In response to the greatest accounting scandal in United States history, significant attention has been focused on how to prevent another MCI/Worldcom disaster in the future.
Richard C. Breeden, the court-appointed Corporate Monitor for MCI, has filed his recommendations for improving MCI's corporate governance with The United States District Court for the Southern District of New York.
His recommendations, entitled "Restoring Trust," contain 78 suggestions for improvement, covering the selection of directors, qualification, conflicts and independence standards for board members, the functioning of the board and its committees, establishment of the position of non-executive chairman, specific limits on compensation practices, equity compensation programs, accounting and disclosure issues, ethics and legal compliance programs and other areas.
His suggestions can be seen as a roadmap for any corporate entity to ensure a higher level of corporate governance.
Mr. Breeden, a former commissioner of the Securities and Exchange Commission, addresses a number of major themes in his report, including:
- Establishment of a Governance Constitution for the Company
- More shareholder communications
- Selection of Directors
- An active, informed and independent Board
- A non-executive Chairman of the Board of Directors
- Active Board Committees
- Term limits and auditor rotation
- Compensation limits
- Equity compensation programs
- Enhanced transparency, internal controls and finance department
- Legal compliance, an enhanced legal department, and ethics programs
- Change in control devices