Five things 2012 taught us about governance

Last year was one of the most challenging years for corporate governance in recent memory. There were many significant changes in regulation and a number of equally significant events that may very well serve as precedents to help companies adjust their governance practices going forward. 

Among the many things that happened last year, here is my list of five lessons 2012 taught us about governance:

1. Think like Morgan Stanley. Even though it was cited for violations, the major bank received fewer FCPA fines and penalties because it implemented a vigorous anti-corruption and compliance program.

2. Don’t think like Citigroup’s Vikram Pandit, who saw clashes over executive compensation and organizational structure lead to a shareholder revolt and his ousting.

3. Remember: shareholder engagement wins. AOL fought off an activist investor challenge by understanding and responding to the concerns of its key investors.

4. Conduct thorough due diligence. The messy aftermath of HP’s acquisition of Autonomy (HP took an $8.8 billion writedown, an astonishing 79 percent of the purchase price) showed us what’s at stake if you don’t drill down deep.

5. The pain of complying with regulations only makes you stronger, and your governance policies better!