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Law school launches college for corporate board directors

STANFORD -- The chairman of the U.S. Securities and Exchange Commission (SEC), the presidents of the New York Stock Exchange and the Nasdaq Stock Market, and a judge who has made more pivotal decisions in matters of corporate law than any other individual jurist will speak at Stanford Law School March 23-24 at Directors' College, a new program for members of corporate boards.

They, as well as other leading business people, jurists, regulators and scholars, will discuss how directors can better execute their responsibilities - to the corporations they serve, to their stockholders and to employees - while avoiding the legal liability that can accompany board service. The two-day program will offer hands-on, practical advice in such areas as responding to shareholder activism, reacting to takeover bids, avoiding allegations of fraud and managing derivatives - the controversial financial instruments that cost Procter and Gamble, Gibson Greeting and others losses of hundreds of millions of dollars.

Directors' College is the first executive education program offered by a major law school, tailored specifically to the needs of directors of publicly traded corporations. It will feature keynote addresses, plenary sessions and a series of problem-oriented breakout sessions designed to address real-world, board room issues.

The impetus for Directors' College came from Stanford Law School Professor Joseph Grundfest, a former SEC commissioner whose fields of expertise span corporate law, securities regulation and finance.

"Knowledgeable, well-informed directors add value to the corporation and help control the risk of litigation," Grundfest said. "A well-informed director is a good director."

Grundfest called the increased responsibility of corporate board members and individual directors' liability "mind boggling," and described disclosure obligations as "numbing." Directors must oversee risk management systems that include derivatives - potentially risky investment vehicles with which most directors have little experience - and other exotic instruments. Their activities in takeovers are also scrutinized with greater intensity. In addition, the specter of litigation forces each director to face the potentially incriminating question, "What did you know and when did you know it?"

Yet, until now, "There has been no regular forum for directors themselves on the latest, cutting-edge issues that affect performance as a director," Grundfest said.

The faculty for Directors' College consists of many of the nation's leading business people, academics and regulators. The Hon. William T. Allen, Chancellor of the Delaware Court of Chancery, for example, is "a leading intellect in terms of defining directors' responsibilities" and has great influence over the course of corporate law in Delaware. More than 90 percent of the capital value of U.S. firms is held by corporations chartered in Delaware, Grundfest said.

Keynote speakers include Richard A. Grasso, president and chairman designate of the New York Stock Exchange, on Wednesday evening, March 22; SEC Chairman Arthur Levitt on Thursday, March 23, at noon; Joseph R. Hardiman, president of the Nasdaq Stock Market on Thursday evening, March 23; Chancellor Allen on Friday, March 24, at noon; and the Hon. Steven Wallman, SEC commissioner, on Friday evening, March 24.

Four plenary sessions are scheduled:

"Board Governance, Board Composition and Shareholder Activism" will review the latest proposals for governance reform. It will consider recent events that are likely to affect board operations, including General Motors' and Campbell Soup's board guidelines, the dispute between Philip Morris' management and certain large institutional investors, and institutional investors' practice of targeting certain boards and managements that appear to have under-performed.

"The SEC and the Director" will discuss the directors' role in ensuring compliance with federal securities laws, including insider trading issues and disclosure matters. In the event of a violation, federal penalties coupled with the threat of civil or criminal liability may place a heavy personal obligation on the individual director. Senior officials of the SEC will review securities law provisions that are particularly relevant to corporate directors.

"Takeovers and the Director" will assess the directors' duty, not only to shareholders, but to employees, bondholders, retirees and other constituencies. Recent rulings in takeover transactions create new challenges and ambiguities for corporate directors. The faculty, including the Chancellor of Delaware's courts, two of the nation's leading takeover lawyers and a CEO who actively defended against a hostile takeover, will discuss what to do when the corporation receives an unsolicited takeover bid, and what to do when a third party offers a higher bid after a merger agreement has been reached.

"Directors and Derivatives: New Financial Instruments and Other Traps for the Unwary" will look at the risks associated with derivatives exposures. Experts will discuss what directors need to know about derivatives markets if they are to fulfill their oversight responsibilities, and will present practical steps that directors can implement to control derivatives risk.

Program participants will have the opportunity to attend four of five breakout sessions, offered on "The Audit Committee," "Litigation, Indemnification and D&O Policy Coverage," "Management and Director Succession and Continuity - The Nominating Committee and Beyond," "Compensating Executives and Directors" and "Compliance Programs, Special Investigations, and the Independent Director."

Attendance is geared toward board members of publicly traded corporations, and their attorneys and corporate secretaries. Cost for the two-day program is $2,850 per person. For registration and information, call (415) 723-0981 or fax (415) 723-0253.



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