Category: Business Ethics

Hu, Valukas, and Markopolos on Corporate Governance

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As the country emerges from the worst financial downturn since the Great Depression, directors, executives and other corporate governance experts gathered to honor the 100 most influential players in the boardroom and analyze recent mistakes and how they can be avoided at the NACD Directorship 100 Forum held Monday and Tuesday in New York City. The 100 honorees were commended at a dinner Monday night in a keynote address by Henry Hu, director of the SEC’s Division of Risk, Strategy and Financial Innovation.

Hu presented his “decoupling” concept, and explained how it relates to boards’ current challenges, especially as directors face the new Dodd-Frank Act. He pointed to the Act as the “most comprehensive change in generations… representing a new era for corporations and boards that introduces new challenges and new opportunities. It is important to get the balance between corporate governance and financial innovation right.”

The Forum’s second day featured Anton Valukas, court-appointed examiner in the Lehman Brothers’ bankruptcy, explaining the actions that the Lehman board could have taken to better prepare for the company’s failure. While Valukas does not believe that failure was preventable, he did explain that, had the board asked more important questions, the fall would have had less severe of an impact on the U.S. economy.
“In this case,” said Valukas, “one word would have made the difference: transparency.” (read Valukas’ full report here)

Also featured was Harry Markopolos, author of No One Would Listen, which details his ten-year-long investigation of Bernie Madoff’s Ponzi scheme, the largest in history.  Markopolos took a firm tone with the directors of the room, imploring them to “use your experts and don’t take numbers from management, for the sake of your shareholders and stakeholders. That’s your job.”

The 2010 Director of the Year Awards – Celebrating Boardroom Heroes

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Opening the 2010 NACD Director of the Year Awards celebration by honoring attendees for their integrity, good work, and courage to strive for corporate governance excellence, Mary Pat McCarthy, of KPMG, the Crystal Sponsor for the dinner banquet Saturday night, added, “In this room, we all know guiding a ship in tough seas is never easy; but with these [three Director of the Year Award honorees], it’s easier because we have [the Awardees]—some of the brightest beams—to light our way.”

NACD 2010 Director of the Year Award Winners

NACD 2010 Director of the Year Award Winners

These moving words began a celebration of three boardroom heroes, each of whom has demonstrated a spirit of boundless energy towards improving the governance our nation’s boardrooms for the benefit of the shareowners.

The evening’s first honoree, Josh Bekenstein, was honored as NACD’s 2010 Nonprofit Director of the Year. Mr. Bekenstein joked that when
his secretary called to let him know he won “an award for not making a profit during the entire year,” he had a moment of pure panic. In fact, Mr. Bekenstein’s business acumen is legendary. In a taped tribute, one of his colleagues complimented his ability to connect big ideas to powerful execution to get extraordinary results.

Read more about why Josh Bekenstein was honored was NACD’s 2010 Nonprofit Director of the Year.

Next, Richard L. Keyser, former chairman of W.W. Grainger, was honored as NACD’s 2010 Public Company Director of the Year. Mr. Keyser was described as “one of the quietest, most unassuming people in the room” but the person “whose opinions carried the greatest weight.” Mr. Keyser is known to work collegially with others to run a great boardroom and make the world a better place, using this valuable work style praised throughout just about every conference session as essential to running a good board.

Read more about why Richard Keyser was honored as NACD’s 2010 Public Company Director of the Year.

The evening ended with a special presentation of the 2010 B. Kenneth West Lifetime Achievement Award, presented to 12-year DuPont board veteran, Dr. Curtis Crawford. Ellen Kullman, DuPont’s chairman and CEO, flew in to attend the dinner and to personally congratulate Mr. Crawford for his extraordinary accomplishments. “With his background, he is insightful in a way that I and no others in the company are—and he doesn’t shy away from difficult discussions. As chair and CEO, I value that in a board member.”

One way that Mr. Crawford has been sharing his gifts as a strong steward of good governance has been to award scholarships to, and  mentor students from, DePaul University, where he serves as a trustee. In fact, the University flies scholarship winners from Chicago to California “to sit at Curt’s knee, absorbing best practices in how to govern an organization well, earning the equivalent of three college credits,” said the University’s chancellor.

Read more about why Dr. Curtis Crawford was honored as NACD’s 2010 B. Kenneth West Director of the Year Award.

Richard Keyser, in his understated yet commanding way, said something earlier in the evening that summed up the insight, knowledge, and integrity of courageous directors. He said that “… all of us in this room, all of us, when we do what is right and follow the basics like integrity and hard work, are boardroom heroes.”

Finally, the sponsors, including Crystal sponsor KPMG, and Emerald sponsors DuPont, Grainger, Principal Financial Group, and Zebra Technologies Corporation, as well as corporate table sponsors Center for Audit Quality, Heidrick & Struggles, Lockheed Martin, and Oliver Wyman, were shown great appreciation by all.

Judgment, Values and Integrity

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Norman Augustine

Norman Augustine

“Wow. In the past sixteen minutes I learned everything there is to learn for an MBA!” Thus spoke NACD President and CEO Ken Daly, in response to panelists Ken Duberstein (former Reagan chief of staff)  and Norm Augustine (retired chairman and CEO of Lockheed Martin) expounding on their philosophies of “Courageous Board Leadership,” on the final morning of the annual NACD Corporate Governance Conference.

Augustine’s philosophy is straightforward: “Find quality people, tell them what you want, and get out of the way.” Quality people are those who have “enthusiasm, intelligence, and respect for others.”

The Honorable Kenneth M. Duberstein

The Honorable Kenneth M. Duberstein

Duberstein said that “a good leader empowers those around him to do their jobs better.” Leadership, he said, is “judgment, values, and integrity.” A good leader seeks “people who are independent but loyal to the mission.”

All panelists agreed that “professional skepticism” applied in the appropriate way, is healthy to the success of any enterprise. All believe that, while it is not necessary to agree with one another, board members should serve in a collegial fashion, get along, and respect each other.