The verdict on SOX: full adjustment; As the Sarbanes-Oxley era marches on, veteran board counselors Richard Beattie and John Finley render judgment on the law that was thrust on Corporate America five years ago.

• Author: Dysart, Theodore L.
• Position: HEIDRICK & STRUGGLES GOVERNANCE LETTER - Interview

FOR ALMOST four decades, Richard Beattie has been an integral, behind-the-scenes player in of some of Corporate America's most significant boardroom dealings. As a longtime partner, and now chairman, at the law firm of Simpson Thacher & Bartlett LLP, Beattie has advised on such high-profile mergers as AOL-Time Warner and J.P. Morgan Chase-Bank One. In addition, he has counseled many boards on governance issues, and currently serves as a director of Harley-Davidson Inc. and Heidrick & Struggles International Inc.

Likewise, John Finley is a partner in Simpson Thacher's mergers and acquisitions group. He is especially well-versed in the boardroom dealings that go into private equity acquisitions. In recent years, he has been involved in the Kmart-Sears merger, the Toys "R" Us private equity deal, and other high-profile moves.

Ted Dysart (pictured at left) is the managing partner of the Americas Board of Directors Practice at Heidrick & Struggles. Here, five years into the Sarbanes-Oxley (SOX) era, he interviews Beattie and Finley on SOX's effects so far on boards, directors, executives, and shareholders.

In the five years since SOX, what have been the most significant changes for boards?

The most significant change for boards in these past five years is the additional time spent on oversight and process, especially by the audit committee and the nominating and governance committee. The related stock exchange reforms have also engendered a culture of independence that has empowered boards by moving certain responsibilities from the CEO to boards, and that has required more time.

How have the demands on individual directors changed?

The key demand is the time and attention required to fulfill the enhanced oversight role. Certainly, many directors have taken the time to become better educated in audit and corporate governance matters.

Have boards fully adjusted to the SOX guidelines, or are they still evolving?

In our view, boards have fully adjusted to the SOX requirements and guidelines. Most took these issues very seriously and quickly developed the procedures and techniques to meet the requirements.

Generally speaking, is SOX viewed positively or negatively inside the boardroom?

While there are some in the political world that view SOX on a negative basis, our sense is that most directors--those that have had to adjust and live with SOX--view it in a positive way. They like being more involved and they like learning more about the financials...