October/November 2007

The Six Attributes of Leading CEOs

I recently worked with a company whose CEO had led it on a tremendous run of prosperity. Under his leadership, the company had gone from virtual bankruptcy to being number one or two in nearly all of its markets. Full Story

The CEO's Agent

Michael Sirkin counsels his top CEO clients to think of their employment contracts as prenuptial agreements. A divorce is always a possibility, Sirkin reasons, so it’s best to spell out the terms while you are still in love. Full Story

The 2008 Proxy Season

It is not easy to prognosticate on the 2008 Proxy Season and the future direction of corporate governance. For a little help, I recently turned to a renowned, 60-something-year-old pundit—the Magic 8 Ball. Full Story

Tales from the Deal World

Peter Solomon has served on 21 boards in his life. He now sits on only one. New independence rules have forced a choice between serving on boards and advising clients, and the choice, he says, is an easy one to make. It is just one more development in the corporate arena and on Wall Street, which Solomon, 68, has studied during his 44-year career. Full Story

In-house Counsel: Employed Lawyers Coverage

The American Bar Association has further defined the duties of the in-house counsel, instructing them to act in the best interest of their employer when dealing with illegal conduct by executive officers. This can create a complicated and sometimes antagonistic dynamic as in-house counsel becomes increasingly involved in investigations and civil and criminal litigation of their colleagues. Full Story

Boardroom Focus on Immigration

Although in recent years illegal immigration has exploded as a nationwide concern, most of the discussion has been focused on the more politically charged issues. That debate, so far, has shed more heat than light on the topic. Full Story

Shareholder Power

In 1932, a classic book called The Modern Corporation and Private Property spelled out the view that underlies most of the corporate governance activism in the United States today. Written by two academics named Adolf Berle and Gardiner Means, the book explained how the birth of the modern publicly owned company in prior decades had brought about a fundamental split between ownership and control. Full Story

M&A Report: Deal or No Deal?

Talk about a drop-off. Merger and acquisition activity came to a screeching halt late this summer when concerns in the credit market made financing for large deals all but impossible, especially for private-equity blockbusters that had been fueling the M&A boom. Full Story

Ira Millstein on Governance

Ira Millstein is arguably the top lawyer in America in the practice of corporate governance. As a senior partner at the law firm of Weil, Gotshal & Manges, where Millstein has worked since 1951, he has been so influential on the topic that not only did he rank number eight on The Directorship 100, a listing of the most influential people in corporate governance, but Yale School of Management named its Center on Corporate Governance after him. Full Story

An Advocate for a Culture of Integrity In and Out of the Boardroom

Kenneth Starr was thrust into the limelight when he was appointed Independent Counsel investigating first Whitewater and its successor, the Monica Lewinsky affair. Starr spoke to Directorship during the magazine’s annual Boardroom Forum earlier this year about his lengthy legal career, his time in the public eye, the current make-up of the Supreme Court, and what all directors should know about the Constitution. Full Story

Michael Milken: A Capitalist's Manifesto, Part II

In part II, Michael Milken, chairman of the Milken Institute, an independent think tank devoted to global economic issues, discusses, in his own words, the power of education, the democratization of capital, and the role of financial innovations. Full Story

Shareholder Communications: Why 'Short Termism' May Be Short Lived

Imagine for a moment turning on CNBC and watching Maria Bartiromo explain that while Company X has just announced it missed the “consensus earnings estimate” by a penny, resulting in a 10 percent drop in share price, she gleefully reports what the company is doing to create long-term value. Full Story

Postings

Appointments made to boards of Sapient, NiSource, JPMorgan Chase, H&R Block and more... Full Story

Think Week, If You're Not Bill Gates

Directorship urges directors and officers to take a page out of Microsoft Chairman Bill Gates' book and take an annual think week, and if practical, to do so as a full board, complete with afternoon walks, provocative reading, and speakers on global issues. Full Story

The Return of the Tender Offer

Unused in friendly transactions for many years, the tender offer has returned as a viable—and in many cases superior—alternative to the single-step merger for strategic and private-equity acquisition structures. Indeed, the first six months of 2007 have seen at least 29 tender offers for U.S. targets with a market cap in excess of $200 million, compared with just 5 for the same period in 2006. Full Story

Nasdaq Wants You

As part of a broad strategy to provide services outside of its core listing service, Nasdaq is targeting board members with a series of offerings. In addition to Carpenter Moore, a directors and officers (D&O) insurance broker that it purchased two years ago, the electronic exchange is branching into recruitment, education, and technology for boards. Full Story

