February 2002

End to Political Contributions

BP, the world’s third-largest oil company, announced it will halt all of its political contributions worldwide, possibly motivated to avoid accusations of influence peddling in the era of Enron. BP CEO Sir John Browne said the company would continue to engage in policy debate, but would not fund any political activity or party. According to the Center for Responsive Politics, BP, which makes about half of its money in the United States, spent $1.1 million on the 2000 U.S. elections, with two-thirds going to Republican candidates. BP was the first major oil company to acknowledge the threat of global warming. Royal Dutch/Shell says it had a long-standing policy of not contributing to political parties, political organizations or their representatives. more at: New York Times, 2/28 andBayArea.com, Reuters, 2/28

CalPERS Adopts New Emerging Market Policy

CalPERS has completed its comprehensive review of emerging market countries, which takes into account broad financial factors as well as transparency, political stability and labor practices/standards.

“We now have in place a blueprint to examine which emerging markets can support institutional investment,” said Michael Flaherman, Chair of CalPERS Investment Committee. “It is a screen and an important entry point for investments into our portfolio that will help to protect our pensioners assets in the emerging markets.”

Based on its new review process, CalPERS will begin taking a public equity position in Poland and Hungary, while eliminating its public equity investment position in Indonesia, Malaysia, the Philippines and Thailand.

Identify Accounting Fraud, Tricks and Best Practices

The Financial Numbers Game, by Charles Mulford and Eugene Comiskey, could not have been released to a more eager audience. Months ago Enron was the country’s seventh largest company, in terms of revenue. Now the company has all but vanished, amid revelations of questionable accounting practices that allowed Enron to overstate profits, while dodging taxes. They did it, in part, by keeping billions in debt off the books through partnerships. The authors help you understand and identify:

• premature or fictitious revenue
• aggressive capitalization and extended amortization policies
• misreported assets and liabilities
• creative income statements
• problems with cash flow reporting

Earnings management can fall within or beyond the boundaries of generally accepted accounting principles. Key targets of a recent SEC campaign were big-bath charges, creative acquisition accounting, cookie jar reserves, materiality judgments and revenue recognition practices. Statistical research shows that such practices are not uncommon, given the rarity off small losses and small declines in profits, as well as the large numbers of consensus forecasts that either just meet of barely exceed consensus forecasts. Professional reaction to these practices is discussed.

The book also highlights many of the creative ways of presenting income statements, “the premier playground for those who engage in the financial numbers game” and cash flow reporting. A great reference book for board members (especially audit comittee members), fund fiduciaries, regulators and others. Includes helpful glossaries and references for each discrete chapter.

Lax Environmental Liability Reporting

Three out of four US corporations surveyed openly violated SEC environmental financial debt accounting regulations, according to the EPA. Congressional committees investigating the hundreds of millions of debt hidden in the Enron scandal don’t appear to be aware of the environmental liability problem, according to the Environmental News Service (ENS). “This departure from SEC mandated disclosure puts good companies at a disadvantage in the absence of reporting EPA legal proceedings,” says EPA attorney Shirin Venus.

The SEC is required to enforce federal securities laws, protecting investors and maintaining fair and efficient markets. However, in the past 20 years the SEC has only once enforced its S-K financial environmental accounting regulation. Under current federal securities law, “material” information is anything that an “average investor” ought reasonably to be informed of before buying a security but many auditors and their clients define environmental materiality as any event or news which will affect a company’s revenues by a 10% threshold level. The SEC’s efforts are lagging behind investor needs. The average investor should demand a lower material standard. (Public Companies Tweak Accounting to Hide Environmental Debt, ENS, 2/18/02) For more information, see the Corporate Sunshine Working Group.

Bogle Calls for Federation of Long-term Investors

John Bogle, founder and former chief executive of The Vanguard Group, told the New York Society of Security Analysts that abuses that led to the downfall of Enron are widespread and must be addressed through pressure from mutual funds and other big institutional investors. A “Federation of Long-term Investors,” could be the nucleus of a new shareholder group that could grow in size, bringing in “active” fund managers who pick and choose stocks based on investment potential. The heart of the problem has been the willingness of the corporate governance system to focus on stock prices as opposed to long-term corporate value.

