Corporate Governance: A Guide for Directors of Public Companies

Author: Martin Lof
Publisher:
Publish Date: 2005-08-01
Features: The downfall of Enron and WorldCom, as well as the failures of other major U.S. companies, have served as a wake-up call to the world. Congress and the President have issued new corporate governance legislation, and the securities market has significantly raised its governance requirements for listed companies. Law firms, accounting companies, and professional associations have published numerous memoranda, documenting and reflecting these new developments. However, what has been missing so far in all publications is actionable and very practical advice on how these new rules can be implemented within the board of directors. Mr. Lof has extensive experience in providing consulting services for board operations, having previously been a senior executive and a renowned lawyer. Today, he fills this gap with this easy-to-read pamphlet, telling company directors and professionals who advise boards how to make the new rules work effectively within the institutional framework of the board of directors. Every director of a public company, as well as all those who serve as director advisors, would hope to have this timely and highly useful pamphlet at hand and refer to it often. Mr. Lof’s book for company directors discusses a new, important, and evolving area of corporate governance, which is helpful for directors, lawyers, and other consultants. The book is both comprehensive and insightful, written in clear, accessible language, making it one of the outstanding guides in its category. —Robert Todd Lang As this timely guide fully reflects, corporate governance is more of an art than a science. The first two tenets in every director’s motto are: Do the right thing and think independently. But now we must also consider the requirements of federal and state laws. For those who wish to navigate the new legal challenges and awe-inspiring principles with ease, this guide is a must-read. —Brooke Romanek, Editor-in-Chief, Corporate Director Advisor magazine This book was published in the context of the U.S. Sarbanes-Oxley Act of 2002. It is a small, easy-to-read book that directors can enjoy during a business flight, serving as a practical guide on how new corporate governance rules can be implemented within the board of directors. This pamphlet fills the gap in books that explain how new rules can be effectively operationalized within the institutional framework of the board of directors. In this book, the author guides company directors and future directors step by step through the key issues they must understand to operate the board effectively under the current legal framework. It summarizes the nature of the director’s role, introduces the principles of director duties under U.S. state corporation laws, particularly the background of the bank reform legislation a dozen years ago and the passage of the Sarbanes-Oxley Act of 2002. Then, he discusses various aspects of director responsibilities, from the selection of the CEO and executive compensation decisions to the oversight of financial controls and reporting procedures. He also specifically discusses how to foster a vibrant corporate culture that aligns with business ethics. Finally, the author cautions company directors to remain united, identify early signs of potential company problems, and carefully consider the factors when accepting or resigning from a directorship. As a practical guide for listed company directors, although the corporate governance structure described in the book has a typical U.S. flavor, the detailed discussions and accessible language will attract senior executives of listed companies with an international perspective, as well as directors. Additionally, readers interested in U.S. corporate governance will also gain a basic understanding of the issues discussed in the book in a short time.