ACC  Chief  Legal  Officers  Roundtable  

May  18,  2016  –  New  York    

ACC Chief Legal Officers Roundtable – Executive Summary – Page 1 of 3

ACC Chief Legal Officer Roundtable with Ben Heineman The Inside Counsel Revolution: How to Be a Partner to the CEO and Guardian of

the Corporation

Hosted by:

Mike Holston, Executive Vice President and General Counsel, Merck & Co.

Executive Summary

This Executive Summary provides a high level summary of the key points of discussion and takeaways arising from the Roundtable. ACC CLO events are candid, open discussions held under the Chatham House rule; i.e., nothing said may be attributed to any individual speaker.

Session participants The following individuals participated in the CLO Roundtable:

David Brill, General Counsel, Gemini

Maureen Brundage, Former Executive Vice President & General Counsel, The Chubb Corporation

Brian Campbell, Vice President, Business & Legal Affairs & General Counsel, DHI Group

Ben Heineman, Senior Fellow, Belfer Center for Science and International Affairs, former General Counsel, General Electric, and author of The Inside Counsel Revolution

Mike Holston (Host), Executive Vice President & General Counsel, Merck & Co.

Shawn Johnson, Senior Vice President & General Counsel, Safari Energy

Sandra Leung, Executive Vice President & General Counsel, Bristol-Myers Squibb Company

Reginald Rasch, General Counsel & Corporate Secretary, Rakuten Marketing

Key takeaways 1. A GC striving for both high performance with high integrity in their organization must not

only consider the legality of their company’s actions, but also ask if it is right. GCs are not

         

 ACC  Chief  Legal  Officers  Roundtable  

May  18,  2016  –  New  York    

ACC Chief Legal Officers Roundtable – Executive Summary – Page 2 of 3

the conscience of the company – this role belongs to everyone within the business, including first and foremost the CEO and senior leadership of the organization. In an organization, the CEO will be the main decider of issues 80% of the time, but the GC must sometimes raise the question of what is right for the business to do.

2. A GC must do terrific due diligence on the company before deciding to join them and to be comfortable with what you learn. It is important to understand the highest priorities of the business as well as their expectations of you in the role.

3. Give your business people choices rather than just saying “no”. Assemble all the relevant facts, explain all the options and set out the pros and cons to the various options you present. Make a recommendation to the business as to which option you suggest and why. You have to do the full analysis first, and be fair in setting out the choices.

4. Sometimes good outcomes can arise when the company rejects your advice to not do something, resulting in problems and scenarios you foresaw. The company can learn from such mistakes - albeit relatively minor things that do not create a big problem for the organization.

5. Invest in your C-Suite relationships from the beginning – get to know what their sore spots are, and try to get to them before they make a recommendation to the CEO - share your viewpoint with them. Make sure that when your C-Suite peers go to the CEO with a recommendation, it has been well socialized beforehand. A good CEO makes it clear that he or she expects the C-suite team to work well with one another.

6. How much of an independent relationship should the GC have with the Board? A best practice: Let the CEO know when you are going to talk with Board members – be transparent to avoid feelings of mistrust. Get to know all of your directors, and visit them in their offices and offer to help with education, on-boarding, etc.

7. When do you decide to stand up in front of the Board and disagree with the CEO? This is a very hard call to make, but sometimes it does need to be done. The groundwork must be laid extremely well in advance. You have the obligation to give the Board all the choices. CEOs may not like that, but you owe the Board a full discussion of all the risks.

8. Be sure that you protect and defend the in-house counsel that work for you and that they know that you have their back. In running the law department, there are very few issues on which the GC must make the final decision.

         

 ACC  Chief  Legal  Officers  Roundtable  

May  18,  2016  –  New  York    

ACC Chief Legal Officers Roundtable – Executive Summary – Page 3 of 3

9. Never compromise integrity and credibility as a lawyer. But know that some board members may hold the view that you should never contradict the CEO and do not understand the independence of GC role. To keep your integrity, you always have to be prepared to quit.

10. To create a culture truly focused on compliance, you have to be willing to fire very senior people even over an act of omission, i.e. for not creating the right culture which allowed for major transgressions to occur within their organization.

11. Boards can only deal with 10-15 issues, so prioritize the most important issues that you want them to focus on.

12. Have a corporate compliance “police blotter”, with real cases of what happened, with no names, but covering what the violation was, outcomes, etc. Link this back to the company’s guidelines and integrity principles.

13. One company actually made a real movie of its greatest corporate failures and narrated and presented it in a humorous way. It was shown to everyone who joined the company and was extremely powerful as an example of what not to do and what the corporate values are.

14. Your corporate culture boils down to who you hire, who you fire, and who you promote – that is what you stand for.

15. Have robust compensation recovery policies to claw back wrongful gains from the company and make it broader than what is required under Dodd-Frank. Such a measure is powerful and sends a strong message. Integrity should be a part of compensation, including options, bonus, goals, 360-degree reviews, etc. There are ways to measure this and include it in compensation.