According to Dennis Carey Management and Boards Must Work Together

As the dust begins to settle after the several governmental regulatory reforms of recent years, corporations can begin to refocus their strategies from compliance with new legislation and begin to push forward into the brave new world of developing strategies to increase value for shareholders and innovation and growth.

According to Dennis Carey, executive recruiter and corporate strategy consultant, it would behoove corporations to link the human capital of the board of directors to the long-term strategy created by management. This is the direction Dennis Carey would like to see the next wave of governance reform, and he believes this is the path to increased value for shareholders.
Carey bemoans the fact that although boards may approve a particular strategy, they have little role in developing and shaping that strategy.

As Dennis Carey puts it,

“Now that innovation and growth increasingly drive the top executive's agenda and major business trends emerge in the blink of an eye, strategically minded boards that forge close partnerships with management will prove to be the crucial difference between companies that create superior shareholder value and those that don't.”

Carey Advises to Let Chairman/CEO Combo Remain

Dennis Carey is a prolific writer of books and articles that have appeared in numerous respected locations including, The Wall Street Journal, Financial Times, The New York Times, and many more. Often Mr. Carey comments on current issues that affect the corporate world.

Recently, in May 2009, an article appeared in the Wall Street Journal in which Dennis Carey discusses the latest attempt in Washington to effect change in the corporate world and why this proposed legislation would be a mistake.

Dennis Carey clearly argues that the bill proposed by the Democratic Senator from New York which seeks to split the role of Chairman and CEO in public corporations "flies in the face common sense and proven results."

Siting the fact that over 60% of the largest American corporations have a combined position of Chairman/CEO and yet there is no observable difference between these companies' performance and those in which the CEO and Chairman roles are separated, Dennis Carey shows that changing this practice has not harmed American businesses. On the contrary. American companies seem to be doing quite well with this configuration of governance and management.

Good Financial News for 2010

Nearly two-thirds of the firms that froze salaries last year will begin offering their employees raises again in 2010, according to a new human resources report from Towers Perrin. While many companies cut out 401(k) matches last year, approximately one third of those companies plan to reinstate them this coming year.

Employees shouldn’t get too excited yet, however. Most of the companies that are reinstating these benefits are doing so slowly. 401(k) matches can be as high as 6% of the pay. Many companies, however, are going to see 401(k) matches that are half or less of what they used to be. Executive recruiters such as Dennis Carey hope that this will help with the recruiting process. FedEx, for instance, plans to give employees a match that is half of the earlier rate.

Other companies are actually moving to put employee achievements as the barometer for receiving salary increases, 401(k)s and more. Four out of every 10 employers say that in 2010 they plan to differentiate among employees during the salary review process. Some employees will end up getting raises and added benefits, based on performance, while others will not.

Choose a New CEO Now

According to Dennis C. Carey, author of CEO Succession, even at the very outset of the tenure of a new CEO, he should already be planning for his own replacement.

Although this might seem a misplaced priority among the many urgent tasks a new CEO must accomplish when taking over a company, Dennis Carey believes that because succession planning requires team-work and input from many sources, when it is accomplished at the beginning the new CEO’s term it can create a feeling of trust in the new CEO and a re-establishment of confidence in the company.

Carey continues to explain that even if the new CEO is not interested in planning for his own replacement, the board should make it a priority anyway. No one knows the future, and the sudden loss of a company’s CEO is always a possibility, even if it is a small one. In at least two prominent cases, the CEO of Tenneco and the CEO of Frontier, both died from a brain tumor. Although this was a rare and unforeseeable tragedy, having already have planned for the CEO’s replacement would have made the trauma less traumatic.

Sarbanes -Oxley Act Forces Boards to React

In 2002 the much lauded Sarbanes-Oxley Act was passed by the United States Congress. Another name for this landmark legislation is “The Public Company Accounting Reform and Investor Protection Act.” This longer title tells a lot about this law, named for its two sponsors, Paul Sarbanes, Democrat of Maryland and Michael G. Oxley, Republican of Ohio.

Considering that it was co-sponsored by members of both parties and won almost unanimous support in the Senate and House (99-0 and 423-3 respectively) it was a law whose time had come.
Dennis Carey has discussed in several places the need for corporations to comply and move forward in the aftermath of this far-reaching legislation. To quote President George W. Bush, who signed SOX into law on July 30, 2002, this law includes,

“the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt.”