To add or change a calendar listing for your organization, please click here.

At the same time, however, there’s another story beneath the headlines: For most managers, dealing with complexity has become an ongoing, day-to-day challenge: keeping up with constant e-mails, attending innumerable meetings, connecting with the right people across the matrix to make decisions, coordinating processes across cultures and time zones. It’s exhausting, and many managers are frustrated, overwhelmed, and worried that they might unintentionally be creating the next Lehman.

But it doesn’t have to be this way. While some of the complexity that managers experience comes from globalization and new technologies, a large portion is of their own making. If we want to prevent the next Lehman, and if we want companies to be more successful and managers to be more energized and innovative, then directors have a responsibility to insist that simplification be part of the executive agenda.

Four Sources of Complexity
Nobody gets up in the morning with the intention of making the organization more complex. Rather, like weeds in the garden, complexity continually insinuates itself into the fabric of a company in four principle ways: through changing structures and reporting relationships; through product design and proliferation; through the evolution of work processes; and through unconscious managerial behaviors. Directors need to challenge executives to address each of these sources of complexity, both individually and in combination. Here are some brief descriptions of these complexity-creators and a few ways that directors might work with their executive leaders to counter them:

Structural complexity: Organizational structures are like biological organisms in which cells continuously grow, split, and reform. Reorganizations don’t happen alone, but rather are initiated by executives to align people by function, product, geography, business unit, customer, or some other factor in an attempt to be as competitive and efficient as possible. At the same time, managers add or combine units due to acquisitions or internal growth; and they add or subtract layers based on people’s capabilities and their beliefs about how many people should report to any one manager. The result of all this seismic structural activity is that many organizations end up being fragmented, sprawling, and confusing, without a clear logic to how things were put together—leading to unnecessary costs, poor communications, and the danger that high-risk or poorly performing units get lost in the maze. For example, AIG’s structural complexity was one factor that allowed a small, under-the-radar unit to operate in a way that almost destroyed the company.

To counter this type of complexity, directors should ask executives questions such as:

• How does the structure of the company directly support and advance the business strategy?
• Can most employees explain the logic of how the company is organized?
• How many levels of management are there between the CEO and first line supervisors?

Product complexity: Products and services are the lifeblood of any organization, and managers are constantly looking for new ways to satisfy and delight customers. Unfortunately, it is much easier to add new products than to subtract—so most companies end up with vast portfolios of products and services that are costly to maintain, control, update, support, and sell. In addition, many product developers focus on the technical elegance of their products without worrying about whether their customers, or their own internal colleagues, truly understand how they work and what will happen to them over time. This kind of complexity was clearly at play in the financial crisis, as investment banking wizards created collateralized debt obligations (CDOs) and other arcane securitized products that neither customers nor their own risk managers fully understood—until it was too late.

To counter product complexity, directors should ask for thorough reviews of new products and services to make sure executives fully understand how they work and the risks involved. In addition, directors should make sure that managers are reviewing the entire product portfolio with an eye towards sunsetting and retiring products as appropriate.

Process complexity: Most work in organizations is done through processes. Sometimes these are highly structured and disciplined, such as with manufacturing activities. At other times, the processes are loose and ad hoc. However, no matter how much rigor and six sigma-type efforts managers put into process management, the processes continually evolve and change as new people get involved, new issues emerge, and new ideas are introduced. Changing organizational arrangements and new product requirements further complicate processes, often making it difficult for people to understand how things really get done. The result is that companies often find themselves with convoluted decision-making, multiple committees, un-ending budgeting and planning cycles, and general lack of control. For example, many of the problematic financial institutions in the past year found themselves with fragmented and inadequate risk management and forecasting processes that left them unprepared for the downturn.

To counter process complexity, directors should first agree on the key processes that are most critically in need of being controlled and disciplined (such as risk management, new product commercialization, or succession planning). They then need to periodically ask executives to walk through the “map” of these processes to make sure that the right controls are in place, that roles are clear, and that cycle times are appropriate.

Managerial complexity: In addition to structures, products, and processes, managers also cause complexity through their own ways of directing and leading organizations. Particularly in dynamic environments, when processes and structures don’t provide clear guidance, managers create the neural networks that give people direction about what to do and how to do it. When managers are clear with their instructions, they can actually reduce complexity. But when managers unintentionally give nebulous assignments, open-ended deadlines, conflicting instructions, mixed messages, and foster fuzzy accountability, they create enormous amounts of additional complexity and confusion. For example, leading up to and during the financial crisis, executives at many of the financial firms gave their people extremely mixed messages about continuing or stopping product transactions, were unclear about what data was needed for decisions, and rewarded people for poor performance.

