Published in Boardmember January 3, 2010 by Frank Aquila

In the wake of the fallout from the credit crisis we have seen a steady stream of corporate governance reform proposals. While many proposals focus on traditional measures designed to increase shareholder influence, most focus on issues not normally viewed as requiring shareholder input or approval. Proposals such as executive compensation, social responsibility, global warming, sustainability, government influence and political contributions are now high on many agendas.                                                                                       As these proposals are refined over the next few months, a few observations are timely. First, corporate governance now appears to be nothing more than the political fulcrum used to promote and justify a relatively broad range of new restrictions and requirements on Corporate America. Second, many of the groups now staking claim to the “corporate governance” turf are extraordinarily diverse with goals that go well beyond the creation of shareholder wealth. Whether we agree or disagree with their proposals or subscribe to their agendas is irrelevant, it is the current environment creating pressure for further corporate governance changes.

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Published in The New York Times, December 27, 2009 by Gretchen Morgenson 

YOU might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies.
You would, however, be wrong.
Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch.
To some investors, this is an example of the refusal of those involved in the debacle to accept responsibility for it. Whether you are talking about top executives loading up on leverage, regulators who slept while companies took on titanic risks or mortgage lenders that made thousands of dubious loans, few in this crowd have acknowledged culpability. Taxpayers and shareholders, meanwhile, who had nothing to do with the problems, are left holding the bag.

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Published in Boardmember December 24, 2009

An academic argues that perks and golden parachutes may be beneficial to shareholders, and that it is possible to design a compensation plan agreeable to executives, shareholders, and watchdog groups. How can that be? Meet Henrik Cronqvist, assistant professor of financial economics at the Robert Day School of Economics and Finance at Claremont McKenna College.
Corporate Board Member: You’ve suggested that annual cash bonuses should be based on measures that can’t be easily manipulated through accounting practices adopted by management. What types of measures are you referring to?
Henrik Cronqvist: Yes. The preferred measures are those that are all types such as EBITDA: earnings before interest, taxes, depreciation, and amortization. That could be one measure. It’s cash flow based, so in that sense it might be a better measure compared to earnings-based measures that may more easily be manipulated. No measure is likely to be perfect, however. It’s more a question of finding something that is more reasonable, therefore cash flow based measures seem to be favored over earnings based measures.

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Published in News Day October 10, 2009 by Rachel Beck

Corporate directors don’t like it when shareholders accuse them of being management cronies, but how else can they be seen when they drop the ball on basic responsibilities like leadership development and executive pay?

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