Dr. Earl R. Smith II

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

One of the most commonly ignored conflicts in corporate governance is that between the role of the CEO and the one of Chairman of the Board of Directors. In some companies, this conflict is papered over by giving the same person both roles. This arrangement not only degrades the ability of the Board to meet its fiduciary responsibilities to the share holders – it also is an indicator that a Machiavellian culture has taken root within management and that the Board has ceded its responsibility – in direct terms, is acting negligently. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Professional corporate governance demands the organization have a succession plan in place. It must allow for an orderly transition of power and authority. The plan must anticipate the retirement, incapacitation or death of members of the senior management team. It should also anticipate the possibility that the board might have to change management leadership. The Succession Committee formalizes the strategic succession plan and makes recommendations to the full board of directors. Sarbanes-Oxley requires this for public companies but most privately held companies have recognized the importance of an orderly transition and have adopted some type of formal succession plan as well. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Talent and leadership are commodities and as such react to the pressures of supply and demand. As baby boomers age, the supply of talent has become somewhat lower. Some far-sight companies began preparing for the inevitable exodus of talent many years ago and instituted effective coaching and leadership development programs. Companies that did not or could not take this approach are finding the best way to attract new board members to their board of directors is by means of increased compensation. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

The board of directors has a fiduciary responsibility to protect the assets of the company they serve. Good governance involves the use of insurance for various predictable risks. Some companies opt to self-insure for some risks, a strategy to employ when a company has a large number or employees or a large amount of control over the activity they are self-insuring against. If a company chooses to purchase insurance against risk, a good understanding of the policy chosen is important. In today’s litigious society, a company, CEO or corporate director cannot afford to be without coverage. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.comRead the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Business risk too often is defined very narrowly and only in the context of the business plan and establishing credit. Business risk is much broader extending to probable material effects of events on a businesses’ ability to achieve established strategic goals. Professional governance will be concerned with business risk in the broadest sense and establish strategic plans to identify and mitigate risk. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

My work with boards – both for-profit and non-profit – often involves an assessment of a search for new leadership. Strong, focused leadership is an essential part of any organizational success. This is as true for boards of directors as it is for senior management teams. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

General liability insurance coverage will not cover claims for errors and omission and neither general liability nor errors and omission policies will cover mismanagement or director misconduct. Businesses operating without any one of these types of policies are seriously under insured. Boards of directors should provide errors and omission policies as well as directors and officers policies as a protection to the stockholders of the company, as protection from personal liability for themselves and as a tool for the Succession committee to use in the recruitment of new directors to the board. Most seasoned executives insist on being covered by directors and officers policies and errors and omissions policies prior to agreeing to serve on the board. No matter how much a person believes in the company, the organization or the strategic plan, they should not be asked to risk their personal assets in service to the organization. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Leadership is a critical factor in the functioning of a well-organized board of directors. Every board (organization) should strive to diversify the composition and have overlapping layers of expertise to call upon in any given situation. Good governance stresses the need for each director to attend seminars to enhance their leadership development skills. CEO’s engage their senior managers in one-on-one and peer-to-peer coaching programs to prepare for an orderly transition of power. Succession committees meet regularly to identify future talent and future skills the company will need to train or recruit for as the company moves through the business cycle. All of these efforts address the issue of leadership. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Board of director responsibilities are increasingly being scrutinized in the face a new round of financial mismanagement and high profile corporate failures. The Sarbanes-Oxley Act of 2002 attempted to address many issues to inhibit corporate finance mismanagement, however many corporations did not correctly align directors pay with both appropriate corporate financial management and with reaching the corporation’s strategic goals. Corporate director’s actions, loyalties, corporate director pay, and ethics are being reviewed. This process is driven by issues raised by Congress and the media. Read the rest of this entry »