It is impossible to counter managerially-generated complexity completely, since much of it is unconscious and unintentional. But directors can hold a mirror up to their executive leaders to help them make their own assessments about the clarity of their directions, the crispness of their decision processes, and the discipline applied to getting things done. In addition, directors can make sure that executive compensation plans are simple, straightforward, and geared to rewarding the right strategic actions over time versus only short-term performance. Finally, directors can insist that succession plans take into account the ability of managers to simplify their organizations.

Simplification as a Business Imperative
Almost every company quite naturally focuses most of its attention on growth, particularly in today’s highly competitive environment, adding more products, services, geographic locations, and employees. But what companies don’t do very well—unless they are forced by an economic or competitive crisis—is prune these growth shoots. Managers don’t like to say “no” or make choices, especially when they are trying to respond to customer needs, beat their competitors, and satisfy shareholder expectations. So, instead, managers keep adding more plants and fertilizer to the garden and end up with a tangled jungle. But to maintain healthy organizations, managers and executives need to constantly prune while simultaneously fostering growth, without waiting for a crisis to force the issue.

The crisis of the past year forced almost every company to cut back, perhaps faster and more deeply than anyone would have preferred. But as the crisis passes, and companies move back into growth mode, it will be easy to slip back into old patterns as the lessons of Lehman and the pain of the financial downturn fade away. One way to prevent this from happening is for directors to insist that simplification become an ongoing business imperative for their companies, such that executives keep a focus on simplification not only in bad times, but in good times as well.

Ron Ashkenas is a managing partner of Robert H. Schaffer & Associates, a Stamford, Conn., consulting firm and the author of the forthcoming book “Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done” (Harvard Business Press, December 2009). He can be reached at ron@rhsa.com.

Today’s corporate education programs have attained a level of diversity and comprehensiveness unimagined by previous generations of executives. The modern global business climate has opened up vast sections of fertile territory for new exploration and interaction. The complexities of modern markets have necessitated a new approach to mastering the ever-expanding requirements of finance, risk, and strategy. Technological innovation presents numerous opportunities for growth and expansion as well as challenges. In short, the business world has changed and continues to change at an impressive rate, and the continual accumulation of new knowledge is and will always be an absolute necessity.

The most important reason to look towards executive education programs, however, may not be entirely based on enhancing the skill set of executives and directors, but rather on the all-important goal of appeasing their bosses: the shareholders.

A significant lasting effect of the financial crisis has been that shareholders have become increasingly concerned about the qualifications and personal character of those board members and executives in whom the well-being of their portfolios is entrusted. Now directors and C-suite executives are being called upon, either directly or indirectly, to prove their worth as leaders, and executive education programs can be a valuable tool in demonstrating to shareholders the development of new and relevant skills necessary in a changing economic landscape.

Making the Grade
In fact, executive education’s new justification may be one that the architects of such programs themselves are just beginning to come to grips with: regulators may require these programs. As shareholders watched resentfully, and sometimes vocally, as their portfolios diminished, the first scapegoats often have been directors and executives. Clearly, directors and executives have to prove themselves in different and more convincing ways than pre-Lehman collapse.

The backlash stemming from the financial crisis is that shareholders and regulators are pushing for increased disclosure of the background and qualifications needed for service in the top ranks of a public company. The Securities and Exchange Commission’s proposed Proxy Disclosure and Solicitation Enhancements would require directors to provide more information on their backgrounds and qualifications on proxy forms. With this in mind, the kind of development offered by executive education programs may be just what directors need to prove their mettle to the company’s owners.

“No one school can teach all that’s required to be a director…If you have a board, and you want to make it work more effectively, we can do that.” —Harvard Professor Jay Lorsch

“The issues facing director accountability are very broad, but [executive education] may be persuasive to some shareholders in establishing a director’s value,” says Stanford University Professor Joseph Grundfest. Though directors may face skepticism from shareholders who doubt a company’s management capabilities, enhancements offered by executive education programs can go a long way in convincing shareholders about the commitment and training of their directors.

