Study group looks at the future of corporate boards
A 20-member blue-ribbon panel, the Study Group on Corporate Boards, co-sponsored by Columbia Business School and the John L. Weinberg Center for Corporate Governance at the University of Delaware, today released "Bridging Board Gaps," a report designed to improve board performance and effectiveness by offering a series of recommendations in critical areas of governance. The report calls for a renewed commitment to the purpose of corporate boards, and suggests guidelines to improve board practices and standards along seven core dimensions: Purpose, Culture, Leadership, Information, Advice, Debate and Self-Renewal. The report also builds on past reforms and regulatory actions to focus on the gaps between governance ideals and governance realities and suggests practical and new solutions for boards of companies of all sizes and in all industry groups. Funding for the report was provided by the Rockefeller Foundation. Glenn Hubbard, Dean of Columbia Business School and Study Group Co-Chair, noted that boards must address two kinds of gaps: oversight and expertise. Each is important, he said, and require looking beyond mere process. "Many of the contributions to corporate governance in recent years focused inward to the board's operations rather than outward to the board's work in areas such as risk."
Study Group Co-chair Charles M. Elson, Edgar S. Woolard, Jr. Chair in Corporate Governance and Director of the John L. Weinberg Center for Corporate Governance, University of Delaware said: "Over the decades, the board has admirably moved from an advisory to a monitoring function. Unfortunately, it has still to meet its potential."
Frank Zarb, Senior Advisor, Hellman and Friedman, and Non-Executive Chairman, Promontory Financial Group and a veteran of many corporate boards added that the report is an initial step in igniting a broader and deeper review of board structure and function.
"The report is not meant to answer all the questions, but to encourage further examination of boards," said Mr. Zarb. "The need for greater board expertise comes at an important time for securities markets," he noted. "In the early 1970's the stock market began to democratize and today it includes tens of millions of middle class advisors – although board governance is essentially the same today. Is this a reality we have to live with?"
Other participants from the Study Group on Corporate Boards include:
- Peter Langerman, President and CEO of Franklin Mutual Advisers (Mutual Series Funds)
- The Honorable Arthur Levitt, Senior Advisor, Carlyle Group and former Chairman, Securities and Exchange Commission
- Eugene A. Ludwig, Principal, Promontory Financial Group
- The Honorable Paul O'Neill, Special Advisor, Blackstone; former Secretary of the Treasury
- Ruben Mark, former CEO, Colgate Palmolive
- Damon Silvers, Policy Director and Special Counsel, AFL-CIO
- The Honorable E. Norman Veasey, Chief Justice Delaware Supreme Court, Retired
Source: Columbia Business School
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