Editor: Susan, tell us about your reporting relationships at Schering-Plough.
Wolf: I report to the general counsel in my role as Associate General Counsel. I work directly with the chairman of the board and the CEO in my role as Corporate Secretary and Vice President-Corporate Governance. I have substantial interaction with my board members, particularly the chair of the nominating and corporate governance committee of the board.
Editor: What role did you play in the change of the Society's name to refer to governance professionals as well as corporate secretaries?
Wolf: The idea took root during Peggy Foran's time as chairman. Kathy Gibson, my predecessor, actually accomplished getting the name changed. I was chair of the securities law committee at the time that was happening and followed the discussion of the name change quite closely. Securities law and its disclosure requirements are closely related to governance. I also attended Society board meetings and participated in the dialogue on the wisdom of the change. I strongly supported the change.
When we looked across our membership, we saw that we had many members who combined the corporate secretarial and governance functions or were senior staff members or lawyers who supported those functions. We felt that there were whole pockets of potential members involved with the governance and compliance functions who were misled by the name or didn't even know the Society existed or that they were eligible for membership. We knew the Society could serve them. Many of these folks were delighted when they realized that we could make them more effective in their jobs by providing valuable information and great networking opportunities. For example, we have recently added members from each of the Big Four accounting firms, who are active in our PCAOB subcommittee.
Editor: You were the first chair of the organization after the name change. What steps were taken to communicate that change?
Wolf: David Smith, our President, and his team at the national office did a fantastic job of rolling out a wide variety of interdisciplinary communications and activities that gave the new name traction right away with all of our key stakeholders. For example, we now refer to the governance function in the standard paragraph that prefaces our communications to the SEC about proposed rule making. We impress upon our members the need to let those involved with governance and compliance know that the Society can serve them. We look for as many other ways as possible to get the word out. For example, we interact quite a bit with organizations whose members include compliance and ethics officers and corporate and securities lawyers, including the ABA, Association of Corporate Counsel and state and local bar associations.
Editor: How would you like the year you served as chairman to be remembered?
Wolf: As the year when (1) we focused on our own governance, (2) took a careful look at our committees, defined their responsibilities to cover new ground - and defined existing functions with more precision, and (3) created an important new committee, the committee on listing standards. The ground was laid for this at a board retreat in Chicago this past November. I am lucky to have a strong, hard-working board during my year as Society Chairman, and they made it possible to accomplish a lot.
Editor: What did the Society do in response to the priorities identified at the retreat?Wolf: When we considered our own governance at the retreat, we realized that, as an organization that helps companies achieve excellence in corporate governance, we should be concerned about our own governance. We are very fortunate in having Rich Koppes of Jones Day on the Society's board. Rich is an internationally known thought-leader in corporate governance. He led our effort to perform a corporate governance check-up on the Society. As a result of a very robust discussion at the retreat led by Rich, we amended our bylaws to make some of our board practices more transparent and changed the requirements for directors' terms.
The second highlight related to our substantive committees. Coming out of the retreat was a recommendation that the board approved to change the responsibility statements for our national committees to better reflect the services that those committees provide. The retreat also triggered the creation of a fourth national committee, our new committee on listing standards.
Editor: Tell us about the changes in the committee responsibility statements.
Wolf: The long standing role of our securities law committee has been to serve as the advocate for our members with respect to issues relating to the SEC and the PCAOB. We changed its responsibility statement toreflect that role. It now clearly states that the committee is the source of expertise within the Society about the securities laws and the disclosures that they require, whether it is a disclosure in the proxy statement relating to executive compensation, compliance with regulation FD or what constitutes best practices in providing information to analysts. The chair of the securities law committee is Pauline Candaux of CIGNA.
We also restated the responsibilities of our public company affairs committee. We highlighted two new areas. First, we provided that this committee takes leadership on issues having to do with shareholder communications. This includes, among other things, commenting on issues before the commission relating to the NOBO/OBO rules, best practices for communicating with record and beneficial shareholders and responsibility for issues relating to the mechanics of how companies interface with all of those vendors that our members hire to get materials to their shareholders.
