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Thursday, September 14, 2006

New rules encourage battles in boardroom

The spying scandal at Hewlett-Packard has provided a rare window into a normally private, august institution -- the corporate board of directors.

It revealed an HP board wracked by turmoil in recent years. There was the battle led by a board member to stop the firm's merger with Compaq Computer. Then came the board's ouster of Carly Fiorina as chief executive. And now the snooping debacle.

Some say the contentiousness of HP's board is emblematic of an era when boards are being held more accountable. Under the Sarbanes-Oxley Act of 2002, companies and boards have to comply with a host of new financial and governance rules. Companies also face more shareholder activism and a movement toward more independent, outside board members. In this new environment, board controversy and dissent are more likely -- and scrutiny of boards has become intense.

Well before the HP scandal erupted last week, directors had been under growing pressure to prove themselves worthy of the job or face shareholder wrath. The fallout from Enron and changes in laws affecting boards and companies have increased the pressure on boards.

posted by Brian Moran @ 10:12 AM   0 comments

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