates, he explained, the task force gave the company an 18-month deferral. If, in that time, CA turns itself around, the task force will drop all of the charges, but if it does not, the task force will prosecute. Comey explained that it is important to take such steps because, “You can’t prosecute your way to a healthy corporate culture.”
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