What we also discovered in putting the list together was that in some instances, it became impossible to separate the captain from the team. This year’s D100 is a case in point: Our editors and board of advisors were nearly unanimous in our selection of President Barack Obama as this year’s most powerful corporate governance influence. And yet, to do justice to the seismic shift his policies have brought about in the boardroom, we also had to recognize the many other  “New Voices” in the Administration who are now leading the greatest financial reform of American business since the 1930s.

So, we ask that in the pages ahead you pay more attention to who counts, and less to how we count, in arriving at our final selection of individuals and institutions that have met the requirement to be “most influential.” We think you’ll agree it’s an intricate and impressive mosaic where the whole equals much more than the sum of its parts, which may or may not be greater than 100.

Regulators & Rulemakers

Team Obama
It is often written that reasonable people may disagree, and with Americans and their Presidents, it is practically a way of life. But even an unreasonable person could only conclude that this President and his Administration are having a profound and lasting influence over the boardroom. President Barack Obama has demonstrated an enormous capacity for calm in uncertain times. His relative youth leads to frequent comparisons to John F. Kennedy and his communications skills to those of Ronald Reagan. But it is his aggressive response to the unparalleled economic challenges that greeted him at the dawn of his young presidency that harkens back to an earlier figure of towering influence,  Franklin D. Roosevelt.

FDR’s massive social and financial reform programs—the creation of Social Security as part of the New Deal, the establishment of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Company (FDIC)—helped restore confidence in the nation’s banking system coming out of the Great Depression. One could plausibly take major portions of FDR’s New Deal and substitute his name with President Obama’s.  The implementation of the $787-billion American Economic Recovery Act one month after Obama took office, coupled with his handling of the Troubled Asset Relief Program (TARP), which sought to strengthen the financial sector by buying up the assets and equity from troubled banks, has clearly helped the nation avoid further financial disaster and put the economy on the path to recovery.

And finally, turning again to the FDR playbook, Obama assembled a team of wise men and women, formidable economic and business minds, whose decisions are having a lasting effect on the role of the corporate director. Preeminent among them was the choice of Rahm Emanuel as chief of staff. Described as a veritable “influence machine,” within the Administration and Congress, the former Congressman from Obama’s home state of Illinois is known as a hard-charging, brutally candid, sometimes combative, acutely intelligent man who can get things done and knows the ways of the Capitol and the boardroom.

The Enforcers
Perhaps second only to Obama in terms of her influence on boards and corporate governance, career regulator Mary Schapiro heads up the 75-year-old SEC. Before the crisis, the agency’s very existence was in question: “Obsolete,” “out of touch,” and “behind the times” were just some of the many terms uttered by detractors. The Commission, under former chairman Christopher Cox, was pilloried for missing the Madoff scandal.

As former SEC chairman and Directorship 100 Hall of Famer, Arthur Levitt described her: “She has the skills, the intellect, and the character to be a superb SEC chair.” But Schapiro will face a new kind of challenge in the role, not just that of proving her own qualifications, but also instituting a significant remodeling of the SEC itself, as she works to bring it into the new regulatory era.

Moving swiftly to address regulatory concerns in the wake of the financial crisis, the SEC has rolled out a series of proposals that could embody the biggest change to the rules of the game for directors in some time. Schapiro, who is no stranger to the boardroom, having served on the boards of Duke Energy and Kraft Foods, has overseen proposed rule changes on proxy access, broker voting, say on pay, and new requirements for disclosure on executive compensation and director qualifications. It’s now up to her and fellow commissioners Kathleen Casey, Elisse Walter, Luis Aguilar, and Troy Paredes to determine the final regulations that emerge from the proposals.

Other key players Schapiro has brought into the SEC include Senior Advisor Kayla Gillan, Chief Accountant James Kroeker, and Director of Enforcement Robert Khuzami. Gillan was a founding board member of the Public Company Accounting Oversight Board (PCAOB) and former general counsel to CalPERS. Kroeker joined the SEC as deputy chief accountant in 2007 from Deloitte and Touche where he had been a partner in the firm’s national accounting services group. Kroeker recently said that the proposed road map for the convergence of International Financial Reporting Standards,pushed to the back burner amid the larger issues of market reform, would be restored as another top priority. Khuzami is a former federal prosecutor, has pledged to improve the SEC’s enforcement performance by creating specialized units to provide “structure and resources for staff to ‘get smart’ about certain products, markets, regulatory regimes, practices and transactions.”

