Roger W. Raber, NACD President, (second from left) testifies before Congress on Lessons Learned from Enron's Collapse

The Changing Face of Corporate Governance

Contents:

1. NACD's Response to Corporate and Governance Reforms
2. Regulatory Action Impacting Governance - Post Enron to the Present
3. New Governance Codes and Practices -Sarb-Ox, SROs, Investors, and Governing Groups
4. What's Changed in the Boardroom? Directors and Boards Respond
5. Congressional Testimony on Governance Practices Post-Enron - Historical
6. Historical Timeline of Governance Regulation

1. NACD's Response to Enron
   In the wake the fiscal and corporate fraud crises at Enron, Worldcom, Global Crossing, Tyco, ImClone and more, NACD has worked closely with Congress, the NYSE, Nasdaq and SEC to identify core principles for good corporate governance. [Read NACD's Recommendations to Congress] Even more importantly, NACD immediately dedicated its resources to help directors identify red flags and raise the bar of independence and oversight in their own boardrooms. That work continues today as NACD:
   • conducts governance seminars to help directors comply with new requirements and build more effective board and committee structures.

   • conducts Blue Ribbon Commissions and special task forces to address issues such as Risk Oversight, Executive Compensation, and Board-Shareholder Communications (underway).

   • releases benchmarking reports and guides to help directors and boards track their progress in governance reform against other public and private companies

   • keeps NACD abreast of ongoing regulatory changes affecting governance, including how new rules and regulations that will be enforced by the SEC and listing bodies --

2. Regulatory Actions Impacting Governance - Post Enron to Present
   
   Summaries and Overview of Regulatory Action:
   • NACD's DM Extra Governance Bulletins -- NACD has reports regularly on the impact that corporate governance reforms will have on both public and private company boards -- specifically Sarbanes-Oxley, SEC regulations, changes to Nasdaq and NYSE listing guidelines, shareholder reforms, and state corporation laws. Visit the DM Extra Library to learn the latest regulatory news, follow the timeline of developments since Enron and measure the impact of new regulations on your board!

   • Sarbanes-Oxley Rulemaking Scorecard - reflects final rules and orders adopted by the SEC under the Sarbanes-Oxley Act of 2002: Updated regularly. Source: Gibson, Dunn & Crutcher, LLP

   • Changes to State Corporation Law of Concern to Private Companies: Source: DM Extra, May 12, 2003, "Stormy Weather: Governance Whirlwind Dies Down for Public Companies, Kicks Up For Private Firms"

   Regulatory Agencies:

   • SEC Homepage -- http://www.sec.gov/index.htm
   • SEC Filings and Forms (EDGAR) -- http://www.sec.gov/edgar.shtml
   • Uniform Application for Access Code to file on EDGAR --http://www.sec.gov/about/forms/formid.pdf
   • Financial Accounting Standards Board (FASB)
   • Public Company Accounting Oversight Board, created by the Sarbanes-Oxley Act of 2002 -- http://www.pcaobus.org
   • Comment on PCAOB Rulemaking --http://www.pcaobus.org/pcaob_comments.htm

3. Corporate Governance Codes and Practices in the New Era of Corporate Accountability
   
   • Sarbanes-Oxley Act of 2002 (PDF, 130 pages, 680Kb)
     Sarbanes-Oxley Act of 2002 Imposes New Rules for Corporate Governance and Reporting (Weil, Gotshal & Manges LLP. - September 2002)

   • New York Stock Exchange (NYSE) -- Filing of Proposed Rule Change and Amendment -- http://www.sec.gov/rules/sro/34-47672.htm

   • NASDAQ - Summary of proposed corporate governance reforms -- http://www.nasdaq.com/about/Web_Corp_Gov_Summary%20Feb-revised.pdf

   • AMEX - Enhanced Corporate Governance and proposed rule changes --http://www.amex.com/?href=/atamex/news/am_corgov.htm

   • National Association of Corporate Directors (NACD) - Recommendations for Reform post-Enron

   • Organisation for Economic Cooperation & Development (OECD) - OECD Principles of Corporate Governance (PDF, 42 pages)

   • The Business Roundtable (BRT) - Principles of Corporate Governance (PDF, 37 pages)

   • Council of Institutional Investors (CII) - Corporate Governance Policies

   • TIAA-CREF Policy Statement on Corporate Governance - http://www4.tiaa-cref.org/libra/governance/index.html

   • CalPERS Governance Principles -- http://www.calpers-governance.org/principles/default.asp

   • The World Bank - Corporate Governance Principles of Best Practices -- http://www.worldbank.org/html/fpd/privatesector/cg/codes.htm

   • Comparison of Corporate Governance Guidelines and Codes of Best Practice: United States - Source: Weil Gotshal and Manges, 2003
     An analysis comparing suggestions for board structure and practice by influential members of the legal, corporate and institutional investor communities communities to the governance guidelines used by the General Motors Board of Directors. References relevant provisions of the Sarbanes-Oxley Act of 2002, current New York Stock Exchange ("NYSE") Rules on Audit Committee Composition, proposed NYSE and NASDAQ Listing Rules, and current survey data on actual board practices compiled by Korn/Ferry International and the National Association of Corporate Directors ("NACD").

4. What's Changed in the Boardroom? New Practices
   
   • GE's new Governance Principles and Committee Charters

   • GM Corporate Governance Guidelines

   • Open Compliance & Ethics Group (OCEG) is a coalition of national business leaders assembled to develop compliance standards and guidelines for the way organizations approach ethics, conduct and compliance training.

   • Results of NACD's May, 2003 Survey: Should Shareholders Nominate Directors?

   • Results of a real-time survey conducted by NACD and the Institute of Internal Auditors (immediately post-Enron) to determine how directors and boards were already responding to the Enron collapse. How does your board benchmark against the results?

5. Congressional Testimony on Governance Practices Post-Enron - Historical
   
   • Testimony of Rober W. Raber, NACD President, before the House Energy and Commerce Committee on Wednesday, February 06, 2002 regarding the failure of Enron Corporation.

   • Testimony of Ira M. Millstein, Senior Partner, Weil, Gotshal and Manges, before the Senate Banking, Housing, and Urban Affairs Committee. Millstein is Co-chairman of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees convened in 1998 by the New York Stock Exchange ("NYSE") and the National Association of Securities Dealers ("NASD") at the request of Securities and Exchange Commission Chairman Arthur Levitt.

   • Testimony of John H. Biggs, Chairman, President and CEO, Teachers' Insurance and Annuity Association -- College Retirement Equities Fund (TIAA-CREF), before the Senate Banking, Housing, and Urban Affairs Committee.