Lax Corporate Board Practices Long Gone?
Seemingly lax oversight by members of the Hollinger International board and audit committee revealed in testimony this week in an ongoing Chicago prosecution of high-level corporate employees undoubtedly have raised some eyebrows amongst those familiar with current oversight standards. One prominent lawyer called as a witness, for example, reportedly testified that he approved $200 million in payments without reviewing documentary backup.
But being startled by such testimony may be more a sign of the present-day emphasis on compliance with strict codes of corporate conduct than what was standard at the time, according to a Chicago Tribune perspective piece on expectations today for corporate board members. Since the 2002 collapse of Enron Corp., cushy do-little seats on corporate boards have followed the three-martini lunch and the dodo bird into actual or virtual extinction. But most of the conduct at issue in the Hollinger trial occurred prior to the Enron debacle, the article points out.
Meanwhile, as compliance standards have gone up, the number of executives willing to serve on boards and audit committees has gone down. Among Fortune 500 executives, 72 percent served on outside boards, compared to 53 percent today, a recent study found.
