A Publication of WTVP

The world is in financial turmoil, and America is in
the middle of a still-spreading economic contraction-some say it will be the
worst since the Great Depression. The $700 billion financial rescue plan is now
the law of the land, but we don’t yet know if it is enough or how long it will
take to right ourselves; some are talking 2010 and beyond.

Snap judgments are already being made by politicians about
where to assign blame. With the glaring exception of anyone associated with the
Bush administration, do not expect anyone within the Beltway to accept any
culpability for America’s

What you can expect is that leaders in the private sector-and,
that will certainly include corporate board members-will figure prominently
among the suspects to be hauled in for interrogation before the "Peoples"
committees and subcommittees on Capitol Hill. Candidates of both major parties
have made it amply clear that the guilty will be admonished, judged, and
summarily punished-all in the course of the same afternoon, if possible. For
those able to escape actual prosecution, public spirited trial lawyers will
ensure the "guilty" are made to pay.

All of this may sound disturbingly Kafkaesque, but the
message is already coming through loud and clear: rampant greed, a lack of
regulation, poor corporate governance and oversight all helped to precipitate
this calamity. Only more, much more, regulation and strictly mandated corporate
governance can restore order in the face of a greedy capitalist calamity.

In fact, the verdict is already in. The American public
believes that the international market meltdown was the inevitable result of
poor management at many levels, including corporate boards sound asleep at the

Indeed, for better or for worse, boards are squarely in the

Boards have already been under relentless pressure for
granting big pay packages to underperforming CEOs. Now, directors are coming
under fire for what politicians and the news media have convinced the public
was precisely the kind of lax oversight that led to Enron and the enactment of
Sarbanes-Oxley in 2002 and all that followed. Apparently, none of this
government-mandated governance was sufficient to keep the corporate "crooks" at
bay. But Congress in its wisdom will not be as lenient this time around.

With the world in crisis mode, how can boards navigate this
unprecedented terrain? Never in the past seven decades has there been such
urgency for management and boards to work together to achieve real transparency
and accountability.

What Should Boards Do

The CEO, in particular, and the board of directors must
project an air of calm, stable management. Senior executives and the board must
be in alignment during this difficult time. There are a number of strategic
moves that can and should be made make now.

If practical, consider establishing a special committee of
independent directors to help the company navigate the crisis and determine
remedies. The lead director should head this effort.

Ideally, a board-management crisis communication plan should
have kicked in by now. (If there isn’t a plan, it is not too late to create
one.) The board and management should be in daily contact, certainly with the
lead or presiding director and the special committee. The company should know
where to reach key directors (chairs of the audit and risk management
committees, as well) at a moment’s notice. Make use of additional layers of
communication, including videoconferencing, texting, conference calls and other
methods. Be mindful that all such records are discoverable.

The lead or presiding director should be taking a very
active role, passing key information to the rest of the independent directors
and relaying board concerns to management. Now is not the time for directors to
be out of touch.

Areas in which the board can take a leadership role:

Risk Management

Expenses &

Board Structure &

Boards should look upon the economic crisis as an
opportunity for a comprehensive scrutiny of the company’s corporate governance.
These actions must be fully disclosed to the company and beyond as new rules of
governance going forward. If they’re perceived as window dressing, everyone
will suffer, from management and the board to shareholders, customers,
competitors, employees and others. The loss in goodwill would be incalculable.

By word and deed, management and the board must establish a
shared mission and convey to all that they are in it for the long haul and
that, together with all constituents, they will weather this storm.