TARP Overseers
Another example of Obama’s preference for brains over politics was his reappointment of Sheila Bair to chair the FDIC. Another fiscally conservative Republican, on Bair’s watch alone this year, 94 banks have failed, creating a new challenge:  how to replenish the fund. Bair has also been an integral part of the team overseeing TARP. Neil Barofsky is a former New York assistant attorney general confirmed by the Senate in December as special inspector general. Dubbed the “TARP Cop,” his job is to figure out how and where the $700-billion TARP funds are spent, reporting directly to the President and providing updates to the Congressional Oversight Panel chaired by bankruptcy expert and Harvard Law School professor, Elizabeth Warren. COP’s first report, released in February, casti-  gated then-Treasury Secretary Henry Paulson for his performance and lack of transparency, reporting that the Treasury Department  had overpaid by $78 billion for the assets it bought from banks.

Interestingly, while Obama sponsored and was a strong proponent of  “say on pay” legislation while a senator, since appointing Kenneth Feinberg special master of compensation, he has appeared unwilling to make the issue a top priority. Feinberg, who has immersed himself in some of the country’s most troublesome and high-profile cases, is considered a superb choice, both in terms of skill and temperament, by Capitol Hill insiders. His most noteworthy case was the 33 months of pro-bono work he did following the 2001 terrorist attacks to determine how much each victim would receive from the federal government’s September 11th Victim Compensation Fund.

Feinberg may in fact be perfectly suited for a job that most compensation specialists see as thankless, and possibly as a “no win” situation. As the Obama Administration’s comp expert, Feinberg was called on to monitor the compensation of executives in what were once some of America’s most prestigious corporations, now TARP recipients, including American International Group (AIG), Bank of America, Citibank, Chrysler, GMAC, and General Motors.

Fed to the Rescue
To prevent American capitalism from spiraling deeper into the abyss, nine months after President Obama made his first Cabinet announcement, he re-nominated Ben Bernanke as Federal Reserve chairman. The former Princeton economics professor was selected by Bush in 2005 to succeed Alan Greenspan. In 2008 after the market crashed, Bernanke invoked emergency powers, slashed interest rates, and spent trillions of dollars to right the financial system. Just last month, he declared the recession “likely over.” Though he seldom gives interviews, Bernanke is never far from the public eye and has been a stalwart in the transition between presidential administrations and in the effort to stem the economic slide.

When then President-elect Obama named his economics team, it included players who, like Bernanke, were already steeped in the crisis details, demonstrated a studied understanding of Depression-era economics, or some combination of both. Enter Treasury Secretary Timothy Geithner and Chief White House Economic Advisor Lawrence H. Summers. Geithner, who is currently pushing legislation to provide more systematic regulation of financial institutions, including new limits on executive compensation, recently told one interviewer that he is optimistic major reforms will be passed.

Prior to his appointment replacing Henry Paulson, Geithner was president of the Federal Reserve Bank of New York and part of the team central to the critical negotiations that resulted in Bear Stearns being tucked into JPMorgan Chase, Merrill Lynch going to Bank of America, Lehman Bros. disappearing, and Citigroup and other struggling banks getting a lifeline.

Summers, the former Harvard University economist who became its president following his tenure as Treasury Secretary to President Clinton, is director of the Cabinet’s National Economic Council. The group was established in 1993 to coordinate and ensure that the President’s economic policy agenda is carried out.

Rounding out the team, Paul Volcker, the former Fed chief under Clinton, was selected to chair the president’s economic recovery advisory board. And Christina Romer, a former UC Berkeley economist, who administration sources suggest is well- regarded by both parties, chairs the Council of Economic Advisers. Her appointment was seen as a further triumph of brain over politics in Obama’s approach to talent recruitment.