Fat Exec Pay Tied to High Turnover

Matt Bloom and John G. Michel of the University of Notre Dame find that large corporate pay disparities are associated with lower job tenure and higher turnover among company managers. The lesson: Resentment in company ranks over fat paychecks for top executives causes more problems than just grumbling. “Dispersed pay structures promote the survival and retention of star managers, but at the cost of increasing workforce instability and turnover among remaining managers.” In contrast, “minimizing pay differentials creates a more egalitarian environment, which tends to reduce both the competition among managers and the impetus for them to leave…creating greater workforce stability.'”

The findings, “are robust across different samples, at different periods of time, at different managerial levels and after accounting for external labor market effects.” “We believe these findings support the assertion that pay dispersion per se has important implications for employee outcomes and is of strategic importance for organizational decision-makers.” (February/March issue of the Academy of Management Journal)

Another study in the same issue finds evidence of the harmful effect high turnover of personnel has on teamwork in pro basketball. Even on losing teams, the researchers find, keeping teammates together resulted in a significant gain in the following year compared to teams with more turnover.

Enron Gives Black Eye to Corporate Governance

The deception, hubris and possible criminal fraud that led to the decline and fall of Enron was bad enough, say several Wharton faculty members and a former CEO. But just as appalling was the performance of Enron’s board of directors. Read a frank exchange of ideas from Michael Useem and others at Wharton’s Center for Leadership and Change Management.

Airborne Finally Yields on Confidential Voting

After Rick Ziebarth and the Teamsters received 68% or higher of the voting shares for each of the last 3 years, Airborne’s management and Board of Directors finally saw the writing on the wall and adopted a policy that keeps proxy votes confidential but the Board has failed to yield on annual elections of the Board of Directors and the redemption of the company’s poison pill. see Teamster Scores Victory for Airborne Shareholders, PRNewswire, 2/12. Update: On 2/15 the Board authorized redemption of the poison pill.

Plaintiffs’ Lawyers Shudder

The SEC is arguing in a closely watched securities fraud case that high attorney fees could get law firms kicked off federal class actions. (see SEC Weighs In on Securities Fraud Case, Jason Hoppin, The Recorder, 2/13.

Dim View of Bidding for Class Actions

A study commissioned by a federal appeals court has taken a dim view of a controversial practice adopted by some federal judges in big securities class actions-asking law firms vying to represent plaintiffs to bid for the assignment. A study commissioned by the Philadelphia-based U.S.

Circuit Court of Appeals for the 3rd Circuit concluded last month that competitive bidding for class action counsel positions is generally a bad idea. Plaintiffs lawyers often jockey for the position of lead counsel, hoping for the biggest fee. Without a bidding process, the choice is made at the sole discretion of the judge presiding over a case. “The risks and complications associated with a judicially-controlled auction counsel against its use except under certain limited circumstances,” the 3rd Circuit task force concluded in its final report on Jan. 17.

How limited? Of the 14 cases in which competitive bidding was used, only one fit the panel’s criteria. While the 3rd Circuit’s chief judge, Edward Becker, has said the task force doesn’t speak for the court, the report gives class action lawyers with cases in New Jersey, Pennsylvania, Delaware, and the Virgin Islands weighty ammunition for arguments against bidding for work. Time will test how other circuits react, but U.S. Judges Vaughn Walker of the Northern District of California and Milton Shadur of the Northern District of Illinois are already on record as saying the panel’s work was flawed and failed to give credit to the good points of bidding. (Legal Times, 2/4, Study Frowns On Class Action Auctions 3rd Circuit Task Force Says Judges Should Significantly Limit Their Use Of Competitive Bidding For Class Action Counsel)

High Tech SRI Index

KLD and Nasdaq have createe the KLD-Nasdaq Social Index, “the first index to screen Nasdaq companies for social and environmental criteria.” The following social and environmental criteria were applied to Nasdaq Composite domestic companies: over $1 billion in market capitalization; rejection of alcohol, tobacco, gambling, military contracting, nuclear power, and firearm stock; qualitative screens rate companies on community citizenship, diversity, employee relations, environmental protection, product safety, and non-U.S. operations.

