Defining The Role Of The Chief Governance Officer

Last month, $4.4 billion Pitney Bowes announced that VP and Corporate Secretary Amy Corn would become the firm's Chief Governance Officer, a title recently minted at several other firms including Sunoco, Eastman Kodak and Tyco. We talked with Corn about the CGO position, its responsibilities, its interactions with the PB board, and its potential challenges.

NOTE

The week this Q&A was published, Corn's boss, SVP and General Counsel Sara Moss, resigned to become SVP, General Counsel and Corporate Secretary at The Estee Lauder Companies.

Why did PB decide to create the position of Chief Governance Officer?

The Pitney Bowes Board of Directors for many years has been focused on sound governance practices.

When the original Governance Principles of the Board of Directors were developed in 1996, most of the statements included represented longstanding practice at the Company. With the heightened focus on best governance practices underscored by the Sarbanes-Oxley Act and The New York Stock Exchange governance reforms, the designation of a Chief Governance Officer underscores the Company's commitment to integrity, transparency, fairness and ethics, and its resolve to insure that good practices prevail as part of its culture.

What are your core responsibilities as CGO?

The Chief Governance Officer role is an expansion of my previous responsibilities as Corporate Secretary.

As Corporate Secretary, I had advised the Governance Committee of the Board of Directors on developing trends in governance, and assisted the Directors in their review and decision-making with respect to practices used or under consideration for adoption by the Board of Directors.

I have also been responsible for Delaware legal compliance, as well as regulatory compliance in connection with The New York Stock Exchange listing standards and the requirements of the Securities and Exchange Commission.

In addition to other duties that might normally be expected of a corporate secretary, including responsibility for a wide variety of matters relating to the Board of Directors, as well as corporate subsidiary record keeping, the Stockholder Services Department has reported to me for a number of years.

What about new responsibilities or changes in reporting structure?

As part of my new responsibilities as Chief Governance Officer, I now also have the Corporate Compliance and Integrity Affairs Department and the Corporate Safety and Environmental Affairs Department reporting to me. Each of these units has significant responsibility for policy, legal and regulatory compliance, and is positioned to serve as an early warning system to forecast developments that may affect the Company and its employees.

As part of the thought process in creating the Chief Governance Officer position, we wanted to create a reporting structure in which certain corporate units with key responsibilities in the areas of policy and regulatory compliance would be under the same umbrella.

The Corporate Compliance and Integrity Affairs Department is responsible for ensuring that all business operations of the Company worldwide are conducted in compliance with all applicable U.S. Federal, state and local laws and regulations, and to ensure that the Company's business operations are conducted in accordance with the ethical standards set forth in the Business Practices Guidelines. The Department conducts training for employees, and manages programs to prevent and detect violations.

In addition to its education, training and investigative functions, the Department also adjudicates internal matters to find facts and determine an appropriate response, including disciplinary action, for violations of Company policy or law.

The Corporate Safety and Environmental Affairs Department is responsible for design, implementation and monitoring of programs for occupational safety, health, and environmental protection for the Company on a worldwide basis. The Department provides key assistance to support legal compliance for safety, health, industrial hygiene and environmental activities where the Company has a presence in support of its mission to be a socially responsible enterprise, and proactively promotes best practices in its areas of expertise and influence.

The Chief Governance Officer is also responsible, in coordination with the Investor Relations Department, for a continuous outreach program to institutional owners of our Company's stock. While Investor Relations maintains a focus on financial matters and business strategy, my focus will be sharing information about our governance practices, and listening to our stockholders' views on these subjects.

What are your top first three priorities in the new position?

Among my priorities will be the strategic leadership of the additional departments reporting to me, as well as developing a dialog with stockholders on governance matters.

Another challenge will be to predict approaching trends and to play a key role in developing responses or positions with respect to issues that could affect the Company in the future.

Best practices continue to evolve, and it is important to continually review our policies, practices and programs in light of changing regulation, events and perceptions to help assure that our Board of Directors, as well as our CEO and senior management team, can continue to make informed decisions about issues of importance to our Company and our stockholders.

Who will the position of CGO report to? And will the CGO have any direct reports?

As Chief Governance Officer, I continue to report to the Senior Vice President and General Counsel. My direct reports include the heads of the three departments that report to me: Stockholder Services, Corporate Compliance and Integrity Affairs, and Environmental Health and Safety Affairs.

