Bridging Board Gaps - Report of the Study Group on Corporate Boards

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Letter from the Chairs:

Recent institutional failures, surrounded by general economic turmoil, once again sparked the familiar question: Where were the boards? Although the root causes of the financial crisis went well beyond governance, boards have been a focus of many reforms. The Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), a 2,319-page law, required federal agencies to conduct 81 studies, submit 93 reports, and pass more than 500 rules – including rules directly impacting the boards of all public companies. But the new rules for public company boards are focused on board process. In addition, boards need a renewed focus on their aspirational purpose and guidance for achieving it. They need to recognize the gaps between governance ideals and governance realities – recognizing which gaps can be closed and which may continue, given the process and structure fundamental to our market’s operation.

To identify and address the most critical board gaps, we assembled a group of significant participants in the current governance system, including leaders from academia and the accounting and legal professions, as well as individuals who have led major corporations and boards. Our group also includes a former U.S. Secretary of the Treasury, a former Chair of the Securities and Exchange Commission (SEC) and of the Council of Economic Advisers, and the former general counsel of the SEC (serving ex officio). As a diverse group of leaders and experts, we sought to contribute to what we see as a continuing process of improvement in board practices and standards and director attitudes, while acknowledging that board work is an art as well as a science. Our Report aims to show how boards can fulfill their potential in various critical areas. After discussing dozens of general governance topics, we identified seven core problems. Then we drew solutions from the laboratory of real life, based on our own experience.

Our solutions are intended to be practical – new routines boards can adopt (and adapt) to improve the way they operate. We want to give boards a fighting chance to succeed. We hope to contribute to what we see as the gradual but positive improvement of board practices and standards and director attitudes. We hope that this Report will be a guide to boards, stakeholders, and policy makers in order to set rigorous yet realistic expectations for boards and for those who depend on them to deliver. We are grateful to the Rockefeller Foundation for financial support for the Study Group.


Charles M. Elson, Edgar S.Woolard, Jr. Chair in Corporate Governance; and Director of the John L.Weinberg Center for Corporate Governance, University of Delaware; Of Counsel, Holland & Knight, LLP

Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School; and Professor of Economics, Columbia University


Frank Zarb, Senior Advisor, Hellman and Friedman; and Non-Executive Chairman, Promontory Financial Group