President Obama said in a statement that he and his wife Michelle were “heartbroken” to learn of Kennedy’s death. “I valued his wise counsel in the Senate, where, regardless of the swirl of events, he always had time for a new colleague. I cherished his confidence and momentous support in my race for the Presidency. And even as he waged a valiant struggle with a mortal illness, I’ve profited as President from his encouragement and wisdom,” said Obama, who was elected last November and took office in January.

Kennedy’s death is expected to ignite a battle for his seat in the Senate. Prior to his passing, in a letter to state legislators, Kennedy asked that the governor be allowed to name an interim senator. He was adamant in his efforts in order to maintain critical Democratic votes on health-care legislation that is moving through Congress. Health-care reform has been a lifelong quest, reports Bloomberg. “It has a profound impact on Massachusetts politics and elected office,” said Fred Bayles, director of Boston University’s statehouse program. “Everything’s going to fall down because everyone will start moving around either jockeying for his seat or for the other positions that could open up.”

Kennedy’s pursuit of health-care reform was one of many battles the senator embarked upon. After a failed run for President in 1980, Kennedy soon ramped up his efforts on the Senate floor. Despite his reputation for left-wing “idelogical purity,” according to The Wall Street Journal, Kennedy was known for working closely with high-profile Republicans to push goals through. Kennedy’s efforts helped guide President Obama’s campaign for the presidency and also fueled Kennedy’s pursuit of health-care reform efforts. He spent his final months battling setbacks for health-care reform while fighting for his life. “He was the survivor,” said Norman J. Ornstein, a political scientist at the American Enterprise Institute. “He was not a shining star that burned brightly and faded away. He had a long, steady glow. When you survey the impact of the Kennedys on American life and politics and policy, he will end up by far being the most significant.”

Although the “say on pay” vote was advisory, had the vote gone the other way, CEO Ivan Seidenberg and other executives could have found themselves blanketed with embarrassment. A leading critic of the compensation said afterward that the 90-percent vote in favor of the package shows that most shareholders are pleased with Verizon Communications, which has posted consistent profits.

“They can always do better,” said Bill Jones, president of the Association of BellTel Retirees, which tried to marshal opposition to the pay package. “And this is one of the areas where we can continue to work with them.”

Seidenberg’s compensation was valued at $20.2 million in 2008, essentially the same as in the previous two years.

Verizon is one of 15 companies adopting its own provisions this year for allowing shareholders vote on pay.

Fannie Mae CEO Herb Allison is expected to head the government’s $700 billion financial-rescue program, according to the Wall Street Journal.

Allison is the former chairman of investment company TIAA-CREF and was a Merrill Lynch & Co. executive for several years. In September, he agreed to run Fannie Mae after the U.S. took over the mortgage giant and its sister firm, Freddie Mac.

Obama could announce Allison as assistant secretary for the Office of Financial Stability as early as this week. Allison would replace Neel Kashkari, who was asked to stay on through the Bush-Obama transition until a replacement was found.

Treasury Secretary Timothy Geithner has been searching for someone to run TARP. Potential candidates either did not pass the vetting process or pulled out of consideration on their own accord. If confirmed, Allison will face the problems of how to spend the program’s remaining cash, and will likely represent the administration if it requests more bailout funds.

Echoing the patriotic, warlike rhetoric of Warren Buffett, chairmanof Berkshire Hathaway, and the call for regulatory reform from BenBernanke, chairman of the Federal Reserve,  Dimon said the U.S. couldapproach a recovery by the end of the year if all participants pulledtogether: “There are modest signs of recovery and healing.”

JPMorgan’s bonds business had performed better in recent months, Dimon said. Citigroup said on Monday it had been profitable in January and Februaryand was experiencing its best quarter in more than a year.

Dimon expressed support for the mortgage modification program introduced by Obama and told a capital markets conference organizedby the Chamber of Commerce that the government’s stress test of bankswould create confidence: “I think a lot of the banks will be fine.”

Dimon “liked” the mark-to-market accounting rule, which compels institutions to value assets at current prices and has been cited as creating volatility owing to the illiquid market and hard-to-value assets, reports FT.  Dimon said, “We have taken it to a ridiculous point. I think it’s wrong to create all that volatility.”