Harvard’s Jay Lorsch is more skeptical: “No one school can teach all that’s required to be a director.” Lorsch says that while his school’s programs are invaluable in sharpening the skills needed to serve on a board, there is no replacement for years of on-the-job experience; in fact, he says, shareholders may not take such programs into consideration when evaluating directors. “If you’re on the board of a bank, and you don’t know anything about banking, we can’t fix that,” says Lorsch. “If you have a board and you want to make it work more effectively, we can do that.”

One significant, tangible perk of executive education is that many agencies actually will endorse certain programs by granting higher rankings to boards whose directors have participated in such educational opportunities. In fact, ISS Corporate Governance Services, which administers proxy ratings for RiskMetrics, bases its proxy ratings in part on a board’s completion of approved educational programs. (ISS credits can also be earned by attending programs provided by the National Association of Corporate Directors and by Directorship.)

Peer Exchange
For executives with years of experience in a high-pressure daily working environment, time spent on the job is certainly more valuable than hours spent in a classroom setting. There is no substitute for experience, but the vast possibilities offered by new and innovative means of learning can add a new dimension to experience. One significant advantage to executive education, for example, is the opportunity to connect with new people and ideas. “The peer element is crucial,” says Gordon Armstrong, director of marketing at Duke Corporate Education. “Just engaging these smart people in conversation and giving them new ways of thinking about what they already know is very valuable.” Stanford’s Grundfest agrees: “Directors learn a great deal from talking with other directors, and these interactions are a very important element of the work.” It may simply be a matter of new ways of viewing things, says Assistant Dean Whitney Hischier at the UC Berkeley Center for Executive Education: “Oftentimes, if people have been in a particular industry or company for a while, they may have not been exposed to differing points of view. There is a humbling aspect to realizing we don’t all know everything.”

In addition to the engaging minds found among classroom peers, the range of professors in today’s executive education programs is broad—and doesn’t necessarily follow the traditional mold of yore. Though most schools do rely on a core faculty, more often they are bringing in specialists from a variety of fields. “Our professors come from real-world arenas, including international politics, securities studies, environmental politics, and international law,” says Dean Deborah Nutter of the Fletcher School at Tufts University. “And they all bring with them a vital international perspective.”

Engaging the Globe
The curriculum offered by today’s executive education programs reflects the diverse challenges facing today’s executives, directors, and middle managers in a complex and interwoven business environment. The issues of risk management, regulatory compliance, teamwork, problem solving, audit, crisis management, succession planning, asset allocation, and executive compensation that confront today’s business leaders are those which an educational faculty can help tackle. “The world is changing very rapidly,” says Nutter, “and we’re always staying on top of changes in the world to help shape our curriculum.”

Besides the unique educational and networking opportunities afforded by the collaboration of savvy business minds, today’s director education programs focus intently on the new global business frontier. A majority of these programs display an international character, with faculty and curriculum directed towards the possibilities offered by the worldwide market. “We once led a program for Ericsson,” explains Armstrong, “where the executives were faced with a new market in South Africa that they were not at all familiar with. We had them meet with leaders of South African NGOs (non-governmental organizations) and really gain a new cultural understanding they otherwise wouldn’t have had access to.”

“It’s absolutely valuable to do a little exploring of the unknown,” says Hischier. She describes one program in which executives from a Norwegian petroleum company were taken to Brazil, one of their countries of operation. While there, the executives were taken into the field to meet with local oil suppliers, officials with the energy ministry, and community organizations to better understand the day-to-day life of a country that before had been merely a source of product. The field experience, far removed from the confines of the classroom, allowed company executives to see first-hand the reality of a country that until then had been an abstraction.

“If the world were stable, then our programs wouldn’t do much,” says Grundfest. “But the business world now changes so rapidly that even the most experienced directors have more of a reason to spend time educating themselves about these new developments.” Grundfest likens the new opportunities for directors to those available to an experienced surgeon: new techniques, instruments, and drugs that are constantly being developed make continual education a necessity.

Looking Ahead
While traditional educational pathways focus on the lessons to be learned from the past, executive education programs are very much designed towards the future and its possibilities. With the world in flux thanks to a generation-defining recession, directors, executives, and managers at all rungs on the corporate ladder must acclimate themselves to the unique challenges posed by a global marketplace and a regulatory environment far less forgiving than that which nourished the downturn. “There is a broader scope of content to cover now,” attests Hischier. “Our programs are becoming more multidisciplinary in response to a changing world.”

