The year in governance: a month-by-month recap of the people, organizations, events, actions and reactions that defined hoard oversight in 2008.

• Author: Kristie, James
• Position: YEAR IN REVIEW 2008 - Movie review

JANUARY

The year starts off with a "CEO firerama," as CNBC commentator lames Cramer calls it. Among those losing their positions: CEOs of Starbucks, Krispy Kreme, Bear Stearns, and Sears.

The U.S. Supreme Court, in its Stoneridge ruling, affirms that investors cannot sue third parties such as banks, accountants, suppliers, law firms, and other businesses that had dealings with companies accused of securities fraud.

Activists on the move early: Companies getting their year started with investor agitation include Comcast Corp., Charming Shoppes Inc., CNET Networks Inc., New York Times Co. (a hedge fund nominates four candidates to its board), and Zales Corp. (which gave up without a fight, giving Richard Breeden, one of 2007's bigfoot activists, two seats on its board).

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Backdating still making news: Gregory Reyes, the former CEO of Brocade Communications Systems Inc., is sentenced to 21 months in prison and fined $15 million for "orchestrating a scheme to tamper with the company's records of stock option grants," as the Associated Press (AP) reports.

The CFA Institute Centre for Financial Markets Integrity petitions the SEC to improve executive compensation disclosure rules; the CFA's 10-point proposal includes clarifying the role company CEOs play in determining their own compensation.

"All hell's going to break loose" when an advisory panel to the SEC issues its recommendations later in the year for changes in U.S. accounting and financial reporting, predicts the panel's leader, Robert Pozen, chairman of MFS Investment Management Co. The panel is studying how to reduce complexity and make corporate results more comparable from industry to industry.

Rapid growth experienced by the International Corporate Governance Network leads to the appointment of Kerrie Waring in the newly created position of chief operating officer for the organization, whose membership at the start of 2008 encompasses 40 countries.

Board diversity: January 1 is the deadline for every publicly traded company in Norway to comply with a 2003 law requiring them to have a certain number of women on their board--a law that has led to nearly 40% of Norwegian corporate directors being women.

No stigma: Stanley O'Neal, ousted in October 2007 as CEO of Merrill Lynch amidst massive tosses in mortgage-related instruments, is elected to the board of Alcoa Inc.

Woes begin for Yahoo board: On the last day of the month, Microsoft makes a big move--placing "a bold $44.6 billion bet that buying Yahoo can transform both companies' flagging efforts to catch Google Inc.," per the Wall Street Journal (WSJ).

FEBRUARY

Smaller companies get another reprieve from the SEC on some of the more onerous SOX financial reporting controls.

A survey by Thomson Financial finds only a tiny percentage of public companies are planning to create electronic shareholder forums, even though the SEC lightened up this month on its Web disclosure rules to remove some of the liability issues that had everyone concerned about communicating with shareholders online.

Early read on activism: FactSet Shark-Watch reports 72 campaigns waged by activists as of early February--a pace indicating investor opposition will beat 2007's record level of activity. More than half of the campaigns are initiated by hedge funds.

Icahnography: Activist investor Carl Icahn names four nominees to the Motorola board and announces intentions to launch a proxy fight, the next step in a campaign begun in 2007 to break up the company. He also says he will start a blog to address problems in the management and governance of public companies.

Death to a death payout: Under withering criticism, Comcast Corp. adjusts several of its compensation arrangements, including one providing for a payment of his base salary to the estate of 87-year-old founder Ralph Roberts for five years after he dies. Roberts agrees to work for $1 a year in an advisory role.

Hello/farewell as a DJIA company board: Members of the Altria Group Inc. and Honeywell International Inc. boards see their companies replaced in this widely tracked index by Bank of America Corp. and Chevron Corp.

Uneasy boardroom: Former Gillette CEO James Kilts and Sara Lee Corp. CEO Brenda Barnes announce they won't stand for reelection to the New York Times Co. board. Harbinger Capital Partners, lifting its ownership to 19%, nominates four directors of its own.

Activist director election: Ralph Whit-worth is appointed to the board of Sprint Nextel Corp. after notifying the company of his intention to seek two board seats; his firm has a 2% stake in the company, whose stock price tumbled more than half in the previous six months. (In March, four directors will announce their intention to depart the board.)

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Replace the whole board--that's the charge leveled by investor Mark Wattles against electronics retailer Circuit City, which is struggling to stay alive after a bungled turnaround plan.