Chris Dodd, chairman of the Senate banking committee, said at a Washington conference that Congress should resist intervening to alter the mark-to-market value rule.

I know that sub-editors take liberties with copy in order to make headlines but this is utterly misleading.

First, risk, as the Chancellor himself acknowledges is inherent to the business of banking. It is only by the judicious taking of risk that business grows. So, the era of risk is not over.

Second, what are we to make of the demand that banks should be responsible? Of course they should. Whoever thought otherwise? It is in defining what it responsible business and how that is policed where the problem lies. If the review announced by the Chancellor helps to answer those questions, so much the better.

Third, what of the boards? For the most part, and current inquiries and investigations will confirm this or not, most directors were and are conscientious people doing their best, according to the context in which they were asked to perform their duties.

Fourth what was that context? In the first place, the banks were seen as hugely successful enterprises oiling the growth of world trade and investment. Senior bankers were courted and feted by politicians and the media. The siren voices prophesying doom were there, but they were few and far between. In second place, directors, including those of banks, under modern theories in the U.S., U.K. and E.U. are supposed to be independent of management. They are expected to exercise their judgement and experience to know what information to call for so as to challenge management and assess the adequacy of internal control and risk management. How can they do that without a much more profound knowledge of the business of banking which risks making them less independent? May be that is a compromise which will have to be made.

Fifth, where were the regulators in all of this, and the governments behind them? The regulators were passive and the governments quite happy to see the money lubricated by the banks flowing into their pet projects and into their tax coffers.

Sixth, what do we as a society want of banks and businesses – constantly improving returns, reported on a quarterly basis. Isn’t that perhaps just a tad short term? As the saying goes, you get what you measure.

So, where does this leave us on the question of pay and bonuses. Hindsight is a wonderful thing we all know, but let us not demonise millions of people for the sins of a few. Most bankers worked hard and conscientiously. When they did so they just be justly rewarded. If that includes bonuses, so be it. All they should be is fairly structured to promote the long term success of the enterprise and aligned to meet the interests of the employee and employer in long term sustainability. It may not be so exciting, but it will be more enduring.

Alan Jenkins, chairman & head of international development, at the London-based law firm Eversheds LLP.

Stringent executive pay restraints in the new stimulus package President Barack Obama signed Tuesday are a foretaste of economy-wide restrictions likely to come out of a US Congress steamed up about the issue, Global Proxy Watch reports.

The Senate supplanted Obama’s $500,000 salary cap with tougher rules that limit all bonus and other payments to a third of an executive’s annual salary at firms receiving bailout money.

U.S. labor and public pension funds now see this as an opening to push for restrictions they have long wanted at all U.S. firms. Among the possibilities: Broadening the 1993 law that prohibits companies from taking a federal tax deduction for executive salaries over $1 million a year. It has been widely criticized for driving up pay by prompting executives to skirt the limit with stock and option grants. One revision would extend the deductibility limit to all forms of compensation.

Another would cap the deductibility of compensation in excess of 25 times the pay of the company’s lowest-paid worker, as advocated by the Income Equity Act of 2007, which failed to pass.

General Motors Corp. and Chrysler LLC told the federal government they may need up to $21.6 billion more combined in bailout loans to put them on the road to recovery, and outlined extensive bankruptcy contingency plans even while continuing to lobby against the option, according to the Wall Street Journal. The recovery plans submitted to the U.S. Treasury would cement GM’s fall from the top of the global auto industry to a smaller, more flexible car company relying less on its core U.S. market for sales. Chrysler, meanwhile, appears to be steering itself toward a deal or venture with Fiat SpA.

According to Bloomberg, GM said it was making progress on complex deals to reduce some $48 billion in debt owed to bondholders and the United Auto Workers union but had fallen short of an initial requirement to complete those agreements by yesterday’s deadline for submitting the plans to U.S. officials. “The president’s team will be reviewing these reports closely in the days ahead,” White House spokesperson Robert Gibbs said in a statement. “It is clear that going forward, more will be required from everyone involved.” The company said it needs some of the cash next month to survive as it sheds brands and cuts 47,000 more jobs worldwide.