In "Corporate Best Practices: A Blueprint for the Post-Enron Era," The Conference Board notes that a CGO would likely assume a portion of the corporate governance-related functions of the CEO, General Counsel, Corporate Secretary, VP Investor Relations and other corporate officers. Is that the case at PB? Who was performing "CGO-like duties" before your hire?

Prior to my appointment as Chief Governance Officer, the "CGO-like duties" at Pitney Bowes were a bit more dispersed within the Company.

As Corporate Secretary, my role was among the most prominent in managing various facets of corporate governance. The Company has aligned several compliance related corporate functions under one reporting structure with the creation of the Chief Governance Officer role. However, anyone responsible for corporate governance must work across reporting and department lines, and I will continue to work with corporate and business unit groups.

What insights can you provide about how the CGO will fit into (and interact with) the executive team at large?

By adding "Chief Governance Officer" to my title, the Board not only has emphasized to our external constituents that we value integrity, ethics and sound practices, but also has made it clear to management and other employees of the Company that questions or ideas about policy or practices may be directed to my office.

As Corporate Secretary and as Company counsel, I have had many years' experience working with our management team. I expect also to continue my close working relationship with those whose roles have a strong governance component, such as the Chief Executive Officer, the Chief Financial Officer, the Executive Director of Investor Relations, and the Treasurer.

In addition, I will of course work with the department heads of the corporate groups reporting to me.

What about interaction with the PB Board and CEO? The Conference Board recommends that the CGO position "should be of sufficiently high stature and credibility to have direct access to the Chairman, the CEO and other corporate officers and board members when needed." What is your expectation here?

As Chief Governance Officer, I will continue communicating on a regular basis with the Pitney Bowes Board of Directors, as well as the Company's Chief Executive Officer.

Due to the nature of my responsibilities as Corporate Secretary, as well as in the course of my twenty years experience as in-house counsel with the Company, I have worked with members of senior management including corporate officers on a wide variety of matters.

As Corporate Secretary, I have historically supported both the Pitney Bowes Board (most particularly its Governance Committee) and the Chief Executive Officer in a very direct way. If anything, this communication and direct access will be enhanced as a result of my expanded responsibilities.

How do you expect your position to interact with Colin Campbell and other members of the PB Governance Committee? What about other committees of the BoD?

In addition to being Corporate Secretary, I am also Committee Secretary to a number of the Board Committees.

As Chair of the Governance Committee of the Board of Directors, Colin Campbell has been a key advisor to the Chief Executive Officer, and we have worked together continuously on a broad range of matters affecting the Board of Directors.

The role of the Governance Committee has become even more demanding in light of many of The New York Stock Exchange and Sarbanes-Oxley governance reforms. (For example, development and adherence to the Board of Directors Governance Principles, annual self-assessments required for the Board of Directors, as well as several of the Board Committees, and the establishment and review of standards for Director independence).

Governance issues may arise in the context of the work being done by any of the Board Committees. An obvious example is the Audit Committee that is so directly involved in compliance with the requirements of the Sarbanes-Oxley Act. A critical element of governance is process, and each of our Board Committees engages in a process to discharge the responsibilities assigned to the Committee under its Committee charter.

Part of my job is to provide support to the Chairs of the Board Committees, as well as the membership of each Committee, in the diligent discharge of their responsibilities.

A few days before your announcement, $12.5 billion Sunoco announced that they too had named a CGO, and that the position would also be filled by the Corporate Secretary. Why do you think the Corporate Secretary and/or General Counsel position translates so well to the CGO position.

The position of Chief Governance Officer is a natural expansion of the role of Corporate Secretary.

Since a good corporate secretary will typically be engaged in assisting the Board in staying current with best practices in governance, and because corporate secretaries who are also attorneys will typically be very active in assisting the Board and senior management with regulatory compliance matters, including those flowing from Sarbanes-Oxley and the revised listing standards, it makes sense to expand the Corporate Secretary's role to include accountability for specific areas of legal and policy compliance.

What issues or concerns do you have about the efficacy of the new position? What roadblocks might ANY company face in creating an impactful CGO role?

It is critical to the success of a Chief Governance Officer that the Board of Directors and the Chief Executive Officer fully support the establishment of the role and that they believe that, in order to be fully effective in discharging their responsibilities, it is important to maintain a continuous focus on ethics, process, and best practices, and to understand the viewpoints of the Company's stockholders.

Given the high degree of support shown by the Pitney Bowes Board, including our Chairman and CEO, I do not anticipate barriers generated by a lack of buy-in by the Board or the management team.

This column should not be regarded as legal advice. It is for general information and discussion only, and is not a full analysis of the matters presented.