Q&A With Acxiom Corp.'s Corporate Governance Officer

This profile is the latest in a series of weekly conversations with executives at U.S. public companies who are currently involved in establishing and developing compliance programs. An index of previous conversations is available here.

So what’s on the Hughes job description?

Primarily it’s federal securities law and compliance, and Delaware law for internal workings of the board and that sort of thing. We do everything necessary to stay in compliance with Delaware law, federal securities law, and of course Nasdaq where we’re listed.

Do your responsibilities include ethics and similar issues as well, or are you a numbers-only sort of executive?

Our ethics program for the general population falls under the human-resources department. I work with those folks on the Code of Ethics—which we also put on our Web site—but primarily that’s their area for drafting it. I review it, and make sure it’s compliant with all the new Sarbanes-Oxley rules and that sort of thing. They’re in charge of the training.

How did the word ‘governance’ appear in your title?

Well, I’ve been doing this with the company since I joined 17 years ago. With all of Sarbanes-Oxley and the suggestion that there be a governance office, they added that to my title of corporate secretary—just for visibility, mostly. That was right after Sarbanes was passed.

Tell us about how your job has changed since then.

[Laughter] You mean, how I have no free time?

We hear that a lot from your peers.

Well, I think everybody just has a huge burden of trying to keep up with, and then do all the necessary steps for, all these new laws. It’s overwhelming in many senses, just to feel on top of it all. For a while there, more rules were coming out every few months. That’s the challenge, just keeping current with all of it and making sure your implementations are done by each successive deadline.

Let’s start with Section 404. How did Acxiom grapple with that?

When the law first came out, I think it was not at the top of everyone’s mind. But within six to eight months, it became extremely important—at least, that was apparent to us who were reading the law every day. We started about two years ago with one person; I went to our CFO and told him: “One person is not going to be enough. We’ve got to look at this as we looked at Y2K compliance. We’ve got to have a full complement of people in all of our financial areas looking at this. This has got to be their job for a while.”

Finally they realized that—although it took longer than I would have hoped! Now we have 15 people on it full-time, plus two different outside auditing firms, plus our external auditor. We have a March 31 year-end, so our 10-K comes out in June and we’re coming up on it here. We’ve gone through most of the testing, and we’re down to the final tweaks.

What was the principal challenge with 404?

I would say the documentation, definitely. There were so many processes where it had always been, “Oh, so-and-so does that,” but there was no written map for the procedure. That was the biggest challenge, identifying and documenting every single process that we had.

Were any new IT programs or systems installed to get that done?

We did buy software from KPMG, who is our outside auditor, to track it all. Internally we’ve also set up a lot of systems to keep it going.

We hear many companies just wanting to get through the first year with simple tools such as Excel, regardless of leveraging 404 data for long-term benefit.

We’ve actually started that on the KPMG system … We’ve been doing a risk analysis hand-in-hand with this effort. That’s been a key part of it … We have a whole team that does risk management, and they’re plugged into the 404 team. There’s a lot of overlap between them, in fact.

What about other compliance obligations under Sarbanes-Oxley?

The [Section 302] certifications have been interesting. We do a lot of sub-certifications, and it’s been an endeavor because the only people who looked at financial statements and 10-Qs before Sarbanes were the CFO, the controller and some key financial people; maybe five or six people in the company read it cover to cover before it was filed. Now all our division heads are required to read every financial filing—not necessarily every 8-K, but certainly every 10-Q and 10-K. We now have 15 people reading it now who were not reading it before, in addition to the original people. That’s been quite an expansion of the review process.

Yikes, doesn’t that complicate things?

[Laughter] Oh please—when you get 15 people’s comments instead of five? Primarily what we look for is comment on the numbers themselves: is there anything missing, is there anything that’s incorrectly stated, and so forth. We’re not asking them to re-draft the document or anything.

You’re a lawyer by training. How does that background prepare—or not prepare—you for the governance job?

I was a securities attorney, actually with Acxiom for a number of years as a client, before I came here in-house. In a way, this is just an expansion of existing law. It’s a huge expansion, but I didn’t feel like I was in unfamiliar territory. There were just a lot of new rules to learn.

How closely do you work with the head of internal audit or other Acxiom personnel to keep the whole ship sailing properly?

Our chief financial officer, our investor relations officer and our general counsel are the ones I work with the most, for SEC documents and board issues and the various Nasdaq committee issues. We have the financial area; we have my team, which is myself and two paralegals; and the financial folks who actually pull the numbers together for SEC filings—there are probably eight people who contribute to that, and they all report to the CFO. Our governance area itself is very small.

And what’s your interaction with the Acxiom board?

As secretary, I’m at all the board meetings anyway, and I’m the primary person who talks to them about governance issues.

What do you like about the job? After all, it isn’t a high-glamour profession.

Well, it’s never the same every day. I feel comfortable in it because I’ve done this so long. Of course, I work on other things as well, because our company is one that must always re-invent itself every 18 months or so. It’s always a challenge, figuring out what the new business strategy is. So this is different than doing the same work for a law firm, and doing the same tasks for a number of companies. I feel like my job is 50 percent compliance and 50 percent many other things.

We were going to ask what your typical day is like. No such day exists?

That’s true. For example, right now we’re in the middle of a tender offer, and I have meeting later today about that. It’s really quite a variety of things that go on all the time.

And your top compliance priorities for the next 12 months?

After we get over the 404 hump? ... I think it’s the challenge of getting a board that’s more and more and more independent. Like other companies, we’ve had a number of insiders on our board and we’re slowly weaning them off. By our stockholders’ meeting we’ve got to meet the majority-independent requirement. Right now that’s my front-and-center focus.

Thanks, Catherine.

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