What are the new rules of engagement for CEOs and the boards that oversee them in this post accounting-scandal, Sarbanes-Oxley governed era? More than 150 executives from across the region recently gathered at the Union League in Philadephia for a panel discussion on that important topic organized by Drexel University’s LeBow College of Business.
Moderated by Howard Fischer, CEO of Howard Fisher International, the Sept. 20 event featured David L. Cohen, executive vice president of Comcast Corporation; Richard C. Ill, President and CEO of Triumph Group, Inc.; and Eric Pillmore, Senior Vice President of Corporate Governance for Tyco International.
Part of the LeBow College Inside the Boardroom series, a unique forum for CEOs in which the audience is comprised of C-level executives and company board members, the event took place the same day that the sentencing of former Tyco CEO L. Dennis Kozlowski and former CFO Mark Swartz was splashed across newspaper front pages. Each was convicted to 22 charges related to the siphoning of more than $150 million in company funds.
Pillmore, part of a new regime at Tyco, said he and three other top executives report directly to the board in an arrangement for which he knew no precedent. The goal in structuring the company that way, he said, is to be able to identify any future misdeeds like those perpetuated by Kozlowski and Swartz within 30 days.
While the problems at Tyco illustrate the need for strong corporate oversight within companies, all the panelists agreed boards run the risk of missing business opportunities if they are so risk averse that they spend all their time on governance and lose sight of strategic developments.
Cohen said Comcast board addresses governance issues, including Sarbanes-Oxley, at the committee level to keep the board from being entirely consumed with the task. Otherwise, he warned, “you could spend 80 percent of your time talking about Sarbanes-Oxely.”
Ill said expectations for board members have changed. Board meetings that used to take three or four hours now take more than a day, and one member of his board left when it became obvious he could not dedicate enough time to the task, Ill said.
Good communication is key to fostering strong relations between management and boards, Cohen said. In a good situation, management should view the board as a strategic resource, not a hindrance, said Cohen.
Inside the Boardroom is a part of the Mid-Atlantic Currents series of events organized by LeBow. Information on coming events is regularly posted at www.lebow.drexel.edu/events/