“The job of a director is dynamic and the obligations are changing rapidly, especially in terms of legal exposures,” says Grundfest. “As a result, our programs are changing. We reinvent them every year in response to what’s changing in the world.” While most program directors are still determining how their curriculum will be updated in response to the changes in the market, the most obvious impact is a greater emphasis on risk and its related disciplines. As director and executive education programs change, tomorrow’s leaders would be wise to consider such programs to stay abreast of new and valuable methods of adaptation, innovation, and success.

What went wrong?  It is far too simple to blame it on individual failure. Who among us thinks that if only he or she had sat on the board of AIG that its collapse could have been prevented?

What we have is the failure of a governance system. We must ask ourselves a set of very tough questions: What are the barriers to effective board governance? How can they be overcome? What would have been required for these well-meaning individuals to have fully exercised the stewardship with which they were entrusted and which they sought to provide? How could they truly have ensured the long-term health of the institution for which they were responsible?

A corporation’s ability to nurture relationships and to build the reservoirs of goodwill that create the resilience to respond and adapt over time depends on its health as a social institution.

It is time to probe beyond the obvious and well-worn barriers. It is too easy to focus, for example, simply on the mismatch of time and expertise in seeking to exercise “lay” oversight of these large, complex institutions.  More fundamental rethinking is required. We do not claim to have all of the answers, but based on our research and experience the outlines are clear.  A more effective governance model will be based on three core characteristics:

• A redefinition of what a ‘healthy’ institution looks like—one that emphasizes sustainable long-term success
• Board insistence on a well articulated purpose and related performance goals, and set of values for the enterprise that provides a fundamental compass to ensure the enterprise stays on track
• Board oversight of how effectively the purpose, goals, and values are being realized throughout the organization, based on governance processes that ensure transparency and voice from deep within the organization

What should board governance be seeking to achieve? What metrics should directors use to know if they are performing their duties properly?

Clearly, it is not just quarterly financial performance.  To effectively steward shareholder interests, boards need to be concerned about long-term value creation and the sustainability of performance. As anyone who has modeled corporate cash flows knows, the first three or even five years typically represent only a modest portion of the total value—the majority is in the terminal value.

David Langstaff, chairman of the advisory board of The Aspen Institute’s Business and Society Program, stresses the pervasive and corrosive impact of “short-termism.” It is even more invidious when it is the investors—those whose interests anchor the legal structure of corporate fiduciary responsibility—who are focused on the short term.  In 2007, even before the recent financial meltdown, The Aspen Institute issued a set of guiding principles for corporations and investors to help refocus on long-term value creation.

Commitment: The Missing Ingredient
Equally fundamental is a shift from a predominant focus on financial performance to a broader definition of health that includes the quality of the corporation’s relations with key stakeholders. Corporations are social systems as well as economic systems: the quality of relationships matter. The consumer trust that is the basis for brand equity, the customer loyalty that shapes future purchasing, the employee loyalty that keeps high performers from leaving, the supplier relationships that differentiate Toyota from General Motors—these are all important predictors of long-term performance.

A corporation’s ability to nurture these relationships and to build the reservoirs of goodwill that create the resilience to respond and adapt over time depends on its health as a social institution; specifically, on its ability to generate high levels of emotional commitment, first and foremost from their employees, and then from customers, suppliers, and other key stakeholders.

The acid test for employee commitment, in the sense that we mean it, is whether the individual is prepared to put the interests of the firm ahead of their personal interests or those of their particular department or unit. If the focus is strictly on performance, then individual interests can increasingly dominate. Without the requisite commitment to the collective good, the firm becomes increasingly self-seeking, bound by the current power balance and entitlements, to the point that a great enterprise like General Motors can inexorably decline over a 30 year period.

At the extreme, without commitment individuals can become increasingly willing to take risks for personal gain that put the institution at risk. It is patently clear this is what happened inside Lehman Brothers, AIG, and so many of our other leading financial institutions, to the point they not only put their own institution at risk, but the entire financial system.

Equally fundamental is a shift from a predominant focus on financial performance to a broader definition of health that includes the quality of the corporation’s relations with key stakeholders.

