Board practices: its' time to name a chief governance officer.
For me, this all started in the early 1970s when the chairman and CEO of Honeywell sent me a terse note asking me to become familiar with board issues so that I would be in a position to advise him on any improvements that could be made to the Honeywell board process. I cannot remember the exact phrasing of this memo, but I can guarantee it did not contain any references to "governance." Whatever words were used, the subject was foreign to this young lawyer working in real estate and business operations, and, if my memory serves me, the only information I found readily available was in a thin pamphlet issued by the Conference Board.
Discussion and analysis of board practices increased in the late 1970s and early 1980s with three important projects by the Business Roundtable, the American Bar Association and the American Law Institute. In January 1978, the Business Roundtable issued a statement entitled "The Role and Composition of the Board of Directors of the Large Publicly Owned Corporation" This was followed later that year with the issuance by the Section of Corporation, Banking and Business Law of the American Bar Association of its "Corporate Director's Guidebook," which expanded in 1979 through the publication of "The Overview Committees of the Board of Directors." In 1982, the American Law Institute began to issue drafts of what is now called "Principles of Corporate Governance: Analysis and Recommendations."
There is little need to document publication activity during the subsequent 14 years, as anyone remotely concerned with corporate governance and board practices understands the level of commentary has reached epic proportions, and a number of periodicals, including DIRECTORS & BOARDS, now report exclusively on corporate governance issues. The bibliography on available literature would certainly run to several pages.
The question arises how the CEO or the individual director can hope to keep up with the barrage of publications and new ideas on corporate governance. An appropriate solution for dealing with this issue is to identify an officer of the company to act as chief governance officer with the responsibility to keep the board aware of new developments in the governance arena and to assist the board in being aware of how well it compares with other companies in terms of its governance practices. The corporate secretaries at many companies are currently handling this governance monitoring, whether or not any governance designation is included as part of the job title.
The American Society of Corporate Secretaries regularly studies issues related to corporate governance as part of keeping its members up to date on issues related to their position. Most recently, in 1996, the Society issued a report on its "Survey of Current Board Practices" covering 34 board practices that appear to have some recognition as appropriate subjects for discussion as a board seeks to evaluate its own structure and performance.
The Society was not attempting to recommend a list of "best" board practices, nor was it suggesting that any particular issue in its survey was a necessary component in the operation of any board of directors. Rather, the topics represented a broad range of issues that could be discussed when the board wishes to take a fresh look at how it operates. A discussion of these board practices can make boards operate on a higher plane whether or not any changes in current practices are adopted. Each board of directors must make its own determination of what the best practices are for that board and that company.
By formalizing a chief governance officer title for the corporate secretary, the board of directors would accomplish two important objectives:
* It would make a statement to the shareholders about the significance of governance to the company.
* It would be assured that a trusted executive is following all developments in this changing landscape.
My experience as an observer in the boardroom for over 20 years convinces me that my role as corporate secretary provides a unique opportunity to counsel the board on governance issues and to assist my CEO in assuring that a board discussion of governance is an integral part of the board's agenda. I urge the CEOs at other companies to look to their corporate secretary as their best resource for understanding governance issues and to assign the individual responsible with the additional title of chief governance officer.
Sigurd Ueland Jr. is vice president and secretary of Honeywell Inc. He has been with the company since 1969, following five years of practice with a private law firm. He is also serving for 1996-97 as chairman of the American Society of Corporate Secretaries Inc., the New York-based national organization of executives serving the corporate secretarial function.
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|Title Annotation:||Putting In Place the Right Board for the 21st Century|
|Author:||Ueland, Sigurd, Jr.|
|Publication:||Directors & Boards|
|Date:||Sep 22, 1996|
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