Top ten holdings of the KLD-NSI index include Oracle Corp. (ORCL), a computer software and systems producer, which has notably strong diversity policies; Amgen, Inc. (AMGN), a biotech research and production company with exceptional community involvement programs; and Qualcomm Inc. (QCOM), a communications technology firm that KLD has rated highly in terms of involving employees in company ownership and management. Currently only 283 companies qualify for inclusion in the KLD-NSI. (First Nasdaq-based Social Index Unveiled, SocialFunds.com, 2/12)

Even His Mom Isn’t Buying Skilling’s Story

Former Enron CEO Jeffrey Skilling is not only being grilled by Congressional committees, Skilling’s mom, Betty Skilling, says she finds it hard to believe the former Enron executive was not aware of wrongdoing on his watch. She told Newsweek, “When you are the CEO and you are on the board of directors, you are supposed to know what’s going on with the rest of the company. You can’t get off the hook with me there. … He’s going to have to beat this the best way he can.” Ouch!

Sen. Ernest Hollings told Reuters he is unhappy with the way Pitt is handling the entire Enron fiasco. He thinks Pitt has been quiet on Enron because he did work for Enron’s former auditor (Andersen) prior to joining the SEC. “I’m not satisfied,” Hollings told the wire service. “Whatever he (Pitt) would recommend, I’d look at with a jaundiced eye.” (Hollings Disses Pitt, CFO, 2/12)

NACD to the Rescue

In the wake of Enron’s collapse and last year’s September 11 tragedy, corporate directors are reminded more than ever of their critical oversight responsibility to ensure the safety and proper management of fiscal integrity, human resources and information resources. And yet, according to a <a href="Join other directors who will share their seasoned experience in corporate crisis situations Ð bankruptcy, physical threats to employees and information security breaches that threaten operations and credibility. Learn step-by-step processes for avoiding undue risk and minimizing damage from unexpected events. Register today!

View the entire program and register”>recent survey of national directors conducted by the National Association of Corporate Directors and the Institute of Internal Auditors, only 37% of directors responded that a formal risk management process was in place in their organization. Even more surprisingly, 17% of directors stated they did not even know whether their corporation had a formal method for identifying risks. Join other directors who will share their seasoned experience in corporate crisis situations – bankruptcy, physical threats to employees and information security breaches that threaten operations and credibility. Learn step-by-step processes for avoiding undue risk and minimizing damage from unexpected events. Register.

OECD Launches Newsletter

The Organization for Economic Cooperation and Development launched the Corporate Affairs Newsletter to promote free markets in order to achieve sustainable growth. The first issue (see what’s new) carries a discussion of accounting and audit issues… timely, given the Enron situation. The next edition of the Newsletter will be available in May 2002. To get on the mailing list, register by selecting “corporate governance as your theme.

4th Asian Corporate Governance Roundtable meeting; Mumbai, India, 10-12 June 2002 (Shareholders Rights and Equitable Treatment of Shareholders). Participating countries include Australia, Brunei Darussalam, Canada, China, Hong Kong China, India, Indonesia, Japan, Korea, Malaysia, Mexico, Mongolia (as an observer), New Zealand, Singapore, Chinese Taipei, Thailand, the UK, and the US.

Non-Audit Services by Auditor Associated with Lower Quality Earnings

In their study, The Relation Between Auditors’ Fees for Non-Audit Services and Earnings Quality, Richard M. Frankel, Marilyn F. Johnson, and Karen K. Nelson found the purchase of non-audit services from the auditor is associated with lower quality earnings. They also found evidence that investors associate non-audit fees with lower quality audits and, by implication, lower quality earnings. Their evidence indicates that firms paying high non-audit fees are more likely to engage in earnings management. They predict firms “may reduce the purchase of non-audit services to avoid the appearance of non-independence.

