Indra Nooyi, PepsiCo Inc.'s chairman and chief executive, is steering the snack and beverage giant through its biggest challenges in nearly a decade.
It has been called "the Woodstock of corporate governance" by editor and co-founder of The Corporate Library, Nell Minow -- and this year, Directors Forum 2009 promises to continue the tradition.
One of the commonly voiced criticisms of directors is their failure to challenge management's plans, actions or assumptions -- to ask hard questions and stand up for the shareholders.
In an entrepreneurial community like San Diego, a company needs to be prepared with plans to replace a CEO, because no matter how important core executives are in the management of their companies, eventually they retire.
There have been many attempts to define what is meant by “good corporate governance." Everyone who is asked has a different definition. Some even talk about the need for corporate governance as a nuisance, something that interferes with the strategic responsibilities of the board. Yet, when aspects of good governance are discussed, everyone agrees on the components.
“Companies in transition” is often a nice term for companies undergoing a great deal of stress – companies in which the boards of directors is more intensely engaged, when very difficult decisions are being made, when the true meaning of “fiduciary responsibility” comes to the fore.
In the past 30 years, I have served on more than 35 corporate boards, and never have I seen more challenging times for corporate governance than the past 24 months. It is, of course, the post-Enron, WorldCom, Sarbanes-Oxley world we operate in that has provoked these challenges. The reality is that we must proceed rationally through this particular point in American corporate history where the sins of the few have caused what I believe is an overreaction among regulators and the press.
In the summer of 2003, The Scripps Research Institute received an unanticipated invitation from Gov. Jeb Bush to establish a research facility in Florida. The invitation came with a promise of land, laboratory facilities and government economic development grants to fund initial operations — a package that would add up to a half billion dollars. The governor required a fast response to take his proposal to the legislature in the fall.
Long before I ever joined a corporate board, I had a mental image of the ideal board setting that included a wood-paneled room, dark-leather arm chairs and a long mahogany table. We’ve all seen the Hollywood black-and-white films: cigar smoke swirls, pocket watches linked to coats, chortled laughter amongst board members who at the end of the day would never challenge the leader. The old gentlemen seated during the meeting were the main investors of untold fortunes. Further, these individuals focused primarily on protecting their own money if not on their social status in the board club. I didn’t respect them much.
In today’s boardroom, it is easy to find yourself overwhelmed with the concerns of trying to meet the requirements of proper corporate governance. In the current environment, we are witnessing an almost over-engineered idea of how one can best support the interests of the shareholders. It is easy to wrestle with details and ignore the potential that can be achieved by a truly strong board of directors.
