The Institute for Excellence in Corporate Governance hosts its first 
seminar series on the implications of the Sarbanes-Oxley Act


A blue-ribbon panel of experts at the debut seminar of The School of 
Management's new Institute for Excellence in Corporate Governance (IECG) 
offered insights into federally legislated changes affecting the way 
public companies and securities markets operate and make financial 
reports.

Some 70 participants attended the January seminar, "Compliance and Beyond: 
Restoring Public Trust by Building an Effective Organization," the first 
in a series the institute is offering on the far-reaching impact of the 
Sarbanes-Oxley Act of 2002.

The keynote address at the January 20 event came from general counsel and 
associate vice president of the Nasdaq Stock Exchange, David A. Donohoe 
Jr. Mr. Donahoe outlined changes Nasdaq has made to comply with Sarbanes-
Oxley and observed that "the problem of lack of vigilance had to be 
exposed."

Other top speakers included the retired CEO and chairman of Deloitte, J. 
Michael Cook, and businesswoman and former U.S. Secretary of Labor Lynn 
Martin. Ms. Martin said she still believes "that the biggest changes that 
could occur in this century are going to come from business."

IECG Executive Director Dr. Constantine Konstans, who is also a School of 
Management professor of accounting and information management, said the 
seminar was intended to help companies find solutions to issues related to 
new rules for corporate governance.

Congress passed the Sarbanes-Oxley Act, which overhauled the ethical, 
legal and leadership obligations of corporate authorities, following 
financial scandals that included WorldCom and Houston-based Enron. In part 
to bolster shaken public confidence in the nation's capital markets, the 
act has imposed new duties--as well as significant penalties for 
noncompliance--on public companies and their executives, directors, 
auditors, attorneys and securities analysts.

General consensus points of the seminar, a mix of panel discussions and 
keynote speeches, included disappointment that legislative intervention 
was necessary but conviction that investor trust can be restored. 
Participants concurred there is a critical need to educate corporate board 
members about the vagaries of their particular business sector. They also 
expressed concerns that stringent new requirements placed upon board 
members may reduce the number of qualified people willing to serve on 
boards.

In a seminar welcome, School of Management Dean Dr. Hasan Pirkul iterated 
the "tremendous responsibility" corporate boards have in the wake of such 
recent confidence-wrenching debacles as Enron and WorldCom.


Lynn Martin: Tough talk for CEOs and boards of directors 

Former congresswoman and secretary of labor in the first Bush 
administration and current corporate board member Lynn Martin said that 
legislative intervention was necessary but noted, "If we, as businesses, 
had taken care of ourselves, we wouldn't have needed Sarbanes-Oxley.

"We didn't stand up to CEOs and Wall Street enough," she said during the 
seminar's luncheon address.

Ms. Martin serves on the boards of several public companies (see A Seminar 
Who's Who on page 23), is a member of the Council on Foreign Relations, a 
trustee to the Midwest Region of the Boys and Girls Clubs of America, and 
formerly taught at the J.L. Kellogg School of Management at Northwestern 
University. Her varied experience gives her unique insight, from several 
perspectives, into governance issues.

"I think we worry way too much about our CEOs," she said. "What if they 
leave? Good-bye. I do not worry....If we can replace a president of the 
United States every four to eight years, could it be possible we couldn't 
replace a company president?"

Ms. Martin also pointed out that despite their fiscal and financial 
responsibilities, boards of directors are not managers, and that one thing 
"we have to be careful about with the new rules is that boards not start 
thinking that they have the power to run the company." Directors should, 
however, "be part of the strategic efforts and setting the ethos of the 
corporation," she said.


David A. Donohoe Jr.: Creating standards, not just guidelines

Nasdaq General Counsel and VP David A. Donohoe Jr. pointed out that stock 
markets have taken it upon themselves to adopt many measures to help bring 
their listed members into Sarbanes-Oxley compliance. He spelled out 
Nasdaq's changes, implemented in May 2003, for the group. (For an overview 
of the Nasdaq changes, visit www.nasdaq.com/about/legalcompliance.stm.)

