Director, educate thyself.

• Author: SISCO, JEAN HEAD
• Position: Board member training; Jean Head Sisco speech - Brief Article - Excerpt - Transcript

`Continuing education for directors -- we need it now more than ever.'

Ed. Note: Jean Head Sisco, who received the 1999 Director of the Year Award from the National Association of Corporate Directors, died this past April. A tribute to her in the NACD's Director's Monthly newsletter called her "the epitome of directorship...she was widely considered to be a model independent director, and a master in the art of chairing independent compensation and audit committees in large, complex organizations." Over the course of a distinguished career as a retail executive and a consultant, she served on 22 corporate boards, including most recently Chiquita Brands International, K-Tron International, Neiman Marcus Group, and Textron.

When she received the NACD award at a ceremony in Washington, D.C., in October 1999, she spoke of her concerns about the continuing problem for boards of corporate fraud, and, as an antidote, proposed mandatory education for directors. Excerpts of her remarks follow.

THE PESSIMISTS say that fraud is a matter of human nature, and you can't change that. In fact, at a recent World Bank meeting on global corporate governance, someone in the audience said the whole governance cause is hopeless because "the World is full of liars."

The optimists may say that as long as we have full disclosure, investors can decide for themselves. In my opinion, the solution does not lie in more disclosure. Our investing public and corporate directors are overloaded with disclosure.

I am neither a pessimist nor an optimist. I believe that I am a realist. So what is my solution?

I believe that the solution lies in carefully selected and better trained directors. Directors who are truly independent, who realize their obligation to the shareholders, who are willing to devote the necessary time and attention to their duties, and who insist that management provide them with the necessary information and resources to perform their tasks.

Over the three decades that I have served on boards, there have been many positive steps taken to make directors more effective. For a number of years organizations such as NACD have offered seminars, reports, and other publications to better acquaint directors with their roles and responsibilities. Many educational institutions have corporate governance curriculum. The legal and accounting professions have counseled their clients and their boards on director obligations as well as regulatory compliance. Shareholder...