If SOX isn’t working ten years later, then let’s not make things worse

Maybe I’m in a mood but this particular article on the already over-saturated topic of Sabarnes-Oxly ten years after the fact really prunes my petunias…

I’m sure Mark Rogers is a smart guy and I’d like to think his intentions are pure. But if SOX isn’t working ten years later, then let’s not make it worse by setting term limits, limiting the number of company boards upon which a director can sit or making up some sort of continuing education requirement.

Let me ask you this:

Does arbitrarily forcing a qualified director who has effectively served in his/her post to step away from the company help or hinder a company’s ability to execute its long-range growth agenda and best protect the interests of investors?

I find it hard to believe it would do anything but hinder the company and hurt investors. Unlike the justices on the Supreme Court, company directors do stand for re-election regularly. Therefore, they are already limited to the term for which they were elected as there is no guarantee that investors will support his/her re-election or that the governing body itself will ask this director even to stand for re-election. If the director is performing well and bringing the unique skill set that is sought by the governing body (not to mention has accumulated the specific company insight and market knowledge to serve in this capacity), then why in the world would we categorically decide how long a company and its investors can benefit from this individual’s involvement? Governance is not a one-size-fits-all solution… at some point, we have got to learn that such broad-stroke, “easy” button solutions do not work. In fact, they can actually hurt more investors than they help.

Does deciding for an individual how many boards he or she can sit on help or hinder a company’s ability to execute its long-range growth agenda and best protect the interests of investors?

Again, I don’t see how it helps a company or its investors to shrink the pool of qualified director candidates (particularly if we’re also going to limit how many terms a director can serve). This is a decision that needs to be made on a case-by-case basis by investors and the governing board (and, to a lesser extent, the individual director). If he/she isn’t performing because he/she is over extended, then the board and/or the investors can take the necessary actions. In fact, there’s already a name for this process – it’s called the Annual Meeting of Stockholders. Perhaps what we need is legislation that forces… errrr… encourages… investors to read the company’s proxy statement, ask questions, and then – *gulp* – actually cast their vote.

As for continuing education… I love Mr. Rogers’ use of “almost” in this sentence: “In almost every major profession there are continuing education requirements set forth by the applicable licensing body.” Love the subtly of that sentence… makes it seem so overwhelmingly obvious without actually stating a definitive fact. In many ways, it’s “almost” a good point.

Listen, I’d love to change the world too but at least I know I don’t know what to do. Well, I know what not to do… so that’s a start…

What would you do?