Best of the best: spotlight on success

Much has been said amidst the recent market meltdown of the importance of not missing the opportunities a crisis can afford. Monsanto has made the most of past problems to build a highly regarded, best-in-class corporate governance program. It was rewarded for its efforts at the Corporate Secretary Magazine Awards, winning ‘Best overall governance, compliance and ethics program’, a category that included such esteemed nominees as Pfizer, Microsoft, Exelon and The Hartford. Other recent accolades include recognition by Corporate Responsibility Officer as one of the 10 Best Corporate Citizens By Industry in 2007 (best in chemical segment), and a citation by Business Week as one of one of the 10 most influential companies in the world in December 2008.

How does Monsanto do it, and what does it do differently than other companies? According to senior vice president, secretary and general counsel David Snively, ‘As the leader in global agricultural biotechnology, our company operates in the confluence of the current spotlight of global food energy and sustainability policy review. This public spotlight necessarily raises our media and governance profile to a high level. I am pleased that our efforts in corporate governance position us to participate in that arena.’

Snively is quick to credit the entire Monsanto team with working to ensure that governance, ethics and compliance are central to Monsanto’s overall business processes and an integral part of the firm’s annual pledge. Team members include Brian Lowry, deputy general counsel, office of policy, stewardship, regulation and government; Scott Baucum, associate general counsel, business conduct; Dennis Hoerner, deputy general counsel, intellectual property and research and development; Tracy Tretiak, director of global operations and client development; Scott Partridge, deputy general counsel, international commercial strategy and litigation; Randy Mariani, deputy general counsel, global commercial and technology; executive assistant Nancy Beckey; and Alfredo Avilia, assistant general counsel. He calls out, in particular, the efforts of Nancy Hamilton, his deputy general counsel, corporate governance and mergers and acquisitions.

Monsanto’s board maintains complete independence from the company’s management, with the exception of its CEO. The company has stayed strong over the last two years, weathering the recent market trials well, and is robust financially as well as in terms of governance. Snively says while ‘everyone needs to eat,’ he also credits Monsanto’s ‘great management team for building a technological leader that performs well in hard times.’ Each board committee has a management liaison, and each has an independent chairman and presiding director. The board spends a significant amount of time on succession planning.

A growing employee base
Monsanto has 20,000 employees, and 2,000 were newly hired last year. One third of the employee body joined in the last three years, and one half joined in the last five years. Snivley says lots of acquisitions over the past five years and the addition of so much new talent makes Monsanto particularly aware that it must keep track of and develop new talent. Yet Snively has been with Monsanto for over 25 years, like most of Monsanto’s senior executives. He was previously in private practice in Indiana as a litigator with a decade of biotech and patent litigation experience, and came to work on mass tort litigation. His role has evolved over the past 25 years, and he assumed the general counsel role two years ago from his mentor of four or five years, Charles Burson.

A step beyond
One of the most fundamental elements of a good governance program is ensuring people outside the company can ‘see inside’ and are aware of what is going on. Monsanto’s board goes a step beyond normal compliance and governance requirements and engages in significant strategic outreach to major investors, meeting with the professionals who look at governance issues for their major investors. ‘We take it upon ourselves to initiate this kind of outreach and to discuss what’s on their mind generally or, if there are shareholder proposals, we’ll discuss those with investors and the proposal proponents.’ Norges Bank, Norway’s largest pension fund and a large investor, had questions on child labor practices in India and is a strong proponent of change in India. The dialogue on this issue between the company and this investor led to change in the region.

Says Anne Kvam, global head of corporate governance at Norges Bank Investment Management (NBIM), ‘NBIM believes that proper management of companies with a sound corporate governance framework is fundamental for creating shareholder value. NBIM has over the last couple of years been cooperating with Monsanto in regards to the company’s human rights/child labor
governance. We have a very constructive continuous dialogue with Monsanto. The company shares our concern regarding child labor practices in the hybrid seed sector in India and has devoted considerable resources in establishing governance structures for managing child labor in a systematic manner.’

In addition to the governance team, Monsanto has a law department that consists of 76 attorneys worldwide in global offices located in places like Singapore and Mexico. All lawyers report centrally and also to local offices. ‘We are so highly matrixed an organization that they can’t do something in Brazil without the US knowing,’ says Snively. Given Monsanto’s technological prowess in the industry, the law group can shift attorneys to different parts of the world to focus on new technologies, he adds: ‘Our legal team adds strategic value to the firm globally.’ The firm has great central corporate governance and compliance oversight. And Snively explains, the lawyers are mostly brought in as laterals, with intellectual property lawyers hired out of law school. ‘We build our own since we are developing new technologies.’ Lawyers are collocated in centers where big decisions are made, with the greatest number located in Monsanto’s St-Louis headquarters. 

Says Snively, ‘Monsanto has created a holistic approach such that governance activities cover the whole waterfront.’