Day Two of PLI’s Securities Regulation Institute is kicking off this morning with the General Counsel Roundtable. The speakers on the panel are GE’s Brackett Denniston, Louise Parent of American Express, Frank Jimenez of Bunge Ltd., Richard Walker of Deutsche Bank and Hon. E. Norman Veasey, Former Chief Justice of the Delaware Supreme Court who is now with Weil, Gotshal & Manges. Highlights from the panel include:
- Louise Parent addresses how best to build a relationship with a board of directors while remaining strong. The GC’s principal challenge is to maintain independence without eroding trust. She says this is the most challenging part of her job. You have to be candid. It builds trust and lack of it can erode confidence quickly. In between board meetings, make sure GC and CEO are aligned in any communications with the board.
- Frank Jimenez says transparency is key. The board must know that you are an “honest broker.”
- The GC is increasingly exposed to outside scrutiny and potential exposure to liability, prosecution, regulatory constraints, disbarment, and reputational harm. Jimenez says the days of the “silent GC, if they ever existed, are over.”
- A GC has only one job and one client – the corporation. She must be independent, objective, competent and courageous. Do the right thing always even if this risks her own job security.
- Veasey says GC’s must accept bad things can happen to them and to the company. Regulators have inside and outside counsel in their cross-hairs.
- Because the crises that led to SOX and Dodd-Frank has increased scrutiny and public attention on corporations and corporate executives, general counsel may be increasingly targeted.
- Walker says good governance goes a long way. Employees must know that if the correct processes are not followed, they will be thrown back at them. Denniston adds that you are protected from recklessness if you have good processes.
- A great piece of advice from Jimenez in dealing with trouble at the top is to take a step out of your role as GC. Imagine you are a NY Times reporter or a regulator two years in the future, scrutinizing what went wrong at the company. What would be the record of decision making and actions taken? From there, take steps to avoid pitfalls.
- Denniston says you can’t think that you alone are the beacon of integrity. The CEO, head of HR, CFO, etc. also fill that role and that is how you build partnerships.
What is On GCs Minds Today?
- FCPA – Siemens, J&J, Pfizer, Wal-Mart all strike fear. Questions remain as to whether there are benefits to self-reporting. DOJ has made it clear that self-reporting after a scandal has already erupted will not get you very far. Jimenez says you have to weigh the reputational harm from self-reporting against the reputational benefit from self-reporting in a situation that would otherwise have blown up into a scandal. Guidelines are expected to be forthcoming from DOJ which will hopefully provide some clarity.
Six Key Competencies:
- Stay ahead of governance practices (compensation, mechanics, social issues).
- Build compliance and regulatory processes.
- Master investigations and intricacies.
- Marshall the best expertise.
- Be pro-active with the CEO and the Board.
- Insist on thorough analysis. It leads to trust.
We’ll be back with Governance Challenges this afternoon!