Thus, corporations that are built to succeed over the long term are characterized not just by high performance, but also by high commitment.

Psychological and Performance Alignment
We describe these types of companies and what it takes to build them in a new book: High Commitment, High Performance: How to Build a Resilient Organization for Sustained Advantage.

High commitment, high performance companies are found in nearly every industry and sell a variety of products, but all achieve three core goals:

• Performance alignment. The company’s strategy is aligned with the requirements of its environment, and the company’s organizing approach, management processes, and culture are aligned to execute the strategy.
• Psychological alignment. Employees and other key stakeholders have a strong emotional commitment to the mission and the values of the firm.
• The capacity to learn and change. Externally, management is alert to the changing requirements for competitive success, while internally it is open to learning what is going right and wrong within company operations and leading the necessary changes.

Langstaff elaborates on the central role of mission and values in psychological alignment: “If people believe they work for a company that is doing something worthwhile and has clear values that they can embrace with no compromises, they will be happier, more energized, and more committed,” he says.

Langstaff also describes how psychological alignment was central to the strategy of Veridian, a government defense contractor (now part of General Dynamics), where he was formerly the CEO. “We wanted to brand ourselves throughout the industry as the employer of the best, most innovative, and customer responsive people,” he says.  “Our goal was to create an extraordinary work environment for our employees. When we lost a contract, I wanted our people to prefer to stay with Veridian, rather than move on with the contract to the winner, as is customarily done.”

Veridian derived competitive benefit from this practice. “I wanted customers to know that if they chose against us, they could not count on having our talent move to the next contractor,” Langstaff says.

He then illustrates the distinction between performance alignment and psychological alignment. A defense contractor purely focused on short-term financial performance, he notes, would pursue any profitable work they could expect to win—and a number of companies have followed exactly this strategy.

But a focus on psychological alignment would lead them to be far choosier in the kind of work they took on out of concern for their implicit contract with employees. “Is having all employees on the same benefit plan important to you?” Langstaff asks.  “Is investing in training and development and giving all employees access important? Is employee retention a core value?  If so, there are some kinds of work that you’d better not get into, because you won’t be able to afford to do all those things and compete cost effectively.”

To achieve psychological alignment is not simply a question of human resources policies. It starts with a compelling corporate purpose that gives meaning to work and a set of values that people identify as consistent with their own personal values. It extends to the fundamental ways the company is operated.

“To deliver this work environment,” Langstaff notes, “we needed to break down internal barriers to collaboration and open lines of communication.  I wanted every employee to feel that they were supported by, and could deliver, the strength and capabilities of the entire corporation.”

What is true for a technology and professional services business like Veridian, also turns out to be true for airlines, steel, or any number of other industries. Companies like Southwest and Nucor that are able to combine psychological alignment, performance alignment, and the capacity to learn and adapt are the ones best able to sustain long-term performance.

“You don’t get a sense that there’s been a change of culture and behavior as a consequence of what has happened. And that’s why the financial regulatory reform proposals that we put forward are so important,” Obama said in a PBS interview in July.

On Capitol Hill, the so-called Shareholder Bill of Rights introduced by Senators Charles Schumer (D-NY) and Maria Cantwell (D-WA) incorporates proposals already proposed by the SEC, and then some. Its far-reaching provisions include say on pay, majority voting, and proxy access; annual director elections; splitting the role of the chairman and CEO; and the creation of a separate risk committee.

Against this backdrop, it is widely accepted that an annual nonbinding advisory vote by shareholders on executive pay at all publicly traded companies will become the law of the land. The measure was approved by the House in August and is expected to be taken up in the Senate.

In addition, the SEC has issued two sets of proposals—now subject to public comment until September 15—that would require greater disclosure on several fronts and “enhance” proxy disclosure and solicitation. Specifically, the SEC proposals include:

• Broader-based pay disclosures to provide more information about compensation policies beyond the named officers in the Compensation Disclosure & Analysis (CD&A).
• Disclosure on director qualifications including the experience, attributes, or skills that qualify them to serve on the board or specific committees of the board.
• Greater explanation of the company’s leadership structure, including why it is best-suited to the company and why the CEO and chairman’s roles are combined or split.
• More disclosure on the board’s role in risk management.-Disclosure of fees paid to comp consultants and services other than compensation consulting for officers and directors.

If adopted, these rule changes would become effective for proxy filings for a fiscal year ending after December 15.