The twists and turns: Hewlett-Packard CEO Mark Hurd is elected a director of News Corp.; on the News Corp. board is venture capitalist Thomas Perkins--who instigated the revelations of H-P's spying on its board members, a blow-up that led to Hurd joining H-P as chairman and CEO.

MARCH

How awful to be a board member of Bear Stearns--or a shareholder! In an extraordinary weekend collapse, Bears Stearns is forced by the federal government to sell itself to J.P. Morgan Chase & Co. for $2 a share (later raised to $10 a share).

Described as a first of a kind, GE Chairman and CEO Jeff Immelt hosts a live webcast with shareholders, and 1 million people are reportedly tuned in. "We are really excited about this event and the opportunity to be able to more directly communicate with our 5 million shareholders, approximately 40% of whom are individual shareholders," a GE spokesman says to the New York Times (NYT).

Apple Inc. shareholders approve a say on pay proposal.

Boards hate short sellers, and the SEC offers some relief by proposing to crack down on abuses in naked short sales and failure to deliver shares that have been used in such sales.

Ex-newspaper mogul Conrad Black reports to prison to begin serving a six-year sentence for swindling shareholders of Hollinger International Inc. At his 2007 trial, Black's board was much criticized as supine during his reign.

Board-shareholder communication is the next frontier in governance, according to a policy briefing by the Millstein Center for Corporate Governance and Performance at the Yale School of Management. "Pioneering boards are reducing tensions by opening direct channels of dialogue between directors and investors," the governance center declares.

Citigroup, whose share price is plunging to lows not seen since the 1990s, announces that it is "actively seeking new directors" for its board, and is placing "particular emphasis on expertise in finance and investments." (It will take a year until such new directors are added to the board.)

All boardroom eyes start fixing on Washington: The Bush administration launches a flurry of proposals for overhauling the financial regulatory system--"the most dramatic plan since 1929, which would strengthen Washington's oversight role," says the AP.

On the naughty list: CalPERS, the large and powerful U.S. pension fund that issues an annual list of governance and financial underperformers, singles out these five companies as its 2008 reprobates: Cheesecake Factory Inc., Hilb Rogal & Hobbs Co., Invacare Corp., La-Z-Boy Inc., and Standard Pacific Corp.

The New York Times Co. relents to its dissident investors (see February), hedge fund Harbinger Capital Partners and investment firm Firebrand Partners LLC, and offers two board seats in exchange for their dropping a proxy contest aimed at winning four seats.

Executive comp under intense scrutiny as proxies are unveiled: One of the many headline cases is homebuilder Toll Brothers Inc., which outrages its bruised shareholders with a controversial bonus package for its CEO. "At a time when Toll Brothers' shareholders have seen a stock price decline of 50% over the last three years and 35% in just the last year, the people responsible for the company's decline need to be held accountable," says an executive from one of the company's union pension fund shareholders.

As the first quarter ends, investors tote up--or fear to tote up--massive losses; the S&P 500 index is down nearly 10% for the quarter. Reports the AP: "When investors open their quarterly brokerage account or 401 (k) statements, what they see will be painful." Yes ... but, oh, the pain still to come.

APRIL

All eyes are on the Rockefeller family as members make an unprecedented public statement about changes they'd like to see in the corporate governance of Exxon Mobil Corp. One proposal getting their nod, filed by Robert A.G. Monks (see below), is for an independent chairman.

The AFL-CIO, in unveiling its Executive PayWatch website for 2008 with new features and data, says it "exposes the CEO pay packages that helped create the sub-prime mortgage crisis." Case studies address Countrywide Financial, Citigroup, Washington Mutual, and other financial services firms.

"I really stepped in it," Jack Welch says in apologia for seemingly criticizing Jeff Immelt on a CNBC broadcast when GE reports disappointing first quarter earnings. "Nothing is worse than having a predecessor perceived as commenting negatively on a successor ... I will endeavor in retirement not to step in it again."

Major miscalculation: After an embarrassing outcry, the board of beleaguered Washington Mutual backtracks on its bonus calculation for CEO Kerry Killinger. Directors initially decided, as Forbes explains, "to exclude the financial damage from WaMu's subprime lending from the operating profit figure used to calculate his bonus"--potentially setting Killinger up for a massive payout. Director Mary Pugh, head of the board finance committee during WaMu's descent into...