Strategy a Tough Climb? Hire a Sherpa

The disconnect is huge. On one hand setting strategy is one of the three most important responsibilities of boards of directors. On the other hand, the vast majority of boards have neither the time nor the processes to effectively review management’s strategy, much less take a proactive role in setting it. To bridge the gap, boards could use a Sherpa, or guide. Full Story

A Close Look at Proxy Advisors

This summer, the U.S. Government Accountability Office released its long-awaited report on the state of the proxy-advisory industry. The report, which was requested by members of Congress, looked at whether or not proxy advisory firms have conflicts of interest that could skew the objectivity of their vote recommendations. According to the findings, the Securities and Exchange Commission did not identify any major violations in its examinations of such firms. Full Story

Risk Governance and Governance Risk

Boards of directors have emerged from years of regulation on corporate governance with a renewed and empowered role. They are more independent, rely on more diverse expertise, and have better-defined legal standards to help them carry out their fiduciary duties. Full Story

The Board's Role in a Sale to a PE Firm

Over the last several years, private- equity funds have fueled deal-making activity that only recently abated due to the dislocation in the credit markets. This temporary lull provides an appropriate time to review the lessons from several recent decisions of the Delaware Court of Chancery, the nation’s preeminent business court, concerning the litigation that inevitably follows the announcement of a “going-private” transaction. Full Story

When Two Boards Are Better Than One

Establishing a corporate advisory board can be an effective and inexpensive way to help executives build bridges to new technologies and ideas. Full Story

SEC on Pay Disclosure: 'Try Again'

In late August, the Securities and Exchange Commission sent comment letters to more than 300 companies offering an opinion on how they complied with the new compensation discussion and analysis (CD&A) rules that went into effect earlier in the year. The gist of the SEC’s comments? “We’re not happy.” Full Story

The Battle Brewing Over Director Elections

The corporate-governance battle looming over Washington this fall revolves around the issue of proxy access. Last July, the Securities and Exchange Commission made good on a pledge by Chairman Christopher Cox to address shareholder demands for greater access to proxy ballots. But the two proposals voted on by the divided commission flatly contradict each other. Full Story

NACD: 'The Voice of Directors'

“The sweet spot” is how Ken Daly describes his place as president and CEO of the National Association of Corporate Directors. Daly was named last May to head the 30-year-old not-for-profit association based in Washington, D.C. He succeeds Roger Raber, who ran NACD from 1999 until his retirement earlier this year. During Raber’s tenure, NACD membership grew 300 percent and its influence flourished as an educator, adviser, and commentator on board-related issues. “We want to help members understand how to be better directors,” says Daly. Full Story

Succession Planning: And the Next CEO is...

The average tenure of a CEO is now less than five years. Given the potential volatility created by a sudden or ill-conceived change at the top, board members consistently rate succession planning as one of their most important responsibilities. Full Story

Who's the Best? And Other Collected Thoughts

Admittedly, Americans are a competitive breed. From trying to outdo the Joneses to hard charging on the athletic field, few pursuits are greeted with more enthusiasm than trying to be the best. CEOs of large companies are no different: Managing a global enterprise is among the most challenging of all activities, and they like to try to outdo each other. Full Story

Compensation: The Right Stuff

The new boardroom frontier requires developing defensible and logical structures for information gathering, decision making, communication, and ongoing oversight. The process must consider not just board and compensation committee members, but senior management; outside advisers such as accountants, lawyers, and consultants; and the views of external influencers such as institutional shareholders, proxy rating services, and regulators. Full Story

Audit Committee Roundup: Tackle Tax Risks With Authority

Audit committees have developed a greater sensitivity to the financial reporting and reputation risks that taxes can pose for their companies today. The number of tax-related material weaknesses reported under Sarbanes-Oxley Section 404, as well as the recent implementation of the Financial Accounting Standards Board's FIN 48, has prompted this increased attention. Full Story

Editor's Letter: The Non-Hollywood Director

When I came to Directorship from CFO magazine this past summer, I had a good feel for audit committee issues and dealmaking, but outside of that, I didn’t really understand exactly what directors did. Most of what I did know about the boardroom came from reading about the Enron and WorldCom crises, or worse, from Hollywood—Hudsucker Proxy, Trading Places, and, of course, Wall Street. In other words, I was only familiar with the cliché that persists—gray men sitting around long oak tables smoking cigars and talking about golf. Full Story