Dispelling five myths about the corporate secretary

What does a corporate secretary do? For many governance professionals, once they step outside of the governance arena – even within their own company – this is a commonly asked question. It seems very few people can tell you what exactly a corporate secretary’s job entails.

Truth be told, defining the profession has become even tougher due to the way in which the challenges of changing technology and economic downturns have forced many governance professionals to take on and juggle a number of responsibilities that were never a part of their original jobs. Being able to handle such multi-tasking has always been a part of the corporate secretary’s role. So, as business environments become more fraught with risk and volatility, the job of the corporate secretary continues to evolve into one of the more honorable, dynamic and widely sought-after jobs in the world.

Unfortunately, there is a laundry list of misconceptions and myths about the corporate secretary’s job. Those not familiar with governance might be inclined to believe that corporate secretaries are just minute-takers for the corporate board – high-profile gofers for the company’s top executives. In reality, corporate secretaries are tasked with providing the board with advice that will steer it in the right direction, as well as making sure the company is in compliance with existing regulations and is prepared to face what lies ahead in the changing regulatory world.

Laura Hewett, counsel at law firm King & Spalding and member of the national board of directors of the Society of Corporate Secretaries and Governance Professionals, describes the corporate secretary’s responsibilities this way: ‘In 2011, the corporate secretary of a public company is a senior corporate officer, frequently a lawyer with large-firm corporate or securities law experience, who enables the board of directors and senior management to improve their performance, thereby gaining the confidence of the company’s shareholders. The corporate secretary facilitates communications and the flow of information to and among the board, senior management and the company’s shareholders, and ensures that the board and senior management are well advised on corporate governance issues. The corporate secretary implements systems and marshals available resources to support the board, and is responsible for maintaining the records of the board’s actions.’

No doubt that clears things up for many, but just in case Hewett’s definition still has some people confused, Corporate Secretary has reached out to a group of current and former corporate secretaries who recently decided it was time to stand up and debunk some of the many myths about their profession. Here’s what they had to say.

Myth no. 1: Corporate secretaries are uncreative, reactive minute-takers for the board

Since these governance officers support the board of directors administratively on critical corporate matters, many would be inclined to think that this is all they do. However, a key function of the corporate secretary’s office is to ensure that the board has the proper advice and resources needed to discharge its fiduciary duty under state law. It can take a great deal of creativity to come up with viable advice and solutions to many of the problems corporations face today, so corporate secretaries cannot afford to just be minute monitors.

Kris Veaco, president of the Veaco Group of corporate governance consultants and a former corporate secretary, says, ‘Because our work is with the board and with senior officers, most people in the company don’t know what we do.’

Veaco says corporate secretaries maintain the corporate records and are the elected corporate officers of the corporation. However, she stresses that in some cases, corporate secretaries must also show the flexibility to be responsible for the administration of company stock, and they can serve a dual role as compliance officer as well. With those added responsibilities, corporate secretaries cannot afford to be reactive – they must be proactive to avoid regulatory fines and shareholder discontent.

‘Minute-taking is just a small part of what corporate secretaries do,’ says Veaco, a veteran attorney who has been advising public companies on securities law, compliance and corporate governance for over 20 years. ‘They are responsible for compliance and regulation issues, and a lot more besides.’
 

Myth no. 2: Corporate secretaries aren’t tech-savvy and don’t use social media

When it comes to social media, the corporate secretary plays an active role in ensuring companies have instituted rigid policies to protect their online reputation and data. While they may not be active on Twitter, Facebook or Foursquare, they need to endorse strict social media regulations. Corporate secretaries are often responsible for alerting the board about future online risks and have a firm hand in dictating the company’s role in social media.

Some may believe that these governance professionals are not fans of new media technologies, but that is not the case, according to General Mills senior counsel and assistant secretary Cam Hoang.

‘Most corporate secretaries are in fact very tech-savvy,’ say Hoang, who advises General Mills on corporate governance and  securities law matters. ‘It is essential to the role.’ Hoang continues: ‘At General Mills, we have to make sure that directors are equipped with iPads to enable them to retrieve documents on a timely basis. In June, the board had its first meeting using the iPad platform that the legal team introduced.’

