Corporate Governance: Corporate guardians

Ensuring everything that leaves a company is correct and true is a full-time job for some.

Ensuring everything that leaves a company is correct and true is a full-time job for some.

What happens to a buzz word deferred? "Corporate governance" was all the rage a few years back, and while it might not yet have gone the way of "outside the box" (i.e., Taco Bell has yet to satirize it), it's certainly not the subject of nearly as much media chatter as it was just three years ago.

That was when revelations of corporate misbehavior ran rampant across America, and seemingly every corporate entity from Halliburton to Krispy Kreme was eager to tell the world about its ethical bona fides.

But that was then. Now, one doesn't hear such pleas with much frequency, which leads us to wonder: Are those in charge of corporate governance still talking to their PR people? Is media outreach and investor satiation still as integral to their jobs as they were in the darkest days of 2002? And who, exactly, are these people in charge of corporate governance (see sidebar)?

It's not easy to find people with that term in their title or job description. But PRWeek spoke to a few who do - and their PR counterparts.


Eric Pillmore, SVP of corporate governance; Charlie Young, SVP of corporate marketing and communications

Few American companies are associated with corporate governance issues like Tyco, the multibillion-dollar conglomerate whose former top executives are now on trial for stock fraud, falsifying business records, grand larceny, and conspiracy. Little known before the fallout, Tyco quickly became shorthand for corporate greed and "$6,000 shower curtain" - one of several now-infamous items charged to the company by former chairman Dennis Kozlowski.

Today, Eric Pillmore is in his third year as SVP of corporate governance, a new position as of August 2002. He and Charlie Young eagerly discuss the efforts on which they've collaborated - a litany too extensive to list.

"I would say there is nothing we can do in the governance arena without the help of Charlie's team," Pillmore says.

Young points out that when the scandals came to light, Tyco was in the midst of an expansion that included more than 700 acquisitions - an awkward position for a company under such a harsh spotlight. "Tyco was not yet one company so much as it was hundreds of companies," says Young. "We didn't have an intranet. We didn't have a global e-mail directory. We didn't have an employee newsletter, per se. We did not have any communications tools."

Hence, the introduction of those elements over the past few years was handled by the two departments, providing an opportunity in the midst of crisis. "All the stuff we've done with Eric has been concurrent with building those things for the first time," says Young.

While the collaborations between the two teams seem largely seamless, Pillmore explains the process by which such projects are created.

"Typically I'll begin with a concept that I think is important to some constituents - employee base, shareholders, people focused on social responsibility - and we'll engage in a brainstorm," he explains. "Charlie's gang puts the professional execution side on things in what typically starts out as a pretty raw concept."

What the two seem most proud of is the vast improvement in their corporate accountability rating, a number produced annually by GovernanceMetrics International - a Consumer Reports for corporate America.

In December 2002, Tyco was given a 1.5 out of 10.

"We've actively worked with Charlie's group as we've completed a variety of different initiatives," says Pillmore. "By better communicating those efforts, we've been able to increase our [rating] up to an 8.5."

Computer Associates

Bob Lamm, SVP, corporate governance, and secretary; Shannon Lapierre, VP, corporate PR

Bob Lamm and Shannon Lapierre have no formal reporting relationship between them, but you'd never know it. They joke, tease, and finish each other's sentences. When Lapierre tries to give her title, Lamm butts in with an amendment: "PR goddess," he insists.

So it doesn't take Woodward and Bernstein to figure out that these two spend a lot of time huddled over a conference table together. And tempting as it is to chalk their rapport up to complementary senses of humor, the fact is their relationship is the result of lessons learned the hard way.

Seven former Computer Associates executives - including its ex-CEO - were indicted last year for fraud and obstruction of justice. They were all alleged to have been involved in a widespread plot to inflate quarterly earnings by backdating contracts. Hence, Lamm and Lapierre are not casual when it comes to spreading the message of good corporate behavior.

"We've learned the value of sharing information as early as we can, as often as we can," says Lapierre. "[The PR department] really leans on our legal department an awful lot."

"It's really important that we keep each other informed so we can anticipate things," adds Lamm. He says that changes in Securities and Exchange Commission filing rules and Sarbanes-Oxley regulations have shortened the time allotted for - while increasing the frequency of - various legal filings. So when such a filing is coming up, one of Lamm's first calls is to Lapierre, "just so she has time to think about it" and whatever announcements will need to accompany the filing.

Ultimately, numerous safeguards put in place following a deal with the federal government and the company's board ensure that Lamm and Lapierre will not lose touch any time soon.

"Under the terms of the deal with the Department of Justice, we can't disclaim the past. I'd like to think we wouldn't regardless, but it's a fact we deal with every day," says Lamm. "The fact is, we have a lot to talk about going forward.


Cary Klafter, VP, legal and government affairs, director, corporate affairs, and secretary; Tom Waldrop, director of worldwide press relations

Intel is that rare breed - a company that's made corporate governance news without a scandal. While it resisted (and ultimately lost) a 2003 shareholder vote to begin reporting stock options as expenses, the company has long been hailed as being out in front on issues of corporate responsibility and transparency.

So, not surprisingly, Cary Klafter and Tom Waldrop view their working relationship as practically a non-issue.

"My relationship with Cary's group is as close as anything," says Waldrop. "These kinds of issues - disclosure, earnings statements, financial reporting - are as significant a chunk [of the job] as anything we do in press relations."

Like all publicly owned companies, Intel has long been required to openly circulate certain filings and reports. But Klafter points out that, media trends be damned, Sarbanes-Oxley regulations ensure a continued close collaboration with Waldrop. "By definition, we are now required to have a more ongoing relationship," he says.

As for who takes the reins on any particular collaboration, Klafter says it varies. When preparing earnings reports, for example, he says "finance and legal and IR and PR are all in the room with us because, obviously, it will have implications [for those departments] the minute it hits the wires." But when it comes to the yearly proxy statement - which the pair were working on when PRWeek spoke to them last month - Waldrop's team hangs back. "It's not necessary for Tom and his folks to be intimately involved yet, but there will be a point at which we'll give them a draft and point out to them what we [think they should consider]," he says.

Both make it clear, however, that the relationship continues to evolve.

"There are still aspects of Sarbanes-Oxley that have not yet really kicked in," says Klafter. "So there will be that much more that we'll be working on from a disclosure point of view."


Governing the governors

Geoff Luftus is the director of communications at the Society of Corporate Secretaries & Governance Professionals. Here, he tells PRWeek the state of corporate governance as a job - and why it forced his organization to change its name.

PRWeek: Who are your members?

Geoff Luftus: Corporate secretaries or people who work in the corporate secretary's office: paralegals or the assistant corporate secretary. A lot of our members are also the general counsel or associate counsel. A little more than 60% of our members are lawyers. Our member companies represent more than 70% of the Fortune 1,000. Any public company has to have a corporate secretary by law.

PRWeek: What is their connection to issues of corporate governance?

Luftus: The corporate secretary is highly involved with the board of directors ... and it's hard to support the board without getting involved in governance. Also, the board frequently turns to our members [for advice on] setting up this kind of committee or [such questions as] should we worry about mandatory retirement age for board members. The secretary often comes to us for research on [such issues].

PRWeek: What led to your group's recent name change, in which you added the title "governance professionals"?

Luftus: What drove the whole thing was [a desire] to recognize that corporate secretaries aren't just people who dot the I's and cross the T's. They are also the point [people] for corporate governance in many instances, even if they don't even have it in their title. Discussion about the change began in earnest in late 2003, [but] we have been realizing that our members were very active in corporate governance in their organizations for 10 or 12 years at least.

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