Back to School

When proxy advisory firm Institutional Investor Services assigns a Corporate Governance Quotient to the companies it covers, director education is one of the 63 categories it evaluates. All else being equal, a board whose members devote eight hours every 12 months to improving their governance skills through ISS-accredited programs earns a higher CGQ than a board whose members simply do their jobs and skip the coursework.

But putting in the eight hours a year pays off in more than just CGQ. Directors who periodically reenter the classroom also get a chance to rub elbows with the movers and shakers of governance, from regulators to activists to mold-breaking chief executives. “You have a unique collection of leaders in the same room that you could never achieve otherwise,” says Roger Maclean, associate dean of executive education at the University of Wisconsin-Madison. The university’s two-day Director’s Summit has been offered every fall for six years and ties with Harvard’s governance course for the number of Fortune 500 CEOs who attend.

Hobnobbing with peers at the summit can prove at least as valuable as listening to the exalted speakers. “There’s a lot of networking,” says Tammy Thayer, president of Wisconsin’s Center for Applied Studies in Business. “You may be an experienced board member and think you’re doing everything right. Then you have a conversation with another director and find you’d be more effective if you did something different.” Director’s Summit alumni include Cisco Chairman John Morgridge, Kimberly-Clark Chairman and CEO Thomas J. Falk and former Autodesk CEO Carol Bartz.

Sarbanes-Oxley does not require education for public-company directors. The New York Stock Exchange requires only that listed companies address director education in their corporate governance guidelines. The Securities and Exchange Commission does no more than recommend that companies encourage continuing education for directors.

Yet since SOX was passed, ISS-accredited governance programs have multiplied, and enrollment is on the rise. “I started the Directors’ Education Institute five years ago because of all the scandals,” says Stephen Wallenstein, executive director of the governance program at Duke University’s Fuqua School of Business. Originally offered twice a year, the program now takes place each spring. In 2006, the program had 110 registered participants and 35 speakers—its biggest session yet.

The Duke program has shifted emphasis somewhat since its inception, from analyzing the waves of new governance rules to sharing best practices. “It’s a cross between executive education and a conference,” Wallenstein says.

These combination think tanks-job fairs-schmooze fests don’t come cheap. Harvard Business School’s flagship two-day governance course, “Making Corporate Boards More Effective,” costs $6,750, and you pay a $750 premium to take it on the West Coast. (The La Jolla sessions are geared toward recently or soon-to-be public companies, as befits California’s corporate demographic.)

Harvard’s core program has been around since 1992. Since then, the governance series has been updated with “Audit Committees in a New Era of Governance” (June 24-26 and Sept. 30-Oct. 2, $4,250) and “Compensation Committees: New Challenges, New Solutions” (June 27-29, Oct. 3-5, $4,250).

As you would expect, the courses use Harvard’s signature case-study method. According to B-school spokesman Charles Breckling, that means the curriculum is constantly refreshed. “The folks at HBS are writing new cases all the time. It’s an evolving product.”

Many universities have similarly expanded their original governance courses to address specialized issues. For instance, the University of Chicago and Wharton both offer one-day “immersion” courses in finance ($1,500 and $1,000, respectively) that can be taken separately or after the core programs. But ISS doesn’t accredit just any seminar. To qualify:

• The program must be at least eight hours long and be open to all directors. u The course cannot be sponsored exclusively by service providers such as auditors, compensation consultants, executive search firms and the like—that is, at least one sponsor must be an academic institution or professional association.
  
  
• No more than 25 percent of speakers may represent such service providers.
  

• At least 25 percent of presenters must be current or former public-company directors.
  
  
• The curriculum must address governance practices (for example, D&O insurance is specifically excluded).