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Conniving Co-conspirators? or Complacent Confirmers? Preface The Board of Directors The Board of Directors A group of people legally charged with the responsibility to govern a corporation …responsible to stockholders …to the stakeholders The Board of Directors RESPONSIBILITIES Provide continuity and to represent the organization Hire and fire a chief executive Govern the organization Acquire sufficient resources for the operations Account to the public for products and services The Board of Directors How’s the Disney board done? Lousy! The Board of Directors Corporate governance in the 90s? Total Complacency! The Enron Debacle The Story The Board of Directors A governance revolution is under way Heated boardroom debates! How much is enough? Accounting for options? Director independence? On how many boards? Additional consulting from our auditor? Pockets of resistance remain The Board of Directors More good news! The Board of Directors Real Changes! • Corporate Fraud Task Force • Sarbanes-Oxley Act of 2002 • The Securities and Exchange Commission began hiring • CEO and CFO personal certifications • New York Stock Exchange and NASDAQ standards The Board of Directors Real Standards! •Independence •Stock Ownership •Director Quality •Board Activism The Board of Directors Real Standards! •Independence • No more than 2 executives • Audit, compensation, and nominating – independent directors The Board of Directors Real Standards! •Stock Ownership • $150,000 equity stake by each director The Board of Directors Real Standards! •Director Quality • One with experience in the field, one CEO • No more than 4 or 7 boards, 75% attendance The Board of Directors Real Standards! •Board Activism • Regular independent executive sessions • Audit committee mtgs. 4 times per year • Frugal, decisive, diligent, quick to act.
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