July 12, 2005

Truce in the Disney Boardroom: But Is Having a Director Emeritus Good Governance?

As noted in this article, the Walt Disney Company and former directors Roy Disney and Stanley Gold have reached a truce in their ongoing battles. Roy and Stan have agreed not to run a slate of directors or submit shareholder resolutions for the next five years, as well as drop the CEO succession lawsuit that the Delaware Chancellor Chandler recently refused to dismiss. The two also pledged to back the leadership of new CEO Robert Iger.

In exchange, Roy Disney has been named a director emeritus and a consultant to the company. In addition, the company reaffirmed to rotate members of the board’s committees, as currently required by the company’s corporate governance guidelines.

From a governance perspective, the problem with this arrangement is that serving as a director emeritus is not necessarily good for other shareholders. Even though Roy will be a presence in the boardroom – and may impact decisionmaking there – he will not owe any fiduciary duties to shareholders nor will shareholders have an opportunity to withhold votes against him (i.e. the equivalent of voting against) if they don’t believe he is performing or the right person for the job. Perhaps this is why so few companies have honorary directors serving on their boards.

According to an article in Corporate Board Member a few months back, The Corporate Library reports that 107 former board members currently hold the title of emeritus or honorary director, compared with 60 in 2003…but that’s just those companies disclosing the existence of emeritus directors (as the SEC’s regulations don’t require disclosure of these non-voting positions in proxy statements or otherwise). This illustrates a growing trend – but the number is still quite small considering that there are over 15,000 reporting companies.

How You Should Respond to the Latest Whistleblower Developments

In this podcast, Tom White and Carrie Wofford analyze the latest developments in the whistleblower area and provide some practice pointers on what you should now be doing, including:

– What types of action has the Department of Labor’s Occupational Safety and Health Administration been taking?
– How can companies challenge the preliminary order of reinstatement?
– What has been the DOL’s reaction to these challenges?
– What should companies be doing to review existing non-retaliation policies?
– How can they plan to handle any future employee complaints of corporate wrongdoing? Or handle a current complaint by an alleged whistleblower?

Meeting the New Compliance Standards

Today, join us for a webcast – “Meeting the New Compliance Standards” – during which a panel of compliance experts provide practice pointers on how to best develop a compliance program to meet the new US Sentencing Guidelines, with a focus on the challenging cultural requirement in the Guidelines.

If you do a lot of compliance, you know these panelists are leaders in the compliance field: Jeff Kaplan of Stier Anderson; Steve Priest of the Ethical Leadership Group and Tom McCormick of The Dow Chemical Company.