In addition, we assigned responsibility to the public company affairs committee for matters relating to proxy voting and governance rating organizations. These organizations impact how proxies are voted and can have a significant effect on corporate reputation. The public company affairs committee is charged with building good relationships with such organizations as ISS, Glass Lewis and Proxy Governance Inc. on the proxy voting side and with S&P, Moody's, Governance Metrics, Corporate Library, ISS/CGQ and others on the corporate governance assessment side. We hope to build relationships with these organizations that encourage them to be responsive when we identify issues of concern that are common across our membership. We also want to better understand how these organizations operate - and push that information out to the members of the Society. This is a fresh new area that the Society had not focused on before and responds to a need that many of our chapters had identified. People are hungry for information about how to handle a request for information and cooperation from these organizations. For example, what should a member company do if S&P wishes to do a corporate governance check-up that involves interviewing board members and members of senior management and the submission of data, including copies of minutes? Should you be cooperative? Of course, the Society thinks so, because we favor transparency. We try to give our members some guidance as to best practices in handling such a request so that they can show the best side of their companies to the rating organization. Knowing what other companies have done that has proved successful is essential. Cary Klafter of Intel chairs the public company affairs committee.
Our corporate practices committee, chaired by Lydia Beebe of Chevron, focuses on how the board functions. It considers, among others, such crucial matters as: What committees should a board have? How many board members? How should the board be compensated? Should board members talk directly to shareholders and should management also participate in those talks? What is the best way for the board to interact with shareholders at the annual meeting? What should be included in the minutes - is a short form or a long form preferable? How do you best communicate with your board about directors' liability, D&O Insurance and corporate indemnification? How do you recruit directors?
Editor: I understand that another outcome of the retreat was the creation of a new and very important national committee.
Wolf: Yes, it is the committee on listing requirements chaired by Carol Hays of The Coca-Cola Company. This new committee looks at what is required of listed companies by the NYSE and NASDAQ. The committee is charged with drafting comments to those organizations about proposed rules or interpretations under existing rules. It also will provide information to our members about best practices for keeping current on the requirements and various methods for complying with the requirements. We hope, through this new committee, to build the kind of mutually respectful relationship with the leadership and the staff of the NYSE and NASDAQ that the securities law committee has with SEC and PCAOB.
We are so fortunate to have a leader of Carol's quality who is willing to forge new ground because it is always hard to start up a new function that had not existed before. We are just so grateful and excited that she has made time to step up to this leadership position.
Editor: Each of the committees you mentioned has a full plate. It seems as if the concept behind defining more specifically the roles of those committees was to encourage them to emulate the success of the securities law committee, which you chaired until you were appointed chairman of the Society. Tell us a bit more about the role of that committee.
Wolf: As you probably know, our securities law committee has for decades effectively communicated issues of common interest to the SEC's staff, particularly to the Division of Corporation Finance. For example when a new rule is proposed, the committee serves our members by providing the SEC staff with useful data about the impact of a proposed rule and may suggest changes which will facilitate its real world application - the committee looks at the "nits and grits" - practical kinds of issues from the standpoint of those in the trenches. Unlike its colleagues at the ABA, it is very rare for the committee to comment on legal issues like whether a proposed rule is within the jurisdictional reach of the Commission or properly reflects legislative intent. The committee instead focuses its work on practical issues about how those inside companies comply with the legal requirements. The committee takes on questions that have a big impact on companies, like: "What practices can companies use to implement this proposed regulation?" "Are there easier ways to carry out the SEC's intent?" "Can the same regulatory goal be achieved at less cost or administrative burden to companies?"
The securities law committee also pushes out to members of the Society information about new SEC rules or reinterpretations of existing rules, as well as best practices for complying with them. These services are particularly important to our small company members who may not have multiple specialists on their in-house legal staff and rely heavily on the Society and outside counsel.
During the time I chaired the securities law committee, we set up the PCAOB subcommittee of the securities law committee soon after the PCAOB was formed. Marie Oh Huber of Agilent Technologies was the Chair at the time, and Stacey Geer of BellSouth now chairs that subcommittee. Both have done a fantastic job at making this committee very effective, in a new regulatory area that has had a big impact on U.S. companies. The PCAOB subcommittee is developing the same kinds of relationships with the PCAOB commissioners and staff that the securities law committee has established with the SEC - including interfacing with the PCAOB staff on an ongoing basis, commenting on proposed PCAOB rules, and giving members information about the rules and methods of compliance.