First Movers Step Up The Pace of Governance

Improvements in corporate governance may soon become the corporate equivalent of keeping up with the Joneses.

In January, Intel's board amended the company's bylaws to replace a plurality vote standard with a majority vote standard for the election of directors -- a change applauded by governance experts for raising directors' level of accountability to stockholders. Security-software vendor Symantec is in the process of creating a global risk council, a cross-functional management group that will regularly report on compliance and risk issues to the audit committee of the board of directors. And startup tax-software company Sabrix complies with much of Section 404 of the Sarbanes-Oxley Act even though it is exempt from the law because it's a private company.

Call them "governance first-movers." Rather than waiting for new regulations to emerge or standard practices to be established, these companies proactively institute governance and compliance changes that please shareholders; strengthen risk management capabilities; and, some say, make their businesses better-managed. "There is a premium that goes to the first-movers in this area related to [higher levels of] trust from the investment community," notes Patrick McGurn, executive vice president and special counsel of Institutional Shareholder Services in Rockville, Md.