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May 31, 2006

Society turns 60

American Society of Corporate Secretaries celebrates 60 years as the corporate secretary's source of all things practical.

In October 1946, as America began what would be one of the most dramatic and sustained periods of economic and social development in its history, a small group of men came together to form the American Society of Corporate Secretaries. At the time, the average life expectancy stood at 60.8 years. Soon, the society itself will surpass this figure, as 2006 marks the organization’s 60th year in existence. During that time, the group and the country have experienced significant change – and both have grown significantly.

Of course, the formation of the ASCS wasn’t the only historically significant event of 1946. It also marked the official mass-market release of one of the world’s most enduring children’s toys – the slinky. And just as the slinky remains a constant in the lives of kids far and wide (and many adults), the ASCS maintains a crucial role in the professional lives of every corporate secretary.

The business and social environment is considerably more complicated now than it was back in 1946. To help illustrate this point, consider that it cost the society the princely sum of $43.70 to incorporate, a postage stamp would set you back three pennies and movie audiences around the country were enjoying Annie Get Your Gun – the top movie that year – for about 30 cents.

Membership in the society grew quite quickly at first, and a number of regional chapters were established during the fledgling years. Chicago became the first chapter in January 1948 and was closely followed by Northern California/San Francisco in September of that year. By 1951 Pittsburgh, Los Angeles, Detroit and New York all had their own official chapters. There would eventually be 25 in total.

The regional development of the society made perfect sense, and much of the growth in membership was driven by the need for corporate secretaries to share information on a local level. During that time, long-distance travel was not as easy as it is these days, so it was more difficult for members to meet nationally. Furthermore, individual states were often the drivers of regulation at that time, so members needed to work together to develop best practices based on regional regulatory challenges.

National office takes shape

As the society continued to grow on the regional level, there was a need for a central administrative headquarters. This was established in the form of the national office, which was set up in New York in 1952, and the city remains the administrative center to this day. Other significant events taking place in 1952 include Elizabeth II being ordained to the throne of England, Richard Nixon’s famous Checker’s Speech and the launch of The Today Show.

Interestingly, 1954 served as an important year for both the society and the country as a whole, as the ASCS admitted its first female member while the Supreme Court banned segregation in schools. (Far less important, it was also the year of the first color broadcast of baseball’s World Series.)

A women’s touch

The admission of the first woman was an important milestone for the society, but for many years female representation remained minimal. In fact, when Carol Strickland joined in the mid-1970s, she was one of only three female members.

Strickland, who currently serves as corporate secretary at US Trust Corporation, says this demographic has changed incredibly in the almost 30 years she has been a member. Women now make up about a third of the total membership, and eight of the past 17 chairpersons of the society have been women. Sheila Gibbons (then Sheila MacAvoy Block) has the distinction of being the first female chairperson – she took up the position in 1989-90. In fact, women have filled this role five of the last six years.

This dramatic increase has more to do with the changing faces of corporate America than any internal workings of the society itself. David Smith, the society’s current president, explains that the vast majority of corporate secretaries are either former lawyers or people with some form of legal qualification. It is this fact that contributed most to a lack of diversity among the secretariat community.

‘Until the 1980s, the legal profession was almost entirely male-dominated,’ Smith says. As women started studying law and moving into more senior business roles, they started becoming corporate secretaries. ‘With the changing demographics of the workforce, the society changed almost as rapidly,’ he highlights.

The increase in the number of female members and their prominence at the senior level has had a lasting effect on the society. Strickland, with tongue firmly in cheek, points out that women’s famous ability to multitask makes them ideal candidates for the corporate secretary role. ‘It is a position where there are always a lot of things going on at once and sharp organizational skills are vital,’ she says.

As the society’s membership has grown, and its demographics have changed, so has the national conference. The annual event has always been the focal point of the year for the society and many of its members, and it has led to corporate secretaries gracing the halls of some of the finest hotels in the land. Many long-term members list the Greenbrier as a personal favorite. In the photo on this page, you will see four rather well-dressed corporate secretaries preparing for a brisk morning on horseback. No doubt their minds were firmly on governance and business the rest of the time!

All work and no play

Social activities have always formed a significant part of the society, and nowhere is this more evident than the national conference. Smith points out that the conference has ‘always been a family-oriented affair, but it is definitely becoming more so.’ It is estimated that the 2005 conference in Los Angeles was attended by 150 children. Keeping them entertained is a constant challenge.