Enron Fallout in UK

Enron’s auditor, Arthur Andersen faces a backlash in the UK.  A number of major investment funds have threatened to vote against the firm’s reappointment at shareholder meetings. Manifest, the UK proxy voting advisor believes that all companies’ audit committees should include a qualified auditor and thinks this aspect of governance is overlooked. “Whereas fat-cat pay grabs headlines, audit can seem trivial,” says Sarah Wilson, managing director at Manifest. “But experience shows that it is a key risk management area for shareholders.  Legislation should be changed in the UK to enforce full disclosure of audit and non-audit related fees paid to the same organization.”

Clarification Sought on What Constitutes Controlling Company in UK

In the face of relatively low voting levels in comparison to institutional ownership levels, The Myners Report recommended the introduction of ERISA-style regulations regarding corporate governance, shareholder activism and intervention in failing companies. These regulations will primarily apply to Pension Funds, Local Government Pension Schemes and their fund mangers.

Manifest received a number of calls concerning the Takeover Panel Rules. Institutions are concerned about possible inconsistencies as to how active governance could be perceived in the context of ‘controlling’ a company. The Myners Report seeks earlier and closer involvement in under-performing companies but Manifest and its clients are concerned with the possible penalties that could be imposed if an institution got involved in the ‘wrong sort’ of activism and was considered a controlling company.

Manifest believes that it would be helpful for the Takeover Panel to undertake an independent review and clarify the position of Concert Parties in the context of governance and activism followed by a guidance note to interested parties. (seeManifest calls on The Takeover Panel for rule clarification) This will have a number of beneficial effects:

• Elimination of regulatory uncertainty towards legitimate, non-predatory patterns of shareholder intervention;
• Encourage market-based governance programs without the need for institutional case by case review of individual activities;
• Demonstrate commitment to continued market best practice policy development

CalPERS: The Watchdog That Failed to Bark

According to a widely published article originating with the New York Times, the CalPERS Board was warned by outside advisors that Enron’s chief financial officer, Andrew Fastow would face conflicts of interest between his duties to the LJM 3 limited partnership, which he pitched to CalPERS, and Enron. Disclosure of such an investment could lead to embarrassment for CalPERS, especially to its reputation as a corporate governance activist.

Roland Machold, a co-founder of the Council of Institutional Investors, said he wondered why the pension fund managers “did not go right to the board, as it used to do in the old days, and say they were concerned that the board had approved something so conflicted.”

Prompt action by the CalPERS Board, such as talking with the Enron board or putting Enron on their focus list, might have made a huge difference to California taxpayers. Stock losses totaled more than $248 million at California pension funds alone, to say nothing of the $325 million loss suffered by the Florida state pension fund and additional losses at other public pension funds.

Why didn’t the world’s most famous corporate watchdog bark? The Board’s own conflicts of interest may have played a part. Bob Carlson (Board member since 1971) serves on the board of 12 Franklin funds. Bill Crist (Board member since 1987) also served on the board of the Pacific Rim Prosperity fund for many years. Which fiduciary duty gets a higher priority when opportunity knocks or conflicts arise, CalPERS or the private investment funds?

Between stints on the CalPERS Board, Kurato Shimada, (served 1987-1999, reelected in 2001) along with former Board member Albert Villalobos and retired state senator William Campbell lobbied the Board to invest $250 million in the CIM California Urban Real Estate Fund. It was the first vote ever attempted without a staff recommendation in the pension fund’s 68-year history. Is Shimada more concerned with members or building placement fee opportunities (typically 1% of the investment)?

Many Board members continue to accept expensive entertainment, diners and other gifts from those contracting with the System. In direct violation of the Government Code, they raised their own salaries and were subsequently sued by State Controller Kathleen Connell. With such conflicts of interest on their own Board, it is not surprising that CalPERS took no action to further investigate Enron.

