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Shift happens.

As you might imagine, over my three decades as editor of DIRECTORS & BOARDS I have seen a lot of shifts taking place in corporate governance. A big one early in my tenure was the shift to a board composed of a majority of independent directors. It was not uncommon in the late 1970s and early '80s to still see many insiders sitting on boards. (It was only in 1978 that Johnson & Johnson was threatened by the NYSE with delisting unless it added some--its first--independent directors to its board.)


Here are a few other shifts that have taken place over the past 30 years:

* More women being added to corporate boards (though many will argue that this has been more of a glacial inching than any kind of definable shift).

* The adoption of executive sessions of the board.

* The embrace of the lead director concept.

* A more frequent splitting of the chairman and CEO positions.

* Greater usage of search firms in recruiting directors.

* The change in scope of the board nominating committee to a broader-gauge corporate governance committee.

* A vastly expanded purview of the audit committee.

* Much more box ticking, instigated by court cases like Van Gorkom and Caremark and legislation like the Foreign Corrupt Practices Act and Sarbanes-Oxley.

* A reining in of "overboarded" CEOs and other types of directors.

I could go on and on. But what I would be going on about are what might be regarded as process shifts. Much rarer have been attitudinal shifts.

Granted, most process shifts in how a board structures itself and acts are driven by some degree of attitudinal shift. If a board names a lead director, it can be doing so because it genuinely feels that it will make for a better dynamic; or, it can be doing so because it feels pressure to adopt what it is being told is a "best practice."

The kind of attitudinal shift I am referring to is a radical revision of the mental construct of the role of the board. It is a shift that is revolutionary rather than an evolutionary step.

Here is one such attitudinal reset. In 2006, at the annual conference of Yale School of Management's Millstein Center for Corporate Governance and Performance, former SEC Chairman William Donaldson identified perhaps the most momentous attitudinal shift taking place in the boardroom in the past half-century when he remarked: "It used to be said that it's the CEO's board; now, it's the board's CEO." (Bill Donaldson makes an appearance on page 27 of this issue.)

Here is the next momentous attitudinal shift that will drive governance in the era ahead. It is pinpointed by Vanguard Chairman Emeritus John Brennan, our keynote author in this Governance Year in Review special edition (our fourth annual "recap of record"). What he is witnessing is "a great attitudinal shift in corporate boards away from what is right for the insiders to what is right for the shareholders."

That's big. You will see this shift happening in many settings and voiced by many key players as you revisit 2009--and what a year it was--in this sweeping review.
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Title Annotation:EDITOR'S NOTE
Publication:Directors & Boards
Date:Jun 22, 2010
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