The growth of governance

When the first issue of Corporate Secretary rolled off the presses in July 2002, governance was not the major concern for CEOs and boards. Today, however, meeting the mandated standards of regulators and the requested reforms of shareholders has heightened the emphasis on governance and the role of the corporate secretary. Meeting those demands has led to the unprecedented growth of the governance industry over the last 10 years, making the corporate secretary’s role more critical to the board and management than ever before.

‘I think it was Sarbanes-Oxley that created the corporate secretary we are seeing today,’ says Ian Richman, president of Cross Border, publisher of Corporate Secretary’s sister title, IR magazine. ‘Before that, they were very much behind the scenes, but SOX really pushed them center stage.’

Richman, who conceived the idea for Corporate Secretary and launched it with Cross Border CEO Janet Dignan, says the magazine has helped create a community for corporate secretaries to share ideas and keep up with the rapid changes and growth in the field of governance. The magazine has also covered the growth of the governance industry, something that has helped it grow along with some of its inaugural advertisers.

As Corporate Secretary celebrates its 10th anniversary, the magazine’s efforts to supply solutions and resources to its audience of governance professionals have attempted to mirror the growth of the governance industry over the last decade.
 
Reasons for growth

Rachel Posner, former senior managing director and general counsel of Georgeson, says government regulation and shareholder activism have contributed most to the growth of governance over the last 10 years. She says new regulations have turned annual meetings that were once boring, non-events into important situations. ‘Say on pay is the best example of that: government regulations where governance activism has spurred the regulatory reform,’ she notes.

As preparing for the annual meeting has become a more complex process, issuers have sought out companies like Georgeson to help them prepare and comply, fueling their growth and the growth of other firms. Georgeson was among Corporate Secretary’s first 17 advertisers. It has subsequently been acquired by Computershare, another inaugural advertiser in Corporate Secretary.

In fact, Computershare seized upon the growth opportunities in the governance industry and bought two other companies that were also inaugural advertisers in Corporate Secretary: Equiserve and Bank of New York Mellon. As the market for governance services has expanded, Computershare has diversified its offerings to meet the needs of the market.

‘Clients are looking to one organization to fill many of their needs,’ explains Computershare managing director of shareowner services Kevin Brennan, who joined the company when BNY Mellon was acquired. With its larger size and additional resources, Computershare hopes to add value for clients as they look to address several areas of governance and compliance.

Chuck Callan, senior vice president of regulatory affairs for Broadridge, says greater participation and activity in global capital markets has fueled much of the growth in the industry. ‘Capital markets participants of all stripes are looking for solutions to assist them in meeting their obligations to shareholders and clients, to stay in compliance with a rapidly evolving regulatory framework, to make sense of a mountain of internal and external information and to manage complexity,’ he explains.

Broadridge, which was also one of Corporate Secretary’s inaugural advertisers, has also benefited from acquisitions over the last 10 years. In May, the provider of investor communications and technology announced it would acquire NewRiver, a company with expertise in electronic investor disclosure, and last year it acquired Paladyne Systems to expand its business with asset managers, fund managers and brokerages.

Andrew Moore, executive vice president of global sales and operations at Computershare Governance Services, says, ‘The proliferation and incorporation of technology into the governance process – both by regulators and issuers – over the last 10 years has been a big driver for growth’ in the governance industry. Moore notes that 10 years ago most governance reporting used paper-based processes, but today almost everything is done electronically. ‘For example, the large voluminous board book has been replaced by a single PDF file that can be securely accessed and available for reading and annotation on an iPad,’ he says.
 
The future of governance

In the future, Moore believes ‘technology evolution and the unstoppable beast that is social media’ will be the next area of growth in the governance industry. He reasons that the corporate secretary and compliance officer will have to find solutions to manage the various communications between regulators, management and investors in the open environment of the internet. ‘Everybody has a voice today,’ he says.

‘Innovations in mobile computing networking and digital conversation will continue to positively affect corporate governance,’ adds Callan. Regulators and investors will continue to demand greater levels of transparency and participation, and companies will create innovative technologies to meet those demands.

Posner says shareholders hold the cards to the future of governance, because ‘they can cause companies to be much more proactive – not just have the trappings of good governance, but to really exercise good governance.’ She concedes, however, that even though shareholders exert pressure, the execution of good governance ‘all depends on the actions of directors and management.’

Overall, the last 10 years of governance have been pretty bright. ‘There’s been lots of change over the past decade, and there will be plenty more in the decades to come,’ says Dignan. ‘Let’s hope it continues to be positive, as the role of corporate secretaries continues to grow in importance and status, just as the demands upon them become ever more pressing.’
 
Sphere of influence

How important has Corporate Secretary’s contribution to corporate governance been over the last 10 years?
 
‘Corporate Secretary has a knack for identifying useful information in the field, and for providing it in a user-friendly format.’
– Chuck Callan, Broadridge
 
‘Our clients benefit, and we benefit as well, from your coverage of trends and regulatory matters, and your thought leadership.’
– Kevin Brennan, Computershare
 
‘The corporate governance officer has gone from the tiniest office with no windows, chiming in only when necessary, to really being at the forefront of companies and having the ear of not only the board, but also the CEO and management – and for this we give Corporate Secretary credit for bringing all of that to light.’
– Rachel Posner, formerly at Georgeson