Winds of Corporate Governance Change Are Blowing

Yesterday, the U.S. Government announced major pay reductions for executives at companies recently aided by taxpayer funded capital infusions.  In addition, the Wall Street Journal reported that these same companies will be forced to make some significant changes in their governance structure and risk management practices.  Here is what one prominent corporate governance expert had to say about the demands.

The government's move "is a seismic shift,'' said Espen Eckbo, director of the Center for Corporate Governance at Dartmouth College's Tuck School of Business. But the broader impact will be "much more significant from the governance side,'' he added. Mr. Eckbo anticipates increased shareholder pressure on companies without federal bailouts to create board risk committees and split the roles of chairman and CEO. There likely will be more non-binding stockholder resolutions next year calling for such changes, he predicted. In particular, "risk committees are a no brainer.''

As more companies establish board risk committees, Enterprise Risk Management ("ERM") programs will come under greater scrutiny and need to be more robust.  Wheelhouse Advisors can help strengthen your ERM program.  Visit www.WheelhouseAdvisors.com to learn more.