Executive Word -- Restoring Investor Faith

Dec. 21, 2004
ConocoPhillips Chairman Archie W. Dunham outlines manufacturers' role in rebuilding confidence in business community.
Archie W. Dunham Chairman of the Board ConocoPhillips, Houston Born: 1938 Education: Holds a bachelor's degree in geological engineering and a master's degree in business administration from the University of Oklahoma. In 1999 the university granted him an honorary doctor of humane letters degree. Career Highlights: 1966: Joined Conoco Inc. in Houston as an associate engineer. 1979: Named president of Douglas Oil Co., a Conoco subsidiary in California, where he had been serving as executive vice president. 1992: Became Conoco's executive vice president, exploration production. 1996: Named president and CEO, Conoco Inc. 1999: Elected chairman of the board of Conoco, in addition to his other roles. 2002: Named ConocoPhillips chairman upon completion in August 2002 of the merger between Conoco and Phillips Petroleum Co. Family: Wife, Linda, three children, eight grandchildren.
Public and investor faith in the integrity of the business community has been severely shaken in the past year or so by a seeming epidemic of accounting scandals. As the recently named chairman of the National Association of Manufacturers (NAM) trade organization, Archie W. Dunham, chairman of Houston-based energy company ConocoPhillips, has made it a top priority to help restore public confidence in corporate America. IndustryWeek spoke with him about this challenging goal. IW: Does an ethical lapse by corporate America account for the recent rash of scandals? Dunham: No. The vast, vast majority of corporations and CEOs in America are scrupulously honest. When you look at the 17,000 public companies in America and you look at the companies that are on the front pages of the newspapers around the country -- I would guess it's less than a dozen [that have had these problems]. But those dozen CEOs have tarred all of us with the same brush IW: What can manufacturers do to help restore confidence in corporate America? Dunham: First, I think every company -- regardless of size -- needs a written, hard, strong code of ethics. You have to have a culture that values integrity, and that's the No. 1 prerequisite. Second, those companies that are public companies, that have boards of directors, need to make sure that the [Sarbanes-Oxley Act of 2002] is just the minimum standard of excellence that they should be practicing when it comes to disclosure and transparency. And boards need to be principally comprised of outsiders, of independent directors. In my opinion you shouldn't have more than two inside directors, and then only if you have a separate chairman and a president and CEO. If you have one person in all of those jobs, then I think you should have a board with only one inside director. IW: How important is the need for a strong board of directors? Dunham: I don't think you can overemphasize it. Those companies that have strong boards, who are respected, who have judgment, that truly are independent . . . they're going to give the best advice and counsel to the CEO. And I think most outstanding chairmen and presidents and CEOs want good advice. That's why you have a board. You want the board to help you not make any major error in judgment. You don't want to make that mistake that puts a hole in your ship below the waterline. IW: You have said companies with strong corporate governance and ethics need to get their stories out. How? Dunham: That means in your annual report, in all your documents, your quarterly reports, in the letters you send to shareholders, the speeches you make at your local rotary club or business club or forum, that you ought to be sharing what you're doing within your own company with respect to a code of ethics, and integrity and values and corporate governance. IW: How difficult do you expect it to be to rebuild the public's and investors' faith in the business community? Dunham: It is the responsibility of organizations like NAM, the Business Roundtable, the Business Council, the trade associations and the individual companies in America to talk about their codes of ethics, to talk about corporate governance in their companies, to brag about their boards. I think if all the CEOs are committed to doