Enhancing Decision-Making Symmetry by Endorsing All Powers to the Full Board: 6th International Conference on Corporate Governance (ICCG), 2005

by Dr. Darlene M. Andert CMC CFM

The theme of the 6th International Conference for Corporate Governance was “Making Corporate Governance Decisions that Work,” which is an important topic the future of corporate governance. Clearly the Disney case, as well as other recent cases, indicates that the same volume and timing of information may vary between non-independent and independent Board members. Yet, to rebalance corporate governance practices, the US Sarbanes-Oxley Act granted autonomy to the Audit Committee. Although this directive may elevate the independent Director's knowledge and control, an unintended side-effect is information asymmetry between Board members and the dilution of full-Board decision-making synergies.

In contrast, Section 8.01(b) of the United States Model Business Corporation Act (the unifying construct for various state-authored statutes) provides that “all corporate powers shall be exercised by and under the authority of, and the business and affairs of the corporation managed under the direction of, the board of directors” (p. 8-5). This Act structures ALL POWERS as the domain of the “board of directors” as a whole body and not the domain of an individual member or an autonomous committee. The Act further describes “actions without meetings” (8-24) and the “voting and quorum” (8-27) rights which when applied equally to ALL Board members result in a non-hierarchical, one-vote-for-one-member collective body. It can easily be concluded that exercising all powers by the full Board supports information fluidity and enhances collective decision-making synergies.

The needed paradigm of corporate governance re-structuring should provide for a rebalancing between the three distinct powers: the Board providing oversight and representing shareholders, Administration providing operations and serving customers and stakeholders, and Regulatory agencies providing legislative enactment and serving society as a whole. This structural schema, challenges the wisdom of dual roles for members of the Board (i.e. CEO/Chairperson) as well as the use of private-autonomous Board committees. The compelling question is “Will future paradigms of corporate governance complete the separation of powers between operational roles and oversight roles that are currently causing two-tier-Board-syndrome and information asymmetry”?

Most people know the quote from Lord Acton that "power tends to corrupt, and absolute power corrupts absolutely." As democracy divides power and control between the Judicial, Legislative, and Executive branches -- with each having separated and distinct autonomy, shouldn't future restructuring efforts divide the distinct bodies but unite the full Board and provide for the symmetry of information and the maximization of decision-making synergies in the Boardroom? After all, knowledge is power and the key asset to any decision-making body.

Dr. Darlene Andert serves as the Director for the International Center for Responsible Corporate Governance at Florida Gulf Coast University [ (239)590-7322] and President of Andert Governance Corporation [(239)549-7766].


	Enhancing Decision-Making Symmetry by Endorsing All Powers to the Full Board by Dr. Darlene M. Andert CMC CFM The theme of the 6th International Conference for Corporate Governance was “Making Corporate Governance Decisions that Work,” which is an important topic the future of corporate governance. Clearly the Disney case, as well as other recent cases, indicates that the same volume and timing of information may vary between non-independent and independent Board members. Yet, to rebalance corporate governance practices, the US Sarbanes-Oxley Act granted autonomy to the Audit Committee. Although this directive may elevate the independent Director's knowledge and control, an unintended side-effect is information asymmetry between Board members and the dilution of full-Board decision-making synergies. In contrast, Section 8.01(b) of the United States Model Business Corporation Act (the unifying construct for various state-authored statutes) provides that “all corporate powers shall be exercised by and under the authority of, and the business and affairs of the corporation managed under the direction of, the board of directors” (p. 8-5). This Act structures ALL POWERS as the domain of the “board of directors” as a whole body and not the domain of an individual member or an autonomous committee. The Act further describes “actions without meetings” (8-24) and the “voting and quorum” (8-27) rights which when applied equally to ALL Board members result in a non-hierarchical, one-vote-for-one-member collective body. It can easily be concluded that exercising all powers by the full Board supports information fluidity and enhances collective decision-making synergies. The needed paradigm of corporate governance re-structuring should provide for a rebalancing between the three distinct powers: the Board providing oversight and representing shareholders, Administration providing operations and serving customers and stakeholders, and Regulatory agencies providing legislative enactment and serving society as a whole. This structural schema, challenges the wisdom of dual roles for members of the Board (i.e. CEO/Chairperson) as well as the use of private-autonomous Board committees. The compelling question is “Will future paradigms of corporate governance complete the separation of powers between operational roles and oversight roles that are currently causing two-tier-Board-syndrome and information asymmetry”? Most people know the quote from Lord Acton that "power tends to corrupt, and absolute power corrupts absolutely." As democracy divides power and control between the Judicial, Legislative, and Executive branches -- with each having separated and distinct autonomy, shouldn't future restructuring efforts divide the distinct bodies but unite the full Board and provide for the symmetry of information and the maximization of decision-making synergies in the Boardroom? After all, knowledge is power and the key asset to any decision-making body. Dr. Darlene Andert serves as the Director for the International Center for Responsible Corporate Governance at Florida Gulf Coast University [ (239)590-7322] and President of Andert Governance Corporation [(239)549-7766]. Back to the top with the Corporate Governance NETwork! Contact: James McRitchie All material on the Corporate Governance site is copyright since1995 by Corporate Governance and James McRitchie except where otherwise indicated. All rights reserved.