John Dedrick, chairman of the board at West Bend Mutual Insurance Co., attended the first annual Directors Consortium at the University of Chicago Graduate School of Business in Chicago Aug. 21-23.
The consortium was described by the New York Times as a "novel post-Enron boot camp."
Enron, WorldCom, Global Crossing, ImClone Systems, Citigroup … Indeed, the corporate landscape is becoming littered with companies governed by boards of directors who either acted inappropriately, looked the other way or simply weren’t knowledgeable enough to perform their oversight duties.
For Dedrick, attending the seminar was simply of matter of protecting himself, his company and his policyholders, even though West Bend Mutual is not publicly traded.
"We are a mutual company, and with 150,000 policyholders, we have similar fiduciary responsibilities," Dedrick said. "Our policyholders are the owners of our company.
"We thought a seminar on board governance would be useful," said Dedrick. "I believe the three days were worthwhile."
And memorable, given the setting.
The seminar was attended by 70 executives, including representatives from companies such as Pfizer, McDonald’s and Motorola.
The objective of the seminar, according to the University of Chicago Graduate School of Business, "to help attendees evaluate the role of directors in strategy development and understand the questions board members should be asking management about financing, disclosure, governance, succession planning and compensation."
Dedrick said he found some useful information in sessions about the roles of compensation committees and audit committees. In fact, West Bend Mutual’s board intends to form an audit committee.
Dedrick and his classmates were actually given homework to complete before the seminar. The assignment: Study Enron’s balance sheets from the three previous years.
"There was an absolute disconnect there, and the $64 question is, ‘Why wasn’t it noticed by the Enron board?’" Dedrick said.
In hindsight, the dramatic shifts in cash flow at Enron should have been clear warning signs for its board, according to Michael Malefakis, senior associate director of the executive education program at the University of Chicago School of Business.
The seminar was co-hosted by the Chicago school, the Standford Law School and the Warton School of the University of Pennsylvania and will become an ongoing series, Malefakis said.
"This is becoming very much the hot thing in the educational market," he said. "There seems to be a sense of urgency on the part of directors and future directors."
Executives paid $4,950 each to attend the Chicago session, which ultimately had a waiting list.
Dedrick, 63, retired March 31 as the chief executive officer of West Bend Mutual after holding that position since 1982. He was succeeded in the CEO position by Anthony Warren.
Dedrick is adjusting to his new role as chairman of the company’s board.
"Ideally, I don’t believe a CEO should be in office that long," Dedrick said. "I believe there’s something real valuable that happens when there’s some turnover. That’s healthy."
Sept. 13, 2002 Small Business Times, Milwaukee