If they had read Enron’s SEC filings, the following should have lead to questions (see 10-K’s: A Good Read for the Curious Investor, New York Times, 1/20/02):

• Enron director, John Urquhart was paid $493,914 for providing consulting services to Enron.
• Enron director, Lord John Wakeham, received $72,000 for advice on Enron’s European operations.
• Enron director Herbert Winokur was affiliated with the privately owned National Tank Co. that made sales to Enron worth $370,294.
• Sharon Lay, sister of Enron chairman and chief executive Ken Lay, was paid $517,200 for travel services provided to the firm.

Additionally, they would have noticed Enron not only avoided paying income taxes in four of the last five years, it also collected $381 million in tax “refunds.” Maybe that wouldn’t have mattered to the CalPERS Board. After all, 18 year Board member Charles Valdes largely avoided paying taxes for seven years and declared bankruptcy twice while serving as the Chairman of the Board’s Investment Committee.

How can we end conflicts of interest in corporations when our own pension funds, even those with excellent reputations such as CalPERS, are riddled with such conflicts themselves? CalPERS and other public pension funds should use the Enron scandal as an opportunity for self-examination. Public employee pension funds that invest in tax evading corporations are like police who sell criminals their guns. They’re not following a good long-term strategy. (CalPERS knew of problem but kept silent: State pension fund didn’t share data on executives’ conflicts, San Francisco Chronicle, 2/5/)

BP and Royal Dutch/Shell Leading: ExxonMobil and ChevronTexaco Lag

BP and Royal Dutch/Shell are leading the field in terms of socially responsible and envrionmentally friencly behaviour, while ExxonMobil and ChevronTexaco have been slow to embrace good practics, according to a survey released by Co-operative Insurance Society, the UK insurer. See UK oil companies are better behaved, says survey, FT.com, 1/23.

Arthur Anderson Can be Held Liable

According to attorney Brian J. Donovan, Enron’s outside legal counsel, outside auditors/consultants, and investment bankers/stock analysts can be held liable for the losses sustained by the corporation’s investors when the corporate client has committed fraud, despite protections afforded by the Private Securities Litigation Act of 1995.

Section 1962(c) of the Racketeer Influenced and Corrupt Organizations Act provides that “It shall be unlawful for any person employed by or associated with any enterprise…..to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” Mail fraud and wire fraud are the two most common forms of racketeering activity relied upon by civil RICO plaintiffs.

A 1993 Supreme Court case, Reves v. Ernst Young, 507 U.S. 170 (1993), which is frequently cited by the accounting profession, held that a RICO defendant must participate in the operation or management of the enterprise itself in order to be subject to Section 1962(c) liability. In that case, the Court held that the outside accounting firm was liable for damages under both the Arkansas Security Act and the Securities Exchange Act of 1934 for material misstatements associated with demand notes. However, the accounting firm, which was sued as an entity enterprise, was not liable under the RICO statute because the firm had maintained its role as an outsider and did not participate in management decisions.

In order to successfully plead a civil RICO Section 1962(c) claim, a plaintiff, in an Enron-like case, should allege that the corporation’s directors and officers, management, outside legal counsel, outside auditors/consultants, and investment bankers/stock analysts had conducted or participated in the conduct of the affairs of the corporation through a pattern of racketeering activity by forming an “association-in-fact” enterprise. The plaintiff would file suit against the insider association-in-fact enterprise rather than against
just a single outsider entity enterprise. As an insider association-in-fact enterprise, the individual defendant entities, e.g., the outside auditor/consultant, could no longer claim, as was done in Reves, that they were outsiders and therefore not liable under RICO.

A civil RICO plaintiff who properly pleads each of the four principal requirements for a Rico civil claim may be entitled to recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee. Maybe this will help stem the flood of earnings restatements and accounting irregularities.

Back to the topConference Board Questions Impact of 911

The Jan/Feb edition of Across The Board carries a cover article, Below the Bottom Line, that asks “do today’s multinationals have a role in ending word hunger, seeking social justice and redistributing wealth.” While weeding out terrorists cells is a necessary short-term step, in the longer term we must improve the conditions that may have contributed to the breeding of terrorists.

