Q&A With The Laclede Group's Chief 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.

Laclede only created the governance officer’s job one year ago. How did that come to pass?

Well, it was probably at my instigation. We had been following a lot of the events at the New York Stock Exchange, and then Sarbanes-Oxley was passed. My approach has generally been to be proactive, advising our executives and keeping them informed on proposals even before they become final law, so that they’re not surprised when something is enacted.

So just in seeing more and more of this coming down the road, after talking with several other companies I went to the chief executive with the thought of creating this position—and of course thinking that I was the likely candidate for it as well. I looked at some other companies, created a job description … and a lot of the corporate secretary function, frankly, deals with corporate governance. It makes sense, and just gives more credit to the role I’d been doing for a while.

How did you craft the job description?

I searched the Internet, and I did belong to the American Society of Corporate Secretaries; they have one or two sample job descriptions on their website. I also took advantage of some professional contacts I had to look for examples. We have our own pre-formatted system for job descriptions here at Laclede, so I tried to make it fit what I envisioned for the role going forward.

How much persuasion was necessary for the board to approve the change?

Not a whole lot, frankly. I did this first with the CEO, where I would feed him articles on the topic from time to time. Over the course of a year, they realized governance wasn’t going away and wasn’t a fad; it was here to stay and to remain important, so in January of last year they officially decided to do it.

What are your duties, then?

A lot of it is interaction with the board. The increased amount of information they want—whether you want to call it corporate secretary or corporate governance, I’m the one they contact. I’m the one who works for them and gets the information they want … When they have questions on anything, whether it’s specific to the company or some latest development in the newspaper, I explain it to them.

I usually do presentations to them as things develop, or at board meetings. I attend all the board meetings, audit committee meetings and corporate governance meetings. I work closely with the corporate governance committee chair, to keep him apprised of what’s going on, not just here but at other companies across the country as far as best practices. I also work with him on the evaluation process for the board and the committees as well.

And these are all responsibilities you had done before?

Some of this might have been done before through the CEO. Now I’m the one being brought into the loop on these requests. A lot of it is, frankly, an increased amount of what I had been doing before.

What might the CEO have handled before, that has fallen to you now?

In the past they might have gone to him for more context or information: “we’d like to see this,” or “make sure this is put on the agenda.” I do think they try to keep an independence from the CEO now, and feel free to go to other levels of management.

How do you get these duties done? What staffers work with you most often?

I only have one direct report, but I work with a lot of other departments to effect things. I work very closely with internal audit, with finance, with corporate communications—there is no direct link so much with those who assist me, as there is a cooperative effort.

What’s your typical day like?

Who in this job has a routine anymore? That’s what has changed the most: that you have to be receptive to change and you have to be flexible. You have to be prepared to do something at the last minute, whether it’s briefing the board on the new American Jobs Creation Act and all the deferred compensation issues that come out of that, or some NYSE standard that’s out there, or some new case law, or the shareholders calling you and asking questions on how things are done. Right now our annual meeting is in two weeks, and I’m just getting ready for that. But you never know.

How has Laclede handled Section 404?

We’re a September 30 year-end company, so we really don’t have to meet all the requirements until September 2005. But we had already started the process, so we determined to complete it on an internal basis and just not have the auditor go through it in 2004. We handled most of it in-house, with a consultant whom we used to bounce ideas off. We would only include our outside auditor to the extent that we might run some risk and control matrices by them, to make sure we weren’t going too far afield.

We completed that internally by September 2004, and our steering committee met every week to stay on top of that process … This year is smoother; we’ve created a whole separate department to take on that responsibility and grow into a risk-management role once we get a hold of 404.

So who did the grunt work for Section 404 last year, and who will be in this department now?

Last year was a cooperative effort. The head person was from our internal audit department, and she had the help of several other people from internal audit and from our IT people to help with the software we’re using. It was about five people spearheading it, but then each process-owner had to do a lot of work too. So there were many more employees involved.

This year that same woman is head of our new department. She reports to the vice president of finance, and she will be hiring—in fact, we’re interview right now—some new people from outside to assist her. We didn’t want to keep it in internal audit, because we wanted the independence issues to be clean so that internal audit could do testing and our auditor can then rely on some of that testing.

Interesting. What will you name this new department?

The department of risk and control services. At this point we’re going to start with three people, and see how it goes.

We were going to ask about Laclede’s approach to risk and whether you have a chief risk officer. Those duties are handled here, then?

We don’t have anyone called a chief risk officer, no. It’s a lot like corporate governance: we had a lot of these functions, but they weren’t formalized and documented. This will be more formalization and structure put upon the process through this department.

What about the rest of Sarbanes-Oxley? Was that a lot of heavy-lifting to comply?

It was a lot of paperwork. We had most practices already in place, but not documented. We added a few things to our website, but mostly it was a matter of formalization. The only thing we didn’t have was an outside hotline, and we hired The Network as our hotline administrator.

What about corporate ethics? Does that fall under your purview?

It’s a combination of me and the head of internal audit. A lot of times he and I will do joint seminars for employees; I do a lot of the drafting, but we work together on the implementation. We already had a code of business conduct for a long time, so we didn’t have to start fresh on that … It’s a joint effort.

What subject might get covered in one of your workshops?

Well, all new employees are trained by HR on our codes and policies during orientation. We went out last year and did special visits to go over the code again and to make sure they were aware of the new hotline and how it works. It often depends; if something happens, I might decide to go out and hold a session somewhere. But it’s at least once a year that we have some communication with our employees.

And what are your top one or two governance priorities for 2005?

Well, I guess we’ll have to spend some time looking at those new standards on independence from the PCAOB on independent auditors. It’s a little tougher and tighter now, but I think we’re OK … Section 404, obviously, will still be at the forefront. This is our first official year, so we want to stay on top of that. Those are pretty much the big ones.

Thanks, Mary.

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