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Published on: 1/7/2005
Last Visited: 1/31/2008
John M. Thompson, chairman of the board of Toronto Dominion Bank Financial Group (TD Bank), says both the regulations and the environment are causing all directors to spend far more time on all board issues--some imposed and some self-imposed.Headquartered in Toronto, TD Bank is listed on the New York Stock Exchange (NYSE), so it comes under U.S. as well as Canadian rules.Where rules differ, Canadian rules take precedence for Canadian corporations, he says, but he believes that regulators are "doing their best to harmonize things, because in a free-trade environment, it makes sense to have common rules on both sides of the border."
Thompson, who first served on a board in the 1980s when he was president of IBM Canada, says that board members are working harder now than 10 years ago.He's now on three boards: TD Bank (where he chairs the corporate governance committee and is a member of the management resources committee), Thomson Corp. (where he chairs the corporate governance committee and is a member of the audit committee); and European-based Royal Philips Electronics (where he is on the supervisory board and remuneration committee).
Increased Workloads, Especially for Audit Committees
A downside of the new rules, Thompson argues, is that with so many regulations, "if you're not careful, you can get pre-occupied by doing all the mechanics of those regulations and miss the big picture."For example, TD Bank is subject to about 24 regulators, so to the extent that those regulations are different or not harmonized, it's like paying your taxes to 24 different tax jurisdictions.All this creates a lot of conflict, he says, but he believes this downside is greatly outweighed by better performance by boards on behalf of shareholders.
A lot of TD Bank work, he says, is quite detailed, and a lot happens in committees, so committee meeting time has gone up, especially preparing for them.One step TD Bank's board took was to split the audit committee into two--the audit committee and the risk committee.As chairman, he says he's conscious of making sure that he frees up enough board time for open sessions to discuss strategic issues and things that are on the minds of directors or management.
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John Thompson thinks it will be difficult to recruit directors for a few reasons.First, there is the personal liability probability (if you join the board of a company that becomes involved in a shareholder lawsuit).Second, he says, the time commitment is such that people can't join as many boards, so there are fewer candidates (one set of candidates that is scarcer is sitting CEOs whose company boards restrict how many boards they can serve on).
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Despite the problems, however, Thompson believes, "For those who are committed, interested and enthusiastic about doing it, I recommend it."
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Thompson says that as a sitting CEO, it's useful to be on the board of a leading company, because you gain another perspective of how someone else runs a business who may be facing similar problems that you face.
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