Reporter Jackie Majerus wrote this story:
Hoping to help bring back confidence in American business – and in the corporate boards that oversee them – Barbara Hackman Franklin will take over the leadership of the National Association of Corporate Directors in the spring.
"There's been a real loss of trust," said Franklin, a former U.S. Secretary of Commerce who lives in Bristol and Washington, D.C.
Elected vice chair of the 10,000-member association's board last October, Franklin will start a three-year volunteer term as chair of the national organization in March.
Franklin, who has decades of experience on corporate boards, said it's important to bring back faith in capitalism as well as the governance structure used by corporate boards across America.
Her experience on corporate boards and in the world of Washington will help Franklin with her new role in the directors' group.
"We are in a greatly uncertain economic time," said Franklin on Monday. She said she believes in better corporate governance.
"People are not sure where the bottom is," said Franklin. "There's been a huge loss of confidence in American business."
Directors, she said, "have to do their part" to restore it.
In a prepared statement issued Monday, Kenneth Daly, president of the National Association of Corporate Directors, said Franklin has provided "extraordinary leadership" in the organization.
"I couldn't think of a better person to serve as chair, particularly in this time of economic uncertainty," Daly said.
Franklin, who is president of Barbara Franklin Enterprises, a private consulting firm based in Washington, said members of corporate boards are
"in a heightened position of responsibility."
Congress and the public are taking a new interest in corporate boards in the wake of the meltdown in the financial sector, according to Franklin, and new regulations may be on the way.
"Boards are going to be under the gun more," she said, adding that there's a need to re-establish trust in the American way of doing business and "to help to govern companies right."
The organization is designed to serve the board members who belong to it, offering courses to help individual board members be more effective and can facilitate discussions within boards, according to Franklin.
"Our intent is to help directors do a better job," Franklin said, and "restore the trust that's been lost."
She said it can also help teach lawmakers and others about corporate governance.
"We're not lobbyists," said Franklin. "A lot of people don't understand what boards do. It's an education type approach."
Boards don't take direction from company executives, said Franklin, but rather provide checks and balances. They provide oversight, set policy and can hire and fire a chief executive officer, she said.
Franklin, who has served on the boards of 14 public companies in addition to private companies and non-for-profit corporations, has spent more than 20 years speaking and writing about corporate governance.
She said she wants the directors' organization to address four issues: risk, executive compensation, strategy for corporate growth and transparency, "so the investors and the public know" what boards are doing.
Companies are facing increasing risk in today's economy, so boards must learn to manage, assess and mitigate those risks, she said.
"It's a risky business environment," said Franklin.
The global financial collapse came about in part because some of the risks of doing business were overlooked, according to Franklin.
Executive compensation is likely to continue to be a hot topic in the coming year, Franklin said, that boards will have to face.
"There's a lot of public sector concern about that," Franklin said.
Franklin, who served as Secretary of Commerce under President George H.W. Bush, helped open American trade with China, Russia, Japan and Mexico. She is a commentator on the Nightly Business Report on PBS.
Copyright 2009. All rights reserved.
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