S-O what?

• Position: Letter from the Chairman - Sarbanes-Oxley - Column

OVER THE PAST YEAR, directors have endured lengthy presentations detailing the Sarbanes-Oxley Act (S-O) as well as new stock exchange rules and SEC requirements. These new standards should help to assure better corporate governance. However, the board's attention to their implementation poses the risk of compliance issues taking up an inordinate amount of the board's time. Under pressure to comply with the new governance regulations and filings, directors can become distracted from their primary mission of overseeing the management of the business. Given that compliance checklists can eat up agenda time, how can the chairman, who increasingly may be a nonexecutive director, keep board meetings relevant?

To allow requisite time for discussing substantive business issues, the chairman needs to better manage the board meeting process in terms of information flow, agendas, and schedules. He must make certain that the board package is both comprehensive and manageable, enabling directors to keep up with the inner workings of the company from financial, operational, and market perspectives. The chairman should assure a continual flow of current information, and directors in turn need to devote more time to preparing for meetings.

Because of the increased workload, meetings -- in particular, committee meetings -- will be longer and more frequent. However, the board should be careful not to overstep its bounds by attempting to fill in for management or the outside advisers. For example, the audit committee will have to work longer and harder to assure...