Global Conflict on Horizon

Writing in December’s ISSue Alert, Stephen Deane sees a storm brewing between US led globalization and European national or regional sovereignty. Europeans question US accounting and tax structures which disadvantage shareholders. Specifically, not expensing option grants to income statements (if they had, earnings per share would have dropped 9% in 2000) and allowing a tax deduction when employees exercise their options (companies get to write off the difference between strike price and market value).

The Council of Institutional Investors has long advocated recognizing stock option grants as an expense. Even accounting firms Deloitte & Touche and Arthur Anderson agree. TheInternational Accounting Standards Board (IASB) drew fire in September when it announced that one of its top priorities is to develop a global standard for the accounting treatment of stock options.

Let’s hope Congress has learned from the Enron scandal and keeps out of accounting standards setting this time. Unfortunately, Deane reports that is not the case. Michael Oxley(R-Ohio), who chairs the House Financial Services Committee, has fired off letters to the IASB, the US Financial Accounting Standards Board (FASB) and the US Securities and Exchange Commission warning that requiring companies to expense options “would sharply diminish their use, harming American workers in a profound way.”

In our opinion there is just about no action that could help American workers more than proper accounting. Yes, a few greedy CEOs could be hurt but let’s hope the Europeans win.

Options Use Up

According to an article in the New York Times, the issuance of options is up and many question the supposed link to pay for performance. CEOs who received more last year, even as their companies suffered, include Daniel A. Carp of Eastman Kodak, John T. Chambers of Cisco Systems, Scott G. McNealy of Sun Microsystems and Harvey R. Blau of Aeroflex. Pearl Meyer & Partners reported the number of options granted by 50 major companies was up in 2001 an average of 12% from 2000 and expects the trend to continue.

Watson Wyatt Worldwide reports that average options overhang for Standard & Poor’s 500 firms was 14.6% of outstanding shares in 2000, up from 13% in 1999, with another percentage point or two expected to be added in 2001. In 1999, the LongView Collective Investment Fund, which manages some AFL-CIO pension money, submitted a shareholder proposal to the Chubb Corporation seeking to better align option grants with performance. The proposal failed but Chubb got the message; half the options later issued to senior management have an exercise price 25% higher than when they were granted. The NYT article indicates that consultants estimate that only 2-4% of large companies use such premium priced options. (Even Last Year, Option Spigot Was Wide Open, 2/3/2)

CEO Survey on CSR

PricewaterhouseCoopers’ fifth annual Global CEO Survey, “Uncertain Times, Abundant Opportunities,” reported highest confidence among CEOs in Corporate Social Responsibility (CSR) reputation amongst North American CEOs, with 64% feeling strongly that the public perceives their company as a positive social performer and 30% with more guarded confidence. Asia-Pacific CEOs had the lowest confidence in public perception of their companies as positive social performers, with only 28% feeling strongly confident and 54% feeling more cautiously confident. Most CEOs agree that CSR does not amount to public relations “spin” (51 percent), that CSR is vital to profitability (68%), and that CSR must remain a priority, even amidst the current economic downturn (60%). (see CEOs Worldwide Prioritize Corporate Social Responsibility, SocialFunds, 2/1/2)

MassMutual Owners to Take Charge

For the first time in U.S. history, policy owners of a major mutual insurance company, MassMutual, have united to nominate their own slate of candidates for election to a board of directors, announced John H. Jameison, Executive Director, of the MassMutual Owners Association (MMOA), a nonprofit corporation of concerned policy owners of Massachusetts Mutual and the former Connecticut Mutual Life Insurance companies.