Chrysler said it requested another $5 billion in U.S. government aid, saying it expected the current brutal downturn in the U.S. market to run another three years, reports Reuters. Chrysler said concessions from its stakeholders—United Auto Workers, dealers, suppliers and second lien lenders—were implemented or fundamentally agreed upon. In its restructuring blueprint, the number three U.S. automaker also said it planned to cut its outstanding debt by $5 billion and reduce fixed costs by $700 million in 2009. U.S. Treasury Secretary Timothy Geithner said he will start reviewing the plans later this week when he and Lawrence Summers, director of the White House National Economic Council, convene an autos task force for President Barack Obama.

Meanwhile, an Obama Aide Says Bankruptcy Can’t Be Ruled Out for General Motors and Chrysler, according to the New York Times. President Barack Obama’s chief spokesman said the administration can’t rule out a restructuring through bankruptcy for struggling automakers, while adding the industry is “tremendously important” to the economy.

Bank of America, which recently completed a merger with Merrill Lynch that produced the country’s largest bank, is taking flak for the $15 billion losses posted by Merrill in Q4 2008—losses that weren’t reported until after shareholders approved the merger. Merrill paid out $3.6 billion in bonuses for 2008, and recently deposed CEO John Thain had been pushing for even more.

Bank of America will be making huge job cuts—up to 35,000—in the coming year in order to achieve cost savings after the expenses of the Merrill deal. BofA recently landed $20 billion from the federal government’s Troubled Asset Relief Program and further guarantees of up tot $118 billion in assets.

Wall Street paid out a combined $18.4 billion in bonuses in 2008, despite widespread losses throughout the financial sector. Critics have emerged from all sides to condemn such payments, including President Barack Obama, who labeled them “shameful.” Bank of America’s deferred bonus plan appears to be a step towards cooperating with public and legislative criticism.

Among the investors are the New York City funds, Calvert Group, Trillium Asset Management, Boston Common Asset Management, Catholic Healthcare West, and shareholder advocates Robert A.G. Monks and Amy L. Domini.

In a December 11 letter signed by the group, the investors asked Obama to “reverse a pattern of recent SEC staff decisions that have been closing the door to important dialogues between shareholders and management. The SEC has disallowed many shareholder resolutions that ask companies to disclose the financial implications of an array of environmental, community, public health, and human rights concerns and issues.”

David Lynn, a former SEC lawyer who is a partner at the Morrison & Foerster law firm, said he doesn’t expect that the investors’ letter would prompt the SEC staff to change its approach.

“Ordinary business” exclusions are the most common reason cited in “no action” requests and rulings on shareholder resolutions. Of the 223 excluded proposals for 2008 meetings tracked by RiskMetrics Group, 65 were omitted on “ordinary business” grounds. The controversial provision is being brought into question as the SEC has taken the approach and applied it beyond environmental and health proposals to address any resolution that relates to risk evaluation.

The SEC will receive a large number of “no action” submissions in the coming weeks. The SEC has granted a request by Whole Foods Market to exclude a CEO succession planning resolution from the Laborers.

SunTrust Banks raised “ordinary business” as one of several arguments to exclude a new labor proposal that seeks additional executive compensation limits than those required by the Treasury Department’s Troubled Asset Relief Program (TARP).

President-elect Barack Obama has selected Mary L. Schapiro to be chairwoman of the Securities and Exchange Commission. Schapiro, 53, is a former commissioner of the SEC.

While her appointment is not a cabinet-level position, she faces confirmation by the Senate, many of those who have been critical of how the SEC performed as the financial crisis ensued.

Schapiro previously served as chairwoman of the Commodities Futures Trading Commission during the Clinton Administration, according to The New York Times. Obama is considering combining two regulators, a structure long supported by many experts to streamline market oversight.

As the Financial Industry Regulatory Authority, Schapiro leads the largest non-governmental regulator for all securities firms doing business with the U.S. public.

A group of more than 60 institutional investors, investment firms, and investor groups representing approximately $300 billion in assets submitted a letter to President-elect Barack Obama asking him to support shareholder rights, according to FinancialWeek.

