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To: Softechie who wrote (1991)	3/5/2002 11:01:05 AM
From: Softechie	Read Replies (1) \| Respond to of 2155

POINT OF VIEW: Reform Boards, But That Won't Solve All 05 Mar 08:00 By Neal Lipschutz A Dow Jones Newswires Column (This column was originally published Friday) NEW YORK (Dow Jones)--Don't expect corporate boards of directors to solve most of the accounting and disclosure problems highlighted by the Enron debacle. Reforming corporate boards is a favorite topic of advocates of better corporate governance. That's understandable. After all, boards theoretically have great power and theoretically are independent of management. If they could be just be made even more independent and more comfortable using their power, the reformist thinking goes, boards could be a strong counterweight to wayward chief executives, chief financial officers and the like. And, in fact, corporate boards have come a long way. They are more independent, more pro-active and more willing to act independent of managerial wishes. Even more useful reform work could be done. Lengthen the check-off list that needs to be met to show a board's independent directors are truly independent. One measure that seems clear after Enron's collapse is to bar companies from making large contributions to charitable or non-profit organizations in which directors are significantly involved. Audit committees, the focus of much post-Enron attention, should have a more pro-active role in dealing with outside auditors and enforcing whatever new rules on auditor independence and rotation that emerge from the current clean-up debate. Compensation committees need to find more sophisticated performance measures to tie to top executives' compensation. Short-term stock price or other short-term financial goals don't always align CEO interests with those of long-term investors. But even as these improvements are made, they should be made with the clear understanding that boards of directors alone are never going to be in a position to guarantee corporate management is running clean and responsibly. The groups of accomplished individuals who make up the independent members of boards of directors meet a relatively small number of times a year. They have other occupations and interests. Auditors can maintain to some degree that their work is at the mercy of the facts and figures provided to them by corporate management. Independent directors are even more at the mercy of management as an information conduit since directors typically have no independent base of knowledge of the company's actual operations. Federal Reserve Chairman Alan Greenspan earlier this week summed up the limits faced by independent directors. His remarks were especially noteworthy because few publicly question the presumed power and authority of directors acting in the interest of investors. "If you make everybody on the floor independent, what's going to happen is you're going to have competing power centers within a corporation, and in my judgment, corporate governance will suffer as a consequence," Greenspan told the House Financial Services Committee Wednesday, Dow Jones Newswires reported. "I've served on too many audit committees to know that even though I would consider myself independent, I would consider myself knowledgeable, I did not know what questions to ask the chief financial officer during meetings to find out what it is that conceivably is going wrong in the corporation. And he wasn't about to tell me," Greenspan added. So let's continue down the road of empowering truly independent corporate directors. Just don't expect them to solve most of the problems in the system raised by the Enron affair. Neal Lipschutz is senior editor, Americas, Dow Jones Newswires. -By Neal Lipschutz, Dow Jones Newswires, 201 938 5152 neal.lipschutz@dowjones.com . (END) DOW JONES NEWS 03-05-02 08:00 AM