The SEC also voted to approve an NYSE proposal to eliminate broker discretionary voting for all elections of directors, whether contested or not. This rule change would apply to shareholder meetings held next year.

On Capitol Hill, the so-called Shareholder Bill of Rights introduced by Senators Charles Schumer (D-NY) and Maria Cantwell (D-WA) incorporates proposals already proposed by the SEC, and then some. Its far-reaching provisions include say on pay, majority voting, and proxy access; annual director elections; splitting the role of the chairman and CEO; and the creation of a separate risk committee.

The Business Roundtable called the bill an “unnecessary intrusion into matters governed by state corporation law, the SEC, stock exchanges, and public company boards.”

“All of these measures are well intended, but they are misguided,” says Marc Rosenberg, a partner at law firm Cravath. He says they give more authority to shareholders, who don’t have a legal obligation to look out for the best interest of the company.

Others, including Thomas Quaadman of the U.S. Chamber of Commerce’s Center for Capital Market Competitiveness, argue that federal legislation is not about improving the corporate governance of poorly run companies, but rather “liberalizes rules so that activist investors can avoid costly proxy fights and elect their own directors instead.”

The 27-page advisory report, “U.S. Financial Regulatory Reform: The Investors’ Perspective,” centers around a strengthening of existing regulatory structures: “the will to
regulate must be restored.” It advises greater oversight on derivatives contracts, credit ratings agencies, and investment managers, among other financial entities.

The report also advises improved corporate governance, including greater accountability for directors by shareholders.

“Investors need better tools to hold directors accountable so they will be motivated to challenge executives who pursue excessively risky strategies,” reads the report. “Measures to make it easier for shareowners to nominate and elect directors are a good place to start.”

The IWG is a collaboration between the CFA Institute Centre and the Council of Institutional Investors. It is helmed by former Securities and Exchange Commission Chairmen William H. Donaldson and Arthur Levitt Jr.

In today’s rapidly evolving regulatory environment, directors are increasingly expected to act proactively in raising issues and asking questions that delve into every conceivable area of risk. One such area relates to the corporation’s defined benefit and defined contribution plans. Though ERISA permits the board to appoint others to serve in the capacity of “named fiduciaries,” thereby delegating the operational responsibility for managing the pension plan assets, the board retains a residual responsibility to act prudently in overseeing and monitoring how those assets are being handled by the named fiduciaries. The U.S. Department of Labor has long regarded the right to vote the shares owned by the pension plan as a plan asset that must be exercised.

In discharging its duties, the board should therefore inquire how the corporate employees who manage the pension assets are complying with the ERISA rules, which require that the shares be voted in the best interests of the plan participants and beneficiaries. It is not sufficient for corporate employees to just delegate the voting responsibility to the plans outside investment managers and then adopt a “three monkeys” approach.

The board, or an appropriate committee, can and should ask management for a report at least annually on whether, how, and by whom the plan assets are being voted. For example, the board can create an internal fiduciary review committee, which can be composed of company employees, to formulate voting policy guidelines establishing how the shares will generally be voted, and to itself determine the vote in the relatively rare cases which either the guidelines don’t address or which involve exceptional circumstances (e.g., proxy fights). This is the same process that the investment firms, which manage corporate pension assets, typically follow. Regardless of whether the voting decisions are made internally or by an outside investment manager, the ERISA requirement is the same: Votes must be cast in the best interests of the plan participants and beneficiaries.

In its monitoring role, the board should understand which process is being followed, and ask who within the corporation is reviewing both the voting policies and, periodically and on an after-the-fact basis, the actual votes to make certain that the corporation is in compliance with the ERISA mandates. This is especially important because there have been a number of reported instances in which the voting agent, generally through clerical error, failed either to vote the shares at all or to vote them in accordance with the shareowner’s established voting policies.

It should be a simple matter for the corporate managers with responsibility for the pension plan assets to prepare a summary report for the board indicating whether the shares had been voted, and how they were voted. Every mutual fund today must by law prepare such a report once a year and make it publicly available to its shareholders. Given the board’s continuing fiduciary responsibility for the corporation’s pension plan assets, it should expect no less from cognizant corporate employees.

James P. Melican is chairman of PROXY Governance, a provider of proxy voting and corporate governance services.