Soon after Enron, he said, Nasdaq examined "ways we could tighten our 
rules to enhance the role of independent directors and shareholders in the 
governance of their company. We wanted to adopt significant listing 
standards and not just "best practices' guidelines."

Although Nasdaq and the New York Stock Exchange took different approaches 
to the process, both markets still dealt with many of the same issues, 
including creating guidelines for shareholder approval of equity 
compensation, an expanded role of independent directors, and strengthened 
audit committees.

"Will we restore public confidence?" Mr. Donohoe asked. "We hope so. We 
need people with integrity, and that's something that comes [naturally] to 
most people, but we also need a structure that can help weed out those who 
don't want to play within the rules. Hopefully, the structure that we're 
giving issuers will help do just that."


The evolving board-of-directors landscape

Bill Hays, partner at IECG strategic partner firm Haynes and Boone, led a 
panel discussion of "The Role of the New Requirements in Enhancing 
Corporate Governance," with panel members offering their personal insights 
into the evolving board-of-directors landscape.

Independence, education, compensation issues, the need to define distinct 
roles of chief executives and directors, and the need for involved 
directors drove much of the discussion.

Joseph F. Hubach, senior vice president, secretary and general counsel for 
Texas Instruments Incorporated, noted that it can be difficult for 
directors to understand the vagaries of the technology areas in which his 
company operates, and it is incumbent on Texas Instruments to fully 
educate them so that they can participate in strategy discussions.

"We spend several days of presentations plotting competitors, our business 
and goals so that they will have a rich understanding of the company," he 
said.

Bottom line, even the best guidelines are folly if not adhered to, noted 
Greg Samuel, partner at Haynes and Boone. "The Enron committee policy was 
golden, a beautiful piece of work. The problem was, it wasn't followed."


Holding to high standards

Ms. Martin joined an afternoon session that explored ways to deliver 
business value beyond mandatory compliance. 

"I think we can ask management to hold to certain high standards," Ms. 
Martin said, adding that good directors are those who are willing to 
question themselves. When, years ago, some boards on which she served 
started internal reviews, "I thought it was a pile of junk," she said. "I 
was absolutely and totally wrong."  

In fact, the board of review process "made me a better board member," she 
said.


Business should take the lead

The final panel, led by Jay Chappell, vice president at IECG strategic 
partner firm Marsh, Inc., examined the impact of Sarbanes-Oxley on 
liability issues and the organizational and personal risk that directors 
and senior officers face.

In the final analysis, Ms. Martin noted that, post-Sarbanes-Oxley, 
businesses have more responsibility than just restoring public confidence. 
"Government doesn't have all the answers to the changing challenges facing 
our society," she noted, and business needs to take the lead in many 
areas.

The IEGC seminars "are designed to move beyond basic compliance issues, to 
explore how continued investment in governance processes can increase the 
value of any organization to its stakeholders," Dr. Konstans said.

The next IECG event, the workshop "IT and Internal Audit for Directors, 
Corporate Officers and Institutional Investors," is scheduled for 
September 9. 


Lynn Martin: Realist and Optimist


Lynn Martin, former congresswoman and labor secretary under President 
George Bush, serves on the boards of Dreyfus Funds, Procter & Gamble 
Company, Ryder System, Inc. and SBC Communications Inc, and on the 
International Advisory Council of Coca-Cola.

The featured luncheon speaker at the first IECG seminar, she spoke on "The 
Role of the Director in Facilitating Change" and made it clear she thinks 
corporate rules apply from the top down: "If the giants in your company 
ask to be exempted from ethics rules, wouldn't somebody [say,] "I don't 
know why, but that strikes me as a wee bit odd?' The people at the top 
have to be the last exempted from anything. We all know that's about 
management and leadership."

In an afternoon panel discussion on "Moving Beyond Compliance," Ms. Martin 
observed that the process of internal board reviews--boards of directors 
reviewing themselves--"is becoming common currency," and that "is a step 
forward."

She expressed the wish that more Americans would serve on boards but 
added, "I think there will be fewer and fewer" as a result of Sarbanes-
Oxley. "The demands and stakes are high, and so are the barriers.  And 
they probably should be."

