NEW YORK: A sweeping corporate-governance report from former SEC chairman Richard Breeden, a partner in Edelman's group of corporate governance advisors, outlines a "blueprint for action" in which aggressive investor communications plays a central role. Breeden is the court-appointed monitor for MCI (formerly WorldCom), and his report is part of an effort to improve corporate governance at the embattled company.
Among the 78 recommendations, all of which must be legally implemented by MCI, are
electronic "town hall" meetings with shareholders.
Overall, the report focuses on increased transparency and more power sharing between senior management, the board of directors, and shareholders. MCI board members will have to be reelected annually, and shareholders will be allowed to nominate candidates.
Hollis Rafkin-Sax, Edelman's GM of financial communications, would not specify the extent of the firm's involvement in drafting the report, but emphasized that Breeden takes full responsibility for its content. "Our group has been dealing in financial disclosure and transparency," she added, "and that's very much a part of the issues we've discussed with [Breeden]."
Rafkin-Sax also said that each recommendation was considered and tested with a variety
of stakeholder audiences, "because unlike a theoretical recommendation, [MCI] needed
to implement it."
Media reaction to the report has been positive, she said, because it maps out a possible solution to transparency issues de- bated since the Enron scandal.
"These issues are very tied to IR," she said. "It's credible evidence that corporate governance matters. It's too dire to ignore."
When asked about those who say mapping governance regulations isn't the place for a PR firm, Rafkin-Sax said, "There's a very real need because perception drives reality. With Breeden's regulatory experience, we've been advising clients and going beyond what lawyers would do and say - saying that doing the bare minimum isn't enough."