The Apple CEO’s notoriously opaque communications in regard to his condition has sparked debate over the role of the board in communicating relevant information to shareholders.

Though the SEC’s investigation is still in its review stage, if the regulator determines that Apple committed wrongdoing by not letting shareholders in on what could have posed a severe impact to shareholders, further action may result.

“The issue here is: Did Apple or Jobs make misleading disclosures, tested by what they knew at the time?” says UC Davis Professor Robert Hillman. “A disclosure could be misleading if it’s a partial truth.”

Jobs, who announced last month that he underwent a successful liver transplant in April, returned to work last week.

PGI says that both White and Abel have exercised poor judgment in regards to potential conflicts of interest within the company as relate to a key independent director on the board. White, who chairs CPI’s compensation committee, and Abel, who chairs its nominating and governance committee, were responsible for the independent classification of Chairman David Meyer.

Said PGI, the “judgment seems seriously flawed. In declaring Meyer independent the board papered over the serious conflict of letting his business partner, [Michael] Koeneke, continue to sit on the Compensation Committee even as it negotiated Meyer’s contract. It also created the Kafka-esque reality in which Meyer has a role in approving both sides of the negotiation, making it substantially more difficult (and awkward) for a truly independent director to question the wisdom or the terms of the agreement.”

PGI goes on to question Meyer’s compensation figures, which total more than twice the amount paid to other directors in the company.

CPI manages and operates over 1,000 portrait studios around the country, including in-house businesses with Wal-Mart and Sears.

According to Bloomberg, the SEC is looking to require companies to disclose information regarding the specific experiences that qualify a given director. This would include experience as relates to issues such as compensation and accounting rules.

“What the SEC wants to do is prompt companies to make sure they’re appointing directors who can do the job and not just look pretty on a roster,” says Stephen Davis, a senior fellow at the Millstein Center for Corporate Governance and Performance.

Some celebrity directors in the past have included cyclist Lance Armstrong (Morgans Hotel Groups), U.S. military veterans General Tommy Franks and Admiral Joseph Prueher (Bank of America), and former basketball hall-of-famer Oscar Robertson (Countrywide).

“Those kinds of people, celebrities, add little to the boards on which they serve,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “It’s a problem.”

Having returned from a six-month medical leave of absence last week, Jobs and Apple have maintained their secrecy regarding the CEO’s medical issues, igniting a debate over to what degree disclosure is required in regards to management health. Jobs underwent a liver transplant in April, information that was only recently revealed.

The Securities and Exchange Commission opened an informal probe into the matter earlier in the year, and Apple’s board has enlisted outside counsel to represent it in the event of a more serious inquiry.

Former SEC Chairman Harvey Pitt criticized Apple’s lack of disclosure, saying, “We haven’t gotten to the point where liver transplants are viewed as routine surgery,” and questioning “what processes [the board] went through in deciding what disclosure to be made.”

According to BusinessWorld Online, the SEC has determined that resigned company directors must wait two years before returning to a company as an independent director. In the event that an individual has assisted the company’s board in a non-director capacity, he/she must wait one year.

This second provision includes anyone who served as chairman emeritus, an ex-officio officer or director, or anyone who served on an advisory board.

SEC Secretary Gerard M. Lukban says the new provisions are designed to insulate former company officials from a given firm before returning them to the board.

According to Japan’s Financial Services Agency, the bank had “fundamental problems” with its compliance and governance systems for detecting and monitoring suspicious transactions, as well as a lack of a system to handle organized crime groups.

The suspension will be applied to advertising and promotions for all products in its retail business. The company must also review and restructure its governance system, internal control, and business management as well as ensuring an adequate staffing and proper organizational structure. The bank will still be allowed to conduct business as usual with current and new customers.

This is not the first time Citigroup has had trouble with its Japanese sector. The private banking business was shut down in 2004 for multiple violations, including failure to follow money laundering prevention guidelines and overly aggressive sales tactics.

A report released yesterday by the Conference Board Governance Center provides a checklist of issues for directors to consider in the event of an unsolicited takeover offer.

Some 47 percent of merger activity in 2009 was accomplished by means of hostile takeovers, up from 24 percent in 2008. “Today’s market conditions permit some companies to be ‘put in play’ more easily than before,” says Frederick H. Alexander, author of the report.

