Download a PDF of this paper "Bridging the Gaps - Report of the Study Group on Corporate Boards"
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.
Co-Chairs
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
Vice-Chair
Frank Zarb, Senior Advisor, Hellman and Friedman; and Non-Executive Chairman, Promontory Financial Group