The letter specifies that within Obama’s first 100 days in office, to reverse a five-year “patter” at the Securities and Exchange Commission of blocking shareholders from using proxy resolutions to request better disclosure of the financial risks that companies face.

The group broke down the areas of interest into marketplace, social, or environmental concerns.

The Office of the Comptroller of the City of New York, shareholder advocates Robert A.G. Monks and Amy L. Domini; Calvert Group, Domini Social Investments, Trillium Asset Management Corporation, Boston Common Asset Management, and Catholic Healthcare West, among others. Endorsing the letter were the Investor Network on Climate Risk, the Investor Environmental Health Network, and the Interfaith Center on Corporate Responsibility.

The group argues that the SEC has “gradually been closing the door to important shareholder concerns’ and that shareholder proxy requests that had been allowed in previous years asking for better disclosure of financial risks to companies have been stumped.

Cheryl Smith, co-CEO at Trillium Asset Management, said that the protection and enhancement of the rights of investors “improves the stability of the financial system as a whole.”

Illinois Governor Rod Blagojevich was arrested on criminal charges on Tuesday, for trying to sell the U.S. Senate seat being vacated by fellow Democrat President-elect Barack Obama. Blagojevich intended to secure board appointments for his wife—making the Senate seat a packaged deal, according to FinancialWeek.

He was seeking a substantial salary for himself at a nonprofit foundation or union affiliated organization. He intended to secure at least one spot on a corporate board for his wife, expecting an annual salary of $150,000. He also expected promises of campaign cash and a cabinet or ambassadorship in exchange for his Senate choice, according to the FBI affidavit.

“Many, including myself, thought that the recent conviction of a former governor would usher in a new era of honesty and reform in Illinois politics,” Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, said in a statement.

The mail and wire fraud charge carries a maximum sentence of 20 years in prison while the bribery charge has a maximum sentence of 10 years in prison. Each count carries a maximum fine of $250,000, according to Reuters.

Glass Lewis, the proxy firm, announced that it is buying Washington Analysis Corporation (WAC), which provides early warning of US public policies affecting financial markets and specific companies, according to Global Proxy Watch.

The sale reunites two firms that were both owned by Xinhua Finance. The unhappy alliance led Xinhua Finance to sell off GL and is now selling off WAC. WAC does not sell research or serves to corporate, so GL says it will remain free of conflicts of interest.

According to Glass Lewis, GL is expected to see 2009 proxy reports with WAC analyses of political risk. As Obama’s administration takes hold, WAC’s analyses will become a rising factor.

GL rival, Institutional Shareholder Services is now part of RiskMetrics.

At the top of Obama’s agenda will be filling his cabinet, and his selection of Treasury Secretary is one of the most vital appointments. That selection, named last month, is Timothy Geithner, who Obama plans to nominate to the post. As the president of the Federal Reserve Bank of New York, he has enjoyed a rapid rise through the ranks and has been praised for his role in helping to develop the bailout plan. Larry Summers, who held the Treasury post under Clinton and later endured a contentious reign as president of Harvard University, was named to head the White House National Economic Council.

A pressing question is whether Obama will continue with current Treasury Secretary Henry Paulson’s plan to overhaul and consolidate the regulatory framework under the Federal Reserve. It is likely that there will be some restructuring, but probably not on the scale that Paulson recommended. Expect Obama to select a new Securities and Exchange Commission chairman, in the mold of Arthur Levitt, who will be a strong advocate for shareholders. That could mean new rules for proxy access and broker votes, and, to the dismay of directors, less restrictive tests for shareholder proposals.

The other hot-button issue for directors in the light of the new administration is “say on pay.” Obama introduced the Senate’s version of the bill in 2007 and has rallied around it ever since. With the public outcry against excessive compensation in the midst of the credit crisis, expect Obama to do everything he can to confirm his sentiment that “the American people should not be spending one dime to reward the same Wall Street CEOs whose greed and irresponsibility got us into this mess.” Such a push towards say on pay and a general curb on executive compensation was inevitable following the credit crisis; remember that fellow presidential candidate John McCain was also a supporter of say-on-pay legislation.