Analyst Guidance Anticipated

The National Association of Securities Dealers, the New York Stock Exchange and the Securities and Exchange Commission are planning a joint regulatory measure that would codify industry best practices for research analysts to avoid analyst conflicts. (see Rules Or Guidance Expected, Compliance Reporter, 1/27/02)

Global Markets, Domestic Institutions:
Corporate Law and Governance in a New Era of Cross-Border Deals

April 5-6, 2002, Columbia Law School, New York, New York
The Center for International Political Economy and Columbia Law School are jointly sponsoring a conference on the dynamic tension between the inherently domestic nature of corporate law and governance institutions, and the increasingly global markets for capital, assets, and managerial talent. Topics of discussion are wide ranging. Registration is free, but space is limited, so it is important to register early. The conference will be held in the Kellogg Conference Center, 15th Floor, International Affairs Building, Columbia University, corner 117th Street and Amsterdam Avenue. To register, send an e-mail with the word “Conference” in the subject matter line tostrotm@law.columbia.edu

Include the following information in your message: (1) name, (2) institutional affiliation, and (3) whether you
plan to attend the lunches on Friday and Saturday, and the reception on Saturday evening.

Speakers and panelists include: Ronald Gilson (Columbia Law School), Edward Rock (University of Pennsylvania School of Law), Henry Hansmann (Yale Law School), Brian Cheffins (University of Cambridge) & Randall Thomas (Vanderbilt Law School), John Core (Wharton), John Coffee (Columbia Law School), Merritt Fox (Univ. of Michigan Law School), Michel Goyer (MIT, Max Planck Institute), Jeffrey Gordon (Columbia Law School), Peter Muelbert (Mainz), Luca Enriques (University of Bologna), Jonathan Macey (Cornell Law School), Lynn Stout (UCLA Law School), Katharina Pistor (Columbia Law School), Reinier Kraakman (Harvard Law School), Bernard Black & Michael Klausner (Stanford Law School), Roberta Romano (Yale Law School), Zohar Goshen (Hebrew University), William Allen (NYU Law School, formerly Chancellor, Del. Court of Chancery), Mark Roe (Harvard Law School), Corporate Law’s Limits, Andrei Shleifer (Harvard Economics Department), Curtis Milhaupt (Columbia Law School) & Mark West (University of Michigan Law School), Hugh Patrick (Columbia Business School), Mark Ramseyer (Harvard Law School) & Yoshiro Miwa, (University of Tokyo, Faculty of Economics), David Weinstein (Columbia Economics Department), Kon-Sik Kim (Seoul National University) & Joongi Kim (Yonsei University), Lawrence Liu (Lee & Li; Soochow University School of Law), Tarun Khanna (Harvard Business School)

Does it get any better than this? If I could get there, I definitely would.

NACD Provides Analysis of Lessons from Enron

The National Association of Corporate Directors has risen to the occasion in response to the recent failure of Enron . TheirDirector’s Monthly Extra includes commentary and analysis on major events in corporate governance… as they are unfolding. DM Extra will be a members-only publication delivered electronically, as critical issues arise. DM Extra is an added benefit of NACD membership. Recommendations include the following:

• Understand financial reporting practices
• Recognize, and if appropriate, reduce corporate and board complexity
• Protect retirement plans
• Set and follow policies and rules pertaining to conflict of interest
• Refrain from improper insider training
• Ensure auditor independence
• Issue, improve and enforce internal document retention policies
• Educate and empower the board to detect and ensure correction of inappropriate financial reporting
• Embrace corporate ethics by creating a climate of integrity and responsibility, expressed in both written codes and living example

The Globalization of Corporate and Securities Law in the Twenty-First Century

Corporations have become dominant players in the global economy. This fact makes it imperative that legal scholars examine how major corporations are managed and financed and how such corporations interact with the nation states in which the corporations conduct operations. The 2002 Annual McGeorge International Law Symposium will explore this topic on 2/23 with distinguished legal experts. The Editor of CorpGov.Net will also be in attendance. The conference is open to the public with a $150 charge for MCLE credit for non-alumni attorneys. For more information on the program, call: (916) 739-7141. Panels include:

• Comparative Corporate Governance: Converging on an American Model?
• Global Securities Markets and Regulation
• Corporate Responsibility and Regulating the Global Enterprise

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