The New Paradigm of Corporate Governance
The demise of the imperial CEO must rank high among the positive business trends that have emerged in the past few years. This issue of Perspectives draws from prescient remarks on that subject delivered by Academy President Rinaldo Brutoco to the Forum for Corporate Directors in Orange County, California in November 2002.
Criminal malfeasance in the boardroom has provoked a legalistic counter-reaction in the past four years. In this issue of Perspectives, Academy President Rinaldo Brutoco argues that when independent board members stick only to the letter of the law, not only do they not serve themselves well, they also fail to make their best contribution to the corporation and its various stakeholders.
Academy President Rinaldo Brutoco and Gerry Czarnecki continue the Academy’s Corporate Governance Series arguing that a board of directors that meets the letter of Sarbanes-Oxley will likely not fulfill its responsibilities unless additional pre-conditions are met. These include a particular type of group consciousness, role clarity, an appropriate budget, full access to information, and more. They also provide a practical tool for dividing responsibility between boards and management.