Diversity, Unintended Consequences And Proxy Voting

Friday, April 1, 2005 - 01:00

With Part III, we conclude this year's Special Report On Diversity with an update on page 45 on the important work being done by the Minority Corporate Counsel Association by its Executive Director, Veta Richardson, including support for a Call to Action (already signed by 80 chief legal officers) in which they pledge to assign less work to law firms that demonstrate a lack of interest in diversity.On Page 46, Mark Stewart of Ballard Spahr describes why that firm is a "Star In The Dupont Network."On page 47, Gerald Pauling and Karen Harris of Seyfarth Shaw describe how law firms should go about improving their diversity strategies.

Our free enterprise system thrives on innovation and risk taking.Corporations are one of its most important participants.Their success depends on the willingness of private individuals to invest their time and money in making them successful.Every time a wave of corporate scandals emerges there is a rush to impose remedies.It is timely for corporate counsel to consider whether the post-Enron reforms have had unintended consequences that need to be addressed.

These unintended consequences could include impairing your company's ability to recruit the most talented individuals as outside directors, generating unmeritorious civil and criminal litigation against your company, weakening your company's ability to defend itself against such litigation, imposing unnecessary compliance costs - and even threatening your company's very existence. You can learn more about these issues by reading on page 76 the interview of Bill Ide, former general counsel of Monsanto and past president of the ABA and now with McKenna Long & Aldridge LLP, and by attending the GC Conference on May 10 and 11 mentioned in his interview.

One of the responsibilities of fiduciaries holding stock is to vote that stock in a manner consistent with the best interests of the beneficiaries. Most corporate counsel are unfamiliar with the fact that there is a high likelihood that the shares in their pension plans are being voted on the basis of recommendations of consultants who may give more weight to doctrinaire principles than to increasing long term shareholder value.On page 44, we interview Jim Melican, a corporate governance leader and former executive vice president of International Paper, about PROXY Governance , Inc., a new proxy advisory firm which has the right kind of bias - a bias toward corporate performance.

Al Driver

Editor