Most members who regularly attend the national conference suggest that they learn more about their jobs and leading practices during social activities than anywhere else. This is because the event has always been designed as an information exchange, and the corporate secretary faces the unique challenge of isolation. They are usually the only person at their company performing the role, although some companies have started building larger teams in recent years. This forces secretaries to learn through exchanging ideas, and best practice is formed through robust debate of the issues.

‘There is no formal qualification that a corporate secretary needs to get the job,’ says Steve Norman, corporate secretary and corporate governance officer at American Express, society member of 25 years and chairman in 1994-95. This is one of the things that sets the society apart from other professional groups like the American Bar Association. You might have a team of lawyers to run ideas by, but a secretary doesn’t have that luxury. This is one of the reasons the society has such a collegiate and egalitarian attitude.

‘I can’t recall the number of times I have picked up the phone or attended a society event and debated a solution to a problem with another member,’ Norman says. ‘We can learn a great deal from our peers, and I hope the society always retains its open and communicative feel.’

Nick Calise, who has been a society member since 1976, agrees. ‘The society, and the annual conference in particular, is a wonderful networking opportunity, and in the early days this was the biggest plus, he notes. ‘If you had a comment or concern, you could always call another member and discuss their experiences.’

While he has not attended a conference in several years since retiring from his full-time career, he saw significant changes in the time he has been a member, and he attended every year he was a member. ‘The conference as the function has evolved. The issues faced by the corporate secretary are changing, and one of the biggest is the advancement of shareholder activism. Years ago, only a handful of these types would show up. Now they are everywhere. One of the great things the society has done is getting senior representatives from those groups to attended and even speak at the conference so we all get a better idea of what they are thinking.’

Calise feels that over time the society has become a far more professional organization and now provides a much higher level of service than it ever did before. ‘The society offers a great many tools for the corporate secretary and other people involved in the compliance and governance function,’ he says. (On a lighter note, Calise tops the list of the most interesting jobs now being performed by a former member of the society – he is a part-time ski instructor in the Vale area of Colorado. Any member looking for a lesson might be able to negotiate a good rate.)

Judith Cion, 25-year member and former chairman, has seen several significant changes during her time at the society. ‘When I first joined I was in Atlanta, so I went to the local chapter meeting. While I have never been to a fraternity meeting, it felt like what I have always thought fraternity meetings would be like,’ she recalls. ‘Everyone would get up and introduce themselves and then the visitors and new members would have to do the same. There was definitely an air of ritual about it, and for someone that had never seen it before, it was a little strange – good, but strange. That is the way some of the other chapters work as well, and it is a great way to get to know your fellow members.’

New members, new feel

But times have changed, and so has the membership, Cion explains. ‘The society and David Smith have done a lot to expand membership further down the corporate secretary chain,’ she says. Twenty-five years ago, the corporate secretary was a very senior role and was normally a close friend of the chairman. Because of this, she feels, they had significant influence.

Since that time, the role has evolved and more people are involved in the compliance and governance fields. The society recognizes this and has done a good job of expanding membership to include the new people not only in the particular job, but in the general field, she explains.

The national conference, according to Cion and other members, has also changed to reflect the newer membership. ‘There was a time when you would never even dream of showing up to a national conference in anything other than a suit,’ she remembers. While all her other business trips involved mostly carry-on luggage, she says the national conference was always ‘a two-suitcase affair.’ These days the event is far more casual in terms of dress code, although you still see many nice suits and evening gowns.

A quick look at the front cover of this issue offers a feel for the standard of dress of years gone by. As was the tradition for many years, the society would arrange for a photograph of all attendees. (This is no longer possible due to the size of modern events.) This picture was taken on the front steps of the Homestead in 1957, and careful examination reveals two female attendees. Can you find them and, for extra credit, provide names?

Terry Gallagher, who has been an active member for 25 years, recalls some of the lighter moments of the national conference. He generously shares the story of the first (and last) time his son attended an annual conference at the Greenbrier. Showing a strong entrepreneurial nature, his son discovered that, by using his father’s room key while he was in meetings, he could charge almost anything.

‘They went fishing, carriage riding and a lot of other things,’ he recalls. ‘I knew nothing of this until I came to check out and was presented with a bill for $1,300 – all of which was my son’s doing. I resolved then that this would be his last ASCS conference.’

For the mathematically minded, $1,300 in 1975 is the equivalent of $4,800 today. Just to help put things in perspective, that was also the year Sony released the SL6300 VCR – the first ever BetaMax recorder – for domestic use. And retail value at the time was – you got it – $1,300. I guess you could say that this was his own small-scale governance failure.