Certain company conditions, such as undervalued share prices and liquidity issues, can invite “bargain hunting” by acquirers. Certain pro-shareholder measures taken over the last few years, such as the elimination of poison pills, may have weakened these companies’ defense against takeover, according to the report.

Shareowners.org—launched Wednesday with hopes of becoming a grassroots powerhouse in the capital market—released a poll showing just how much retail investors are fuming about the global financial collapse.

Four out of five back “strong action” to correct problems. Some 34 percent describe themselves as “angry”; another 45 percent say they’re not angry—but still want muscular reform.

Shareowners.org offers tools to convert those sentiments into political clout for shareholder rights legislation pending in Congress. Expect the drive to gain viral momentum—and spark mirror campaigns in other markets.

CEOs need to increase their online presence on social networking sites, such as Twitter and Facebook, a new study reported on by The Chicago Tribune finds.

Out of Fortune’s 2009 list of the top 100 CEOs, study conductor Sharon Barclay of the executive public-relations firm Blue Trumpet Group found what she calls a “miserable level of engagement” on the networks. Two of the CEOs had Twitter accounts, 13 had LinkedIn profiles, and 19 had personal Facebook pages. They tended to have better Wikipedia presences, with three-quarters of the executives having an entry on the online encyclopedia; however many had incorrect titles, missing information, or a lack of sources.

“I would think an executive at that level would want to exploit (an online) network as much as possible,” Barclay said. “But the only executives using LinkedIn well were people in technology,” she said, citing the CEOs of Dell, technology products distributor Ingram Micro, and Cisco Systems as having the strongest presence on the site.

“What CEOs need to realize is that millions of their customers are communicating this way, and it’s foolish for them to dismiss this,” Barclay said.

NBC Dallas, Hawaii’s Star Bulletin, and Alabama’s Birmingham Business Journal reported on Directorship’s “The Best States to Do Business,” reflecting on where their state stands and if changes need to be made.

Texas’ central location, time zone, low cost of living, and relatively solid economy were highlighted by NBC’s Elvira Sakmari.

Meanwhile, Hawaii’s Star Bulletin admitted that the state is accustomed to poor ratings as a place to conduct business. High cost of litigation, low presence of Fortune 500 companies, and expensive cost of labor, all attribute to Hawaii’s consistent low rankings.

Alabama’s Birmingham Business Journal noted that the state fell below several of its regional competitors, including Tennessee (9) and North Carolina (12). Ranked 37th, Alabama ranked well in the cost of living and cost of labor categories, but the state scored low scores in quality of life and education, where it placed 42nd and 44th.

The report, which centralizes itself on European banks but is, according to its authors, applicable to the financial sector on a global scale, dictates that bank boards must do a better job keeping in check their firms. This mostly applies to internal risk regulation, including:

• Reining in excessive leverage
• Realizing liquidity risks
• Measuring, rather than merely identifying, risk

The report also advises that bank boards will perform better when guided by a financial industry insider rather than an independent outsider. Here, experience is crucial.

“Bank boards, in the run up to the financial crisis, found it difficult to see the forest for the trees,” said co-author and managing director Stilpon Nestor. “In order to avoid this happening in the future, they should look towards implementing corporate governance changes to increase transparency and efficiency.”

President Barack Obama’s financial-market reforms announced Wednesday will be the starting point for new US systemic risk regulation and corporate governance rules, especially regarding shareholder rights, reports Global Proxy Watch.

The plan would give oversight duties to the Federal Reserve while keeping the SEC as the key regulator in the financial sector, while expanding international cooperation.

It is likely that Congress will toughen elements of the plan before it is enacted. Last week, Congressman Gary Peters proposed The Shareholder Empowerment Act, which includes the Shareholder Bill of Rights that New York Senator Charles Schumer proposed last month. Included in the Shareholder Bill of Rights would be requirements of a majority vote in uncontested director elections and a split in the chair and CEO posts. The SEC also proposed rules allowing shareholders to access corporate proxies.

“My view is that the corporate governance system in the UK is not fundamentally broken,” said Haddrill.

Haddrill evoked the anti-regulatory sentiments of many US business leaders, claiming that, “there is no reason to believe a different system or a more legislative approach would have served us better.”

UK business leaders, particularly fund managers, have been roundly criticized for the risky investments that were made en masse in the years leading up to the banking crisis. Hadrill said that fund managers had taken too much flak for their role in the recession.