Directors are certainly hoping that Obama makes good on his promise to reach across the aisle. Just how far that hand is extended could make the difference between reasonable regulation and new rules that make life more difficult for those who sit on the boards of public companies.

As President-elect Barack Obama sets forth to take on Washington, legislation regarding say on pay is likely to be implemented early on. Very few companies are volunteering advisory votes to shareholders.

Richard C. Ferlauto, director of Corporate Governance and Pension Investment for the American Federation of State, County and Municiple Employees (AFSCME); Christianna Wood, CEO of Capital Z Asset Management and director on H&R Block’s board; and Charles G. Tharp, professor of human resources in the School of Management and Labor Relations at Rutgers University, and former compensation consultant for Towers Perrin, weighed in on the future of say on pay during a RiskMetrics forum on executive compensation.

Under Obama’s administration, Ferlauto believes that say on pay legislation will be implemented early on. “Everyone can bank on that say on pay will be legislated sometime in the first quarter of the administration,” says Ferlauto. “Congressman Barney Frank proposed a bill that passed and the sponsor was Obama.” He adds that Hilary Clinton sponsored say on pay legislation and it is a high priority for both the Senate and House.

Companies that have adopted say on pay measures have done so to curtail future compensation conflicts with shareholders. Wood sits on H&R Block’s board and has seen first hand what happens when boards offer shareholders the option of an annual vote on say on pay. “[The vote] was brought by the board—not by shareholders, and was not because of poor pay practices. [The board] thought increased communication was keeping with shareholder views,” says Wood. “Because it was put on a proxy, there was an 88 percent favor vote. There will be an annual vote on say on pay.” Wood notes that shareholders did not submit to proxy without permission of the board. The lines of communication were opened and both sides were able to voice their concerns without a proxy battle.

While there are many proponents for say on pay, critics argue that competitive advantage can be hurt with a forced advisory vote. Tharp believes that companies should be encouraged to take matters into their own hands and work toward designing effective pay programs. “[Forced say on pay measures] will erode the centrality pf pay,” argues Tharp. “This may lead to cookie cutter approaches if boards don’t want votes taken.”

Ferlauto believes there already is a cookie cutter approach to compensation. He also argues that the model is already broken and advisory votes are necessary to bring on long-term strategic compensation planning. “Put up a system with regularized communication with shareholders who can vote up or down. That’s the track record that we’ve got out of the U.K.,” notes Ferlauto.

Tharp believes that while shareholders should have increased communication with their boards, he notes that shareholders are more likely to make uneducated guesses. “If you really think a shareholder is going to spend three hours reading and understanding [a CD&A]—that’s not a helpful thumbs up or thumbs down vote,” he argues. Tharp notes that it’s a board’s job to thoroughly read through and understand in-depth documents, such as CD&A’s, while shareholders are less likely to invest the same amount of time.

Ferlauto offers the solution of compensation committees offering a document that is much simpler and shorter—complete with metrics. “[Shareholders] are interested in the efficient use of capital and what is the company’s philosophy of compensation,” says Ferlauto.

How Should Shareholders Assess Pay?

When assessing pay packages, Tharp suggests that shareholders look at a mix of pay. “Too much or all of the long-term stock options produces a significant amount of risk,” notes Tharp. “[Ask whether] there is a blend of performance driven incentive that then have a holding or retention requirement.”

“There has to be a substantial ‘til death do we part’ where equity is held two years past 10 years of retirement,” says Ferlauto. He adds that misusing CEO leverage can hurt a company’s bottomline. “Make sure that those short-term bonuses are exactly that—short-term—and that they are a stepping stone to a longer term [plan],” adds Ferlauto.

“I do believe in delaying equity rewards to be liquidated beyond someone’s tenure,” adds Wood. “People leave [the company] in the best possible situation and best condition.” Transparency allows communication outreach to be widely available for both shareholders and the board.

All three agreed that if a survey, asking the right questions, and with the right amount of transparency, could have a positive impact. Regardless, Ferlauto and Wood believe that say on pay is a useful tool. “Say on pay is more of a scalpel than a hammer—a hammer would be if you were just voting against comp committees,” says Ferlauto. “I think [say on pay] is required for proxy access—there is a marriage of say on pay and proxy access.”

