Above the Fray

If relations between boards of directors and finance executives seem warmer than ever, the same cannot be said of boards' dealings with other investors.

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First, the good news: Despite a tumultuous proxy season in which boards, investors, and senior management squared off over any number of issues, finance executives report that they are getting along with their boards quite well, thank you. In fact, relations between CFOs and their boards are perhaps better than ever (see “Board Battles“). By a solid majority, readers say that boards are involved in management no more and no less than they should be. And although demands to reform executive compensation and governance get plenty of press, boards remain firmly focused on traditional issues of strategy and performance — and increasingly look to the CFO for thoughtful analysis and leadership.

If relations between boards of directors and finance executives seem warmer than ever, the same cannot be said of boards’ dealings with other investors. As departments editor Joseph McCafferty reports in “The Long View,” the never-ending debate over short-term versus long-term strategy has intensified, with major business lobbying groups advocating for the abandonment of quarterly guidance. Although companies have grumbled about the quarterly focus for years, such a united stand is unprecedented.

What is going on here? Battle lines are being drawn, with corporate interests aligned against shareholder activists and regulators. A growing chorus of organizations (see “Critical Masses,” Topline) is calling for a rollback of Sarbanes-Oxley, not to mention limits on corporate liabilities and other changes to current regulations. At the same time, shareholders are flexing their muscles, endorsing proxy proposals designed to give them more control over boards. This puts CFOs in a powerful if delicate position — they must advocate for the changes they believe will serve their companies well, while also remaining a vital source of nonpartisan perspective and insight.

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