Dennis Carey Info.

SOX is compulsory only for publicly traded companies that file a Form 10-K with the SEC (Securities and Exchange Commission), but many private companies as well as non-profits feel a need to voluntary comply with the SOX standards due to market pressures. Those private companies that choose not to adopt SOX governance and internal control structures face the possibility of finding it more difficult to raise capital, could face higher insurance rates, might be subjected to greater civil liability and could even face a loss of status and reputation among customers, investors and donors.

The thrust of the law was to ensure that publicly reported financial information could be relied upon by investors making decisions, while at the same time improving the confidence those investors have/had in the U.S. capital markets. SOX prescribes responsibilities for corporate boards, executives, securities analysts, auditors and lawyers with enforcement of these duties through penalties which the act stipulates.

Continued…

In several articles written by Dennis Carey, the Sarbanes-Oxley Act of 2002 is mentioned. This legislation was initiated by U.S. lawmakers in response to the loss of confidence American investors were expressing at the time, in a fearful reminder of the Great Depression of the 1930’s. President George W. Bush signed the legislation almost exactly 8 years ago, on July 30, 2002, and within a short while was referred to as SOX.

To Be Continued…

Today boards discuss succession planning more than any other topic aside from making sure the current chief executive is the right one for the job. One probable reason that this subject is taken more seriously than it has been in the past is due to the provisions demanded by the groundbreaking Sarbanes-Oxley Act; the need to have “executive session” meetings, meaning that the board must meet without the executives present; the better to discuss their eventual replacement.

Dennis Carey, an expert on helping companies through the succession process, urges that boards make drawing up a succession plan part of the criteria for a boss’s pay. “Twice a year the board should ask the question, ‘Joe, if you were hit by a truck, who do you recommend should take over your role?’ The CEO should then write the name in a sealed envelope,” Dennis Carey continues, “in the eventuality of a truck-hitting incident.”

Continued…

In an article appearing in the McKinsey Quarterly, Dennis Carey explains the need for boards to focus their energies on creating corporate strategies for success. As Carey writes:

“As companies turn their attention from compliance to growth and innovation, boards must focus on strategy.”

Several years ago new accounting compliance rules were established by landmark congressional legislation, the Sarbanes-Oxley Act. Due to this comprehensive law corporations were forced to turn inward for a time to retool their companies to better comply with legislation.

As Dennis Carey observes in his article,

“Now, by and large, boards have come to terms with the new governance rules, and it’s time to move on.”

Moving on means that instead of boards attending to compliance, it is time to refocus and attend to ways to create to link, “a board’s human capital to the long-term strategy crafted by management to create more value for shareholders.” This, according to Carey, “should be the next wave of governance reform.”