Changes in the Board Room
Boards and CEOs contending with unprecedented economic and
market conditions are doing so even as they struggle to apply a new set of 21st
century corporate governance standards. In an age of heightened regulation, litigation and public scrutiny, they
also are encountering a new generation of activist shareholders who are using
their business acumen to advance their objectives with surprising success.
Alan Murray, online executive editor of The Wall Street
Journal, writer of the paper's "Business" column, and a three-time Pulitzer
Price winning journalist, provides thoughtful insights about this struggle in
his book "Revolt in the Board Room: The New Rules of Power in Corporate
America." He chronicles the
"democratization of the Board Room, with vignettes about numerous companies
including Hewlett-Packard, AIG and Boeing. He also includes a succinct, but comprehensive, history of shareholder
activism.
Interestingly, the call for gender diversity on corporate
boards was first made back in 1947 by Wilma Soss, a serious investor, who was
curtly rebuffed at a U.S. Steel Corporation shareholders meeting when she asked
about the possibility of appointing a woman to the company's board of directors. Thereafter, she organized the Federation of
Women Shareholders, possibly becoming the first moderate social issues
activist.
In his book, Murray examines the extraordinary
unilateral authority of CEOs of American corporations and rapid and dramatic
changes that occurred in the early 2000's that reformed the dynamics
between corporate CEOs, boards and shareholders. According to Challenger & Gray, the
number of CEOs who were fired - an event unheard of as late as the 1980s and
still infrequent in the 1990s - grew from 663 in 2004 to 1400 in 2006. Murray discusses numerous factors that
contributed to these changes, not the least of which was the ENRON and TYCO
boards of directors being required to pay out of their own pockets for the
corporate wrongdoing of their companies without reimbursement under corporate
indemnifications and insurance policies.
As the new Administration and Congress turn their attention
towards regulatory reform of the capital markets and financial institutions,
one can be sure that there is more to be written on the modern corporation and
its governance.
Jilaine Bauer
Founder and Principal
Bauer Consulting
Items of Interest...
The Proxy Process
If you are interested in improving
corporate governance and accountability through the use of your
public company or mutual fund proxy, here are two free resources to help
you.
Download a toolkit to walk you through the
steps of using your proxy to help increase the number of women on corporate
boards. Studies have shown that increased diversity among corporate
leaders is linked to improve governance practices and financial success. Click here...
Learn more about the proxy process, its importance
to corporate governance, and issues that are expected to impact the
2009 proxy season by listening to a Dbrief Webcast
sponsored by the Deloitte Center for Corporate Governance. Click here...
Women in the Wisconsin Legislature
The total number of women in the Wisconsin State Legislature declined from 30 in 2008 to 29 following the November 4th general election - the lowest level
in more than two decades. Nonetheless, when women ran for Assembly open seats, they won 75% of the time. When women serving in the Senate and Assembly ran
as incumbents in contested races they won every time. Read more...
Leaders in a Global Economy
How anomalous are
women who have titles that include CEO, president, chief and partner, and
also have children? A study
conducted by the Families and Work Institute, a nonprofit research organization
that addresses the changing nature of work and family life, and Catalyst, a
nonprofit organization that works to expand opportunities for women in
business, challenged conventional wisdom that executive women in high-status jobs tend to
give up their personal lives. In fact, 70% of women who reported directly to
the CEO or reported to someone who reported to the CEO had children. Read more...
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