Wood agrees with proxy access and believes that if directors are held accountable, there would not be a need for say on pay. However, Tharp warns that mandating say on pay could hinder business. “We’re going to mandate say on pay even if shareholders of that company haven’t asked for it,” asserts Tharp.

Though Cox’s name has long been a mainstay of the financial industry, the past year has seen his office fade out of prominence as the credit crisis has been assessed and negotiated. The dynamic duo—Treasury secretary Henry Paulson, Jr., and Federal Reserve chairman Ben Bernanke—has taken such a strong hand in the regulatory battlefield of late that Cox and the SEC have been virtually marginalized.

Critics of Cox—and of the SEC—claim that his exit from the front pages is largely due to his own unwillingness to grapple with the tough economic challenges; one infamous newspaper article describes him vacationing and attending lavish birthday parties in the midst of the Bear Stearns collapse. Cox’s main accomplishment in the last six months has been his attempts to curb short-selling within the financial community, nothing of the scope accomplished through Paulson and Bernanke’s flushing of the system.

However, whether the SEC proves to have a more prominent role in the Obama administration hinges on who Obama nominates to replace Cox. If the SEC is to continue to thrive, it will require a strong leader who can fight more for the investor and less for the direct benefit of the market.

If Obama selects a passive or weak officer to head the SEC, it very well could spell the end for the organization. Much talk has circulated in the past year of eliminating the agency or consolidating it within another; if its new chairman lies down to such an idea, expect the SEC to be finished

Nearly 75 percent of approximately 350 board members polled during the NACD conference expected increased shareholder communications to be mandated. Both Senator Barack Obama and John McCain have voiced some level of support for say on pay legislation and if Obama is elected, some expect a comprehensive shareholder bill of rights in the first 100 days of an Obama administration.

“Investors are angry. And when they’re angry, they sue somebody,” said Michael Smith, president of AIG Executive Liability. He also noted that institutional investor lawsuits will take longer to resolve and are not often settled out of court.

Where do we go from here? How do we adjust our approach, because the government is in fact, as of last week, a significant shareholder in nine very large corporations,” said Charles Elson, chair of the corporate governance program at the University of Delaware, who also serves on the HealthSouth and AutoZone boards, told FinancialWeek.

Despite the agreement among most board members to open up communication lines between boards and shareholders, many still think there should be limitations. One month limits geared to shareholders with primarily larger shareholder with big blocks of shares. “Wealth has its privileges,” said Peggy Foran, general counsel at Sara Lee Corporation, to FW.

The NACD principles stated that boards should reach out to “large, long-term shareholders” about governance issues and long-term strategy, and that these communications should involve at least one independent director, preferably the lead director, in addition to the CEO.

During the presidential debate in Tennessee on Tuesday, both candidates, Senators John McCain and Barack Obama, were asked who they would appoint since Henry Paulson said he would not be staying another term.

McCain toted that the individual assigned the job would have to be trusted by the American people. “Buffett has already weighed in and helped stabilize some of the difficulties in the markets and with companies and corporations, institutions today,” said McCain.

Obama said, “Warren would be a pretty good choice—Warren Buffet, and I’m pleased to have his support,” he said. “But there are other folks out there.” He did not proceed to mention any other potential candidates he’s pursue.

Peter J. Solomon, the chairman of a boutique investment banking advisory firm sent a public letter on Tuesday, suggesting that rather than putting Neel Kashkari in charge of the government’s $700 billion bailout fund, that Buffett might be a better person for the task.

However, at age 75, and with one of the largest companies in America to run, the likelihood that Buffett would take on the job is more than unlikely. Buffett already plays an advisory role to not only the current, but to former U.S. presidents.

In a recent interview with Directorship, Alice Schroeder, author of Snowball: Warren Buffett and the Business of Life, said that Buffett wields significant sway over world economic matters. “He is so influential–politicians and leaders from all over the world consult with him,” she says. “Behind the scenes he has an incredible amount of influence on what happens in this country and around the world. You may not hear about it in the headlines, but it is very real.”

With all the talk of Buffett’s new possible role, when asked if he’d actually take the job—he just smiled, according to NYT.