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Weinberg Center panel on corporate reporting requirements
Moderator Charles Elson (standing, far right) introduces discussion participants (from left) John W. Noble, Robert Evans III, Eileen Cohen, Cynthia Fornelli, Sharon Virag, Douglas Maine, Margaret Foran and John White.

Corporate disclosure

Photo by Kathy F. Atkinson

Expert panelists discuss role of boards of directors

With shareholders increasingly concerned about issues from environmental sustainability and diversity to cybersecurity, succession planning and corporate culture, boards of directors are paying more attention to their role in the disclosure process.

That was the topic of discussion by a roundtable of experts who spoke at the University of Delaware on Oct. 24.

The event, titled “Telling Your Company’s Story: The Board’s Role in Disclosure,” was co-hosted by UD’s John L. Weinberg Center for Corporate Governance and the Center for Audit Quality, a nonpartisan, nonprofit public policy organization.

The eight roundtable participants—including those representing investors, boards of directors, management, regulators, the legal community and the judiciary—shared their views on questions of how and when a board should get involved in the disclosure process and what shareholders expect.

The discussion was moderated by Charles M. Elson, director of the Weinberg Center, Edgar S. Woolard Chair in Corporate Governance and professor of finance at UD.

Disclosure, the speakers agreed, goes beyond financial reporting to encompass non-GAAP (generally accepted accounting principles) measures as well. Recent attention from regulators, shareholders and others has focused on the board’s role in telling a company’s story through disclosure oversight and engagement.

Elson introduced the discussion, noting that the point of disclosure should not be an end in itself but should be to educate investors.

“There’s an obligation to keep your shareholders informed,” he said.

Panelist John W. White, a partner in Cravath, Swaine and Moore’s Corporate Department, said a board’s legal, fiduciary responsibilities are very straightforward but that there’s a need to go further.

“If you want disclosure that is robust and fair and responsive to investor demands … the board must set the example” for management, he said.

Cindy Fornelli, executive director of the Center for Audit Quality, and co-sponsor of the roundtable, elaborated.

“If you want better disclosure and the SEC is trying to make it so that companies have more freedom to disclose the information that is important to investors at that point in time, the board has to take responsibility for some of that,” she said.

The kind of disclosure that a board can and should support is innovative and transparent in addressing shareholder concerns, said Margaret M. Foran, chief governance officer, senior vice president and corporate secretary of Prudential Financial Inc.

“They [investors] want us [the board] to explain things in terms they can actually understand,” she said, adding that boards can view disclosure as more than a report. Rather, she said, it can be a communication opportunity and a “powerful tool” for engagement.

Other panelists raised questions of how directors can learn to feel comfortable overseeing disclosure and find the time to devote to it. Investors also can be overwhelmed by receiving a large amount of extremely detailed information they may not consider necessary, some speakers said.

“We risk overloading the investor community,” said Eileen Cohen, managing director with JPMorgan Asset Management. On issues such as environmental stewardship, diversity, cybersecurity, succession planning and corporate culture, most investors focus their attention on risk, she said, urging better, not necessarily more, disclosure.

Panelist John W. Noble, former vice chancellor of the Delaware Court of Chancery, noted that under Delaware law, boards have an oversight function and must rely on management, corporate counsel, accountants and other experts for input.

“They can’t do it all themselves, but they need to get involved,” he said. “The board needs to set the tone.”

Participants in the discussion were:

• Eileen R. Cohen, managing director, US equity, JPMorgan Asset Management;

• Robert Evans III, chief of the Office of International Corporate Finance, Division of Corporation Finance, Securities and Exchange Commission; 

• Margaret M. (Peggy) Foran, chair of the Occidental Petroleum Compensation Committee and chief governance officer, senior vice president and corporate secretary of Prudential Financial Inc.;

• Cynthia M. Fornelli, executive director, Center for Audit Quality;

• Douglas L. Maine, limited partner and senior adviser for Brown Brothers Harriman and Co.; director, Audit Committee chair and member of the N&G Committee, BroadSoft Inc.; and director and member of the Audit and N&G committees, Albemarle Inc.;

• The Honorable John W. Noble, partner, Morris James LLP and former vice chancellor, Delaware Court of Chancery;

• Sharon A. Virag, vice president, controller and chief accounting officer, Aetna; and

• John W. White, partner, corporate department, and chair of corporate governance and board advisory practice, Cravath Swaine and Moore LLP.


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