from the Podium blog
by Mark Rogers, CEO, Board Prospects
There is an ongoing global corporate governance crisis within public, private and non-profit companies that can be traced back to the public company scandals of Enron and MCI WorldCom. As we all know, Enron placed the dysfunctional world of corporate governance front and center as the fallout spread well beyond the numerous criminal convictions against Enron’s top management for intentional acts meant to defraud the company and its shareholders of millions of dollars. Unfortunately, this disaster was exacerbated by the staggering lack of oversight by Enron’s board of directors, as well as financial relationships that extended past compensation.
The only positive return from this debacle was the increase in attention, action, laws, corporate governance reforms and a general call for increased transparency from Congress, the SEC, many states and the general public that arose back in 2001. During the Enron investigation, a Senate Congressional sub-committee investigated the role of Enron’s board in the scandal and concluded:
The Enron Board of Directors failed to safeguard Enron shareholders and contributed to the collapse of the seventh largest public company in the United States, by allowing Enron to engage in high risk accounting, inappropriate conflict of interest transactions, extensive undisclosed off-the-books activities, and excessive executive compensation. The Board witnessed numerous indications of questionable practices by Enron management over several years, but chose to ignore them to the detriment of Enron shareholders, employees and business associates.
And yet here we are again, headlines from scandals that have occurred at Best Buy, Chesapeake Energy and Yahoo have put the light back on corporate governance.
Continue reading How to Create a More Effective Board...and Stay out of the Headlines.
Topic tags: board of directors, board recruitment, corporate governance, governance crisis