A positive sign for board evolution.

In 1996 the National Association of Corporate Directors released a report that offered what it called "a new corporate governance standard to define professionalism for individual directors and a culture of professionalism for entire boards." Ira Millstein, senior partner of the law firm Weil, Gotshal & Manges LLP, chaired the NACD's Commission on Director Professionalism which prepared the report. Upon the release of the Business Roundtable's Statement on Corporate Governance, Millstein wrote a note to clients and friends of the firm that compared the BRT's and NACD's overall approaches and specific suggestions. An excerpt follows.

Outlined below are some of the key areas touched on by the BRT Statement and the NACD Report. Although there are areas where the BRT and NACD diverge in their suggestions, neither adopts a "must do" approach, and both leave it ultimately to each board to decide on its own processes.

* Board Composition. The BRT and NACD agree that the majority of directors should be independent of management.

* "Independence" Defined. The NACD suggests that the board define independence, require director disclosure of activities that might impinge on independence, and then suggests that the board evaluate whether these activities require a conclusion that a particular director is no independent. The BRT, on close reading, suggests much the same process as does the NACD, with a tilt, however, towards allowing a conclusion of independence in more situations. But, as noted, the BRT -- like the NACD -- leaves the decision to the board.

* Executive Sessions. The BRT and NACD agree that the independent directors should meet alone periodically in executive session.

* Selecting Directors. The BRT and NACD agree that selecting directors is the function of the board, not management, although management may be consulted.

* Board Leadership. The NACD suggests that boards consider formally designating a non-executive chair or independent board leader, or other independent members, to: set agendas with the CEO; chair CEO and board evaluation; chair sessions of the independent directors; and anticipate or respond to crisis. After reviewing the options available, and...