The Society's new chair is making moves to educate both companies and government
Each June at its national conference, the Society of Corporate Secretaries and Governance Professionals (the Society) ushers in a new chairman, breathing new life into the organization. But fresh perspectives are only as beneficial as the depth of knowledge of those who carry them. For the Society, a strong knowledge and experience base has been built over many years.
This solid grounding is largely the result of insightful input from a long line of highly experienced and well-respected leaders, including soon-to-be-former chairman Craig Mallick and Lydia Beebe before him, each of whom, alongside Society president David Smith and the national board, did a lot to set up a progressive trajectory, one that incoming chairman Paul Washington is excited to advance further.
Corporate secretary for Time Warner and chief of staff to the company’s chairman and CEO Dick Parsons, Washington’s corporate experience is rounded out by roles in government. Prior to joining Time Warner he worked as clerk at the US Court of Appeals for the District of Columbia Circuit and the US Supreme Court.
Wide-ranging wisdom from the corporate world and that of government is especially helpful when operating in the current milieu characterized by financial reform, shifting regulations and investor activism. And Washington’s diverse background allows him to better understand where the lines should – and might – be drawn, and to assess which areas of corporate governance both corporates and public officials need to learn more about.
‘As corporate governance becomes more politicized, it’s all the more important for those of us who are professionals in the area to make sure we do our part to ensure that public officials understand the issues and the perspective we bring to them,’ notes Washington. Some of the most effective tools for educating public officials, which he intends to use more at the Society, include member surveys and studies.
Washington also believes white papers on developing areas of thought can help a great deal and seeks to involve other organizations in producing and researching the documents. ‘We have the capacity to partner with academics who have been doing work in governance and we can help make sure that there is a practical perspective brought to bear in some academic research in any number of areas, whether you’re talking executive compensation, or separation of chair and CEO, or the appropriate line to be drawn between the responsibilities of the board and that of management,’ he explains.
Walking up the Hill
When it comes to the Society’s prospective focus during his tenure, Washington has some difficulty narrowing it down. ‘I think there are a whole range of issues,’ he asserts. ‘Areas where our voice has been heard – and I think will be heard even more in the future – include the proxy process and the ability to communicate with shareholders. I think another one is executive compensation practices, which is probably the one area that continues to drive political interest in the area of corporate governance.’
While acknowledging the concern over the more pressing issues of the day, Washington seeks a long-term sustainable model. ‘I hope that we will be focusing – even as we look at these hot topics – on trying to do more in terms of the long-term education of public policy-makers in regards to corporate governance,’ he says.
Employed on Capitol Hill during the 1980s, Washington noted that ‘a lot of the lobbying that went on by banks was very much a game of ‘inside baseball’, and only a few members in the House and Senate really understood the dynamics of the banking industry.’ On Congress’ prospective involvement in remedying the current problems in corporate America, Washington adds: ‘When there are crises, there can be an inappropriate reaction. I think all of us who work in the corporate governance area have a responsibility to try to make sure we do the best job possible to educate public policy-makers over the long term, so that when crises happen these individuals can be as informed as possible in responding to them.’
Achieving the right reaction means educating the broad membership of the House and Senate over time, not just during periods of high pressure, because, as Washington says, ‘it’s really hard to get in to see them when there’s a storm going on. If you’re showing up in the middle of the crisis as just one more voice, your views may not be taken into account in the same way as if you were able to lay the groundwork over time.’
In looking into these areas, Washington is tapping into an interest that’s already there: regular surveys of the Society’s members show many of them have an appetite for more information on
legislative and regulatory issues. Demonstrating the importance of two-way interaction, in ongoing conversations senior public officials have shown a receptivity to the Society’s recommendations on a broad range of corporate governance issues and to their comments on the impact that regulatory change may have at the corporate level.
‘It’s important to have a voice in those places where decisions are being made,’ explains the Society’s president, David Smith. ‘We have a very strong relationship with the SEC and have had for years, but we also need to be aware that right now change is being pursued in other corners of the capital, like recommendations coming from committees led by congressman Barney Frank and senator Chris Dodd. We have to be mindful that that is where the decision making is residing.’
Across the board
It isn’t just thematically that Washington’s experience shows through. The Society will also benefit from the structural similarities he identifies between public companies and non-profits. ‘I think there are a lot of parallels between corporate governance and non-profit governance,’ he says. ‘When it comes to leading a board of directors effectively and the role of the board, there are a lot of similarities. Things you want to have in a company at the board level, you may also want to have at a non-profit organization.
‘You want to have a clear strategic plan and a clear business plan with well-defined goals for the year. You want to make sure you’re tracking how you’re doing against those goals throughout the year. You want to have an effective committee structure that gives all members of your board a chance to contribute in the most effective way possible, and you also want to have a clear understanding of the division between the responsibility of the board and that of management.
‘If you have some good board processes in place and a clear understanding of the division or allocation of responsibilities between the board and management, it helps you in a company, and it helps you in a non-profit. It doesn’t necessarily prevent wrong decisions, but at least it can prevent sloppy decisions.’
Helping you to help me
In terms of his role as board chair, Washington says that, apart from advancing the Society’s presence with regulators and lawmakers and furthering the advances made by his predecessors, it will be a very traditional one, ‘helping to make sure the board is able to fill its role appropriately in overseeing the Society.’
Washington also intends to take this responsibility very seriously to best extract the expertise of the Society’s board. ‘We are very lucky at the Society to have a strong management team and a really exceptional board,’ he says. ‘They are some of the most talented people in the field of corporate governance. The job of chairman is to help harness and guide that enormous talent and insight on the board, and channel it to support the Society and its members.
‘I guess we’ve been through so much at Time Warner that almost nothing surprises me,’ he adds. ‘The only area where there is some overlap, I think, is that at Time Warner we have taken a fresh look at our governance structures, as we do each year. I think, if anything, what I might bring to bear from my Time Warner experience is a willingness and an openness to look at things afresh and make sure we are structured in the right way to accomplish our goals.’
