In my experience holding the titles of general counsel (Information Dimensions, a software company); EVP, corporate secretary and chief legal officer (Cardinal Health); director for publicly traded corporations; partner (Major, Lindsey & Africa); and now managing director (Allegis Partners), I have accumulated some knowledge on the evolving role of attorneys in corporate governance.
From these positions—past and present—I hold two very strong beliefs: One is that boards of directors benefit from having an attorney among them. In fact, 42% of boards have at least one lawyer occupying a seat; some lawyers evolve very well into becoming business people. Second, now is a great time for governance diversity, including adding attorneys of color who bring unique, nuanced perspectives to the business of running companies.
For these reasons, I took great pleasure in participating in a panel discussion this past October in Chicago at the annual meeting of MIHCA (the Minority In-House Counsel Association). The title of the panel was “Advising the Board of Directors: Challenges and Rewards.” With my fellow panelists, we explored the roles and skills that lawyers of any stripe need to understand and nurture. The panel also looked at trends and external influences that make practitioners of the law more valuable to corporate executives and directors than ever before.
My fellow panelists included senior legal and/or governance advisors in their companies: Stephen Brown, senior advisor at the KPMG Board Leadership Center; Marjorie Pierre-Merritt, VP and assistant corporate secretary for TIAA; and Katherine Smith, assistant general counsel and assistant secretary for Exelon.
Who the Corporate Secretary Is in This Era
Every corporation is required to have a corporate secretary. However, what was clear from this group is that there aren’t always clear role distinctions between whether the general counsel (GC)/ chief legal officer (CLO) handles the duties or if the corporate secretary role is held elsewhere. In some companies, the GC is also the corporate secretary. A CLO might have multiple GCs reporting to him or her, for example in multi-division or subsidiary corporations, which may qualify the CLO to be the corporate secretary but not guarantee it.
The corporate secretary is sometimes a non-lawyer, but I wouldn’t recommend it simply because the secretary is responsible for recording accurate and sufficient documentation (board meeting minutes) to meet specific legal requirements. Internal and external auditors typically review those meeting minutes, which are no easy task to take and produce. The minutes also might be called up in litigation, so the specific terminology and overall positioning can be of critical legal importance, particularly with regard to compliance with statutory and regulatory requirements. Someone without a legal background may find this task even more challenging than it already is.
These roles today are quite different from a generation ago. Katherine Smith explained that, as a result of the Sarbanes-Oxley Act of 2002, there are more formalized practices and policies required of publicly traded companies. This, of course, places additional compliance responsibilities on the attorneys who have governance responsibilities. “There’s been a shift in the power paradigm,” said Katherine. “In the past, board power was supreme, but today institutional investors are a very powerful force.”
A plurality of votes was once all that was required to elect a director to the board. Today, a board candidate usually needs a majority of the votes cast. Katherine points out that this provides greater power to the institutional investors and tends to pressure board action in shorter time frames, for example, one year instead of two.
From my own experience as a director who had to deal with an activist investor and proxy fight, I can attest to these changes having witnessed how an activist was able to install four new directors quickly—and the changes in governance that came with that.
Stephen Brown, who teaches about corporate governance, shared his own experience with one board meeting materials book. “It was 300 pages long,” he told us. “It made me wonder, what are they hiding?”
Translation Skills: The Science and Art of Being Liaison
The secretary is effectively the liaison between the board and company management. It is both science and art to serve in this crucial role.
The corporate secretary must carefully navigate how he or she interfaces with individual board members, all people of accomplishment and influence—and of sometimes contrary and strong opinions. I refer to the job of managing board meetings as “corralling the cats.”
Panelist Marjorie Pierre-Merritt shared how she believes emotional intelligence and attention to detail are important in serving boards. She emphasized the importance of preparation and cautioned to “minimize surprises in board meetings.” She added how in a secretary role she represents the interests of the company, management, and its investors.
Marjorie also provided advice for up-and-coming attorneys on how to join corporate boards, regardless of whether they are lawyers of color or of the majority, is to become a subject matter or industry expert in their fields and to work on non-profit boards. “It’s a place to hone in on specific areas of expertise as well as to network strategically.”
The corporate secretary needs to be a passionate advocate of proper governance. In this era of activist investors and greater regulation, it’s a big job to fill. We look to develop lawyers who want to be leaders. The closer you can get to the governance structure, the more you will know—and the greater the things you can accomplish.