Her view that business needs to take a leading role in society is based in 
part on what government already has accomplished. "The government has done 
much of what it can about gender, race and the kinds of differences that 
tear us apart," she said. "So the thinking was that business, which would 
be looking at merit and end results, would be much more likely to be doing 
the kinds of things that I would think as Americans we wanted to do."

But the impetus for business to take charge "has now been pushed back," 
she said, "because they don't believe business out there anymore. It 
doesn't matter how much we tell them how good we are and that these 
problems stemmed from but two of two billion. They count the two. When we 
talk today about rebuilding the confidence, whether it's with firms, 
accounting, or lawyers, there is an enormous lack of belief and trust out 
there."

But she remains undaunted. "I still have great confidence in us," she 
said.

Her certainty is based, in part, on personal experience. "I have said that 
going on boards was the fastest learning curve I've ever been on," she 
remarked.

"Having said that," she added, "I will say that boards, in the main, and 
business-men and -women do not like politicians much. And the reverse is 
also true."

That tension is probably useful, she noted, but only if the two sides come 
to really understand each other's processes and the complexity of concerns 
on which they have to work together. 


Businesswoman Lynn Martin, a former congresswoman and secretary of labor 
under the first President Bush, made it clear in her luncheon speech that 
she believes corporate rules apply from the top down


A Seminar Who's Who

The strategic partners of the Institute for Excellence in Corporate 
Governance are co-sponsoring the series of seminars on the Sarbanes- Oxley 
Act that began with "Compliance and Beyond: Restoring Public Trust by 
Building an Effective Organization" on January 20. The strategic partners 
are Bank One Corporation; Deloitte; Haynes and Boone, LLP; and Marsh, 
Inc., and they were joined by corporate sponsors Haggar Corporation, 
Lennox International, Inc. and Texas Instruments Incorporated, and 
institutional sponsors Texas General Counsel Forum, The Nasdaq Stock 
Market, Inc., and Financial Executives International-Dallas Chapter.

Featured speakers were David A. Donohoe Jr., Nasdaq general counsel and 
associate vice president; Lynn Martin, businesswoman and former U.S. 
Secretary of Labor (see Lynn Martin: Realist and Optimist on page 21) and 
J. Michael Cook, retired CEO and chairman of Deloitte, board member of 
AT&T, Dow Chemical Company, HCA--The Healthcare Company, International 
Flavors & Fragrances Inc., Rockwell Automation, and an independent trustee 
and member of the board of The Fidelity Group of Mutual Funds.

They were joined at three panel discussions by the following roster of 
moderators and panelists: 


"The Role of the New Requirements in Enhancing Corporate Governance"

Moderator: Bill Hays, partner, Haynes and Boone, LLP

Panelists: 
-  Joseph F. Hubach, senior vice president, secretary and general 
   counsel for Texas Instruments Incorporated  
-  Dale V. Kesler, a director for companies including Elcor Corporation, 
   Triad Hospitals, Snelling and Snelling, and IMCO Recycling  
-  Dr. R.J. Potter, a director for companies including Molex, 
   ZebraTechnologies Corporation, Cree and the American National Bank, and 
   former president and CEO of Datapoint and executive with Nortel Networks, 
   International Harvester and Xerox  
-  Greg Samuel, partner, Haynes and Boone, LLP

"Moving Beyond Compliance: An Opportunity for Board Members to Proactively 
Shape and Direct the Corporate Governance Process"

Moderator: Jim Goodfellow, partner, Deloitte

Panelists: 
- J. Michael Cook  
-  Ron Haddock, a director of the reconstituted Enron board; Elektro; Alon 
   Energy USA; Southwest Securities, Inc.; Adea Solutions, Inc.; SepraDyne, 
   and former CEO of FINA  
-  The Honorable Lynn Martin


"The New Reality of Risk--Risk Management and Insurance Issues Affecting 
Corporate Governance"

Moderator: Jay Chappell, vice president, Marsh, Inc.

Panelists: 
-  David Burr, assistant vice president, risk management, 
   Burlington Northern Santa Fe Corporation  
-  Lou Ann Layton, managing director, D&O national practice leader, Marsh, 
   Inc.  
-  Tom Keane, co-founder, president and COO, Corporate Diagnostics LLA.