Gallagher, who is now retired and splits his time between Hilton Head Island and Palm Springs, praises the society’s expansion and increased involvement in the area of corporate governance. He tells how the role of the corporate secretary has become far more responsible in recent years. ‘The position was always a natural fit for the corporate governance officer, and in many cases the role has moved in that direction,’ he says. Gallagher was among the first corporate secretaries to officially hold the title of corporate governance when he was named vice president, corporate governance at Pfizer.

The society has witnessed many significant milestones. In 1957, a mere eleven years after its incorporation, the society signed member 1,000. In 1972, when the Watergate scandal was gripping America, the society would attract its 2,000th corporate secretary. In 1988, as the US gross domestic product broke $5 trillion for the first time, male life expectancy hit 75 years and CDs outsold vinyl records for the first time, membership topped 3,000.

During the 1990s the use of technology had a dramatic effect on the stock markets and the ways US companies conducted business. Recognizing this sea change, the society launched its web site in 1996. By January of the following year, the site was getting 1,250 visitors a month. This rose to 4,000 a month by the autumn of 1998, and coincidentally, the society’s membership reached the 4,000 mark shortly thereafter.

New challenge, new name

Perhaps the biggest and most sudden change the society has ever endured occurred in 2002. Following a string of corporate scandals – and in director response to the collapse of Enron, then darling of the US stock market – Congress enacted the Sarbanes-Oxley Act. This threw governance, compliance and ethics under the business spotlight, and we’ve been there ever since. Indeed, the life of the corporate secretary may never be the same again.

In recognition of this, and to more accurately reflect the responsibilities and duties of its membership, the ASCS decided a name change was in order. After much debate, the name was changed to the Society of Corporate Secretaries and Governance Professionals.

Corporate secretaries are now at the forefront of the new governance and compliance movement, and the society has increased its range of tools and facilities as a result. ‘The society is now one of the principal groups in the area of corporate governance,’ says Bill Mostyn, who takes over as society chairman at the national conference in June. He also feels the society is better placed than many of the professional legal and government groups, because it is the corporate secretary who is directly involved in the areas of disclosure, director education, ethics, compliance and shareholder communication on a daily basis.

As deputy general counsel and secretary at Bank of America, Mostyn is acutely aware of the challenges that corporate secretaries and members face. ‘There is an incredible focus on corporate governance – far more than there was even five years ago,’ he says. ‘The whole function of governance, which often falls to the corporate secretary, has become far more visible. Everyone is getting involved, from government agencies to the stock exchanges to the institutional investors.’
Building and maintaining a stronger relationship with groups like the SEC is high on the society’s agenda, explains Mostyn, who joined the society in 2000. ‘We have always had a good working relationship with the SEC,’ he notes. ‘They look to us for comment on proposed legislation because they are aware that we are a group that, in a lot of cases, has to execute what they are putting into place.’

He explains that the society can provide a lot of benchmarking data and research on matters relevant to governance and compliance, so there is a lot of back-and-forth exchange. The society often attracts senior members of the SEC to speak at the annual conference, and throughout the year it gets feedback and updates, which it shares with members.

Given the rapidly changing governance world and the increasingly broad responsibilities of its constituents, the society faces challenges in remaining at the forefront of governance best practice.

‘Our primary challenge going forward will be to remain relevant,’ says Mostyn. ‘This will involve establishing or maintaining close relationships with the major exchanges, regulatory bodies like the SEC and other industry groups. There are a lot of areas that need to be addressed, and we need to be involved in shaping future issues. But at the same time, we need to stay in touch with what we have been doing for the past 60 years, and that is providing practical and timely assistance to our membership.’

Another challenge is maintaining membership. As the role of the corporate secretary has become more demanding, membership has actually fallen slightly. This would seem counterintuitive, but people have less time to attend meetings. This is where the use of technology is vital, says Smith.

‘The society is working hard to further increase the value we offer to members,’ Smith notes. One innovative feature is the use of the society chat room, where members can post questions and discuss challenges on their own time. Regular updates, research and white papers are also distributed to members via e-mail and made available on the web site.

Although there are many challenges facing the governance and compliance functions, there is one thing that is unlikely to change anytime soon: the close-knit, interactive and supportive feel of the society’s national conference. There will be a lot of intense discussion about the latest issues of the day in between rounds of golf, river cruises and visits to Valley Forge and the Italian market. Of course, who can travel to the City of Brotherly Love and not stop by the Liberty Bell – a perfect example that no matter how much things change, some things will always remain the same.