To further debunk this myth, Hoang explains that she has contributed to the launch of a subsidiary management database. This used to be internally hosted, but with the assistance of the company’s software provider, she and her colleagues in the legal department have transformed it into a website that is accessible internationally.

‘As our business reaches global customers, so do our subsidiaries abroad,’ Hoang explains. ‘As an assistant corporate secretary, I believe that it is important for employees and other members of the counsel to access information on our subsidiaries immediately.’

Spencer Smul, senior vice president, deputy general counsel and secretary at Estée Lauder, has also embraced technology in his job. ‘I am a firm believer in the power of technology to make things work better,’ says Smul, a veteran lawyer who oversees matters relating to the stockholders, board of directors and audit committee.

Smul developed his own rudimentary matter management program (in Microsoft Access) before discovering a much better electronic invoicing and matter management system for the company’s legal department. ‘I led the implementation of the system within the legal department and it’s been a fixture for several years now,’ he says.

As with many professionals, technology may not have been part of most corporate secretaries’ formal education, but when required to use it in the workplace, they rise to the occasion.
 

 Myth no. 3: It is rare for corporate secretaries to also serve as general counsel

For a long time, the trend has been for governance professionals to be asked to specialize in handling one specific corporate function. For corporate secretaries, however, being able to wear the hat of the general counsel when needed is now seen as a great asset. The ability to juggle two very distinct roles can be quite challenging at times, and one might wonder: can a corporate secretary truly be effective in both roles?

‘It is common in private companies to see professionals serving in both capacities,’ says Christine Jones, executive vice president, general counsel and corporate secretary for Go Daddy, an internet domain registrar. ‘There is a level of credibility that comes with understanding how to apply regulation and statutory requirements when making a decision.’

Jones was the web-hosting giant’s first lawyer. She established the company’s legal department and has grown it to nearly 100 people. She reasons that depending on the size and scale of the company, a governance professional can effectively hold down both the corporate secretary and the general counsel role.
‘The corporate secretary function includes ensuring that the company is in good standing and has good governance measures in place,’ says Jones. ‘I also serve as general counsel, and this comes with layers of complexities, but in the end it all works out well.’

The commercial litigation lawyer explains that the two roles can be merged together successfully. ‘It is nice when all the knowledge is in one person’s head,’ she says. ‘At board meetings, for example, I identify myself as speaking as the general counsel and as the corporate secretary – it is a rare luxury to have this role, but it gives you cohesiveness, and that’s important.’

Depending on the size and scale of the company, the roles are often combined. ‘In some organizations, the corporate secretary office is split from the general counsel and you can end up having a separate office or some deputies,’ says Jones.
Jones worked at the Los Angeles District Attorney’s Office prior to entering private practice, and her wealth of experience in both public and private settings has given her a deep understanding of the various aspects of the profession. She firmly believes that shareholders do play a significant part in influencing the separation and combination of the roles. ‘If you have the ability to operate in the general counsel function, then you can cater to the needs of the shareholders and serve as a communicator,’ she says.

Often, at private companies, some employees feel that the corporate secretary has a ‘less significant role’ than the general counsel, the well-seasoned lawyer explains. In industries like oil and tobacco, however, there are many issues surrounding the legal side of the business, and it is here that the corporate secretary takes the leading role in making sure the boardroom is aware of the complexities.

‘Nowadays, corporate secretaries are vocal and articulate,’ Jones says. ‘They hold a strong position in the boardroom because they need to get their points made.’

Jones also believes that to operate successfully as both corporate secretary and general counsel, it is necessary to strike the right balance between providing counsel and making decisions as well as having a strong position of influence in the board room.

Myth no. 4: Corporate secretaries are not and should not be lawyers

When faced with making governance decisions, a corporate secretary will turn to the general counsel, who is trained to handle complicated legal matters. This has led many to believe that corporate secretaries are not lawyers and do not have to be lawyers since they work closely with general counsel, who have all the necessary legal skills and experience.
While it is true that the corporate secretary must work with lawyers, this does not necessarily mean that a corporate secretary is not also a lawyer.

‘It’s a growing trend to have a corporate secretary who is an attorney,’ says Lisa Lentini, senior corporate counsel and assistant secretary at Best Buy and assistant secretary of the Society of Corporate Secretaries and Governance Professionals.

At Best Buy, Lentini is responsible for corporate finance, legal entity management and corporate secretarial work. Having a corporate officer who is also a lawyer can help mitigate future risks, she contends.

‘There are a lot of issues the board deals with on a regular basis that are legal in nature, such as compliance with state and federal law like the SEC disclosure rules,’ she says. ‘Being a lawyer makes this part of the corporate secretary’s job easier. You need to know enough about law to spot the issues ahead of time and help channel them in the right direction.’

Jones shares this opinion. ‘It is helpful if this role is filled by a lawyer because of the level of credibility needed in understanding the full impact of certain regulations.’

Myth no. 5: Corporate secretaries are promoted to the title or hired internally

Finding the right corporate secretary can be a significant challenge for a corporation. This year, the oldest baby boomers – those born in 1946 – will turn 65, and as an entire generation moves toward retirement age, many businesses are starting to spend time thinking about succession planning. Replacing a corporate secretary can prove difficult because, due to the sensitive nature of the position, a company’s needs tend to be very specific.

It would therefore be easy to conclude that corporate secretaries are usually hired internally. It’s reasonable to assume that it would make more sense to hire someone who had been working in the same company for many years, as opposed to recruiting someone from outside. However, since it often takes a special individual to handle the variable nature of the position, that’s not necessarily the case.

‘Boards of directors want a top-notch general counsel or corporate secretary who will be their trusted adviser,’ says Cary McMillan, chief executive officer of True Partners Consulting, a global tax and business advisory firm. ‘But that takes work on the company’s part, as attorneys are in the minority at most corporations.’

Leanne Likness, corporate secretary at ENMAX, a Canadian energy distribution, supply and service company, believes it makes  sense to find the very best individual for the job, even if that means looking at external candidates with more experience.

‘Throughout my career I have always been recruited externally, but it makes sense to recruit internally as well, especially if there are individuals within the organization that have the skill set required,’ she says.

Likness, a member of the Canadian Society of Corporate Secretaries, has over 15 years in the corporate governance profession and is responsible for overseeing various governance programs and related public disclosure and securities compliance for her company. She explains that while hiring internally is seen as a great technique, it all boils down to expertise and experience in the industry.

‘The corporate secretary should not only be a governance expert but should also have the skills necessary to recognize business decisions that are being made by the board; they need to make business decisions in an informed manner,’ says Likness. ‘So, hiring can go both ways – either internally or externally.’

Echoing that sentiment is Arden Phillips, who was also recruited externally to his current position as corporate secretary and corporate governance officer for WGL Holdings. ‘At a larger company there is usually an assistant corporate secretary who can eventually take over for the corporate secretary if the latter retires,’ says Phillips. ‘However, this may not occur in smaller legal departments. It depends on the company, but there are many ways to fill this position.’

Farmer Brothers, a nearly 100-year-old publicly traded coffee company, is one of many firms making a special effort to promote talent internally.

Larry Garrett, the firm’s current general counsel and assistant corporate secretary, may have been recruited externally, but now that he is in the job he is committed to building the company’s legal department internally from the ground up.

‘The company hired me as general counsel and assistant corporate secretary with a view toward establishing in-house legal support and creating a succession path for the corporate secretary function,’ says Garrett. ‘As assistant secretary, by working closely with the current secretary, I can ensure the vital role of corporate secretary is transitioned seamlessly in the years to come.’

When it comes to selecting a corporate secretary, it’s safe to say that finding the individual with the right set of skills for the company outweighs whether they are recruited internally or externally. The individual who can get the job done is the one that will be hired.

In a nutshell, dispelling some of the most common myths about the job of the corporate secretary is essential in helping those who hold the position move forward and improve overall corporate governance. So if you’re considering a career as a corporate secretary or currently work as one, know that the parameters of the job are rapidly evolving, and this will perpetuate a series of misconceptions and myths that could surface in the near future. However, be secure in the fact that the profession remains indispensable, even if people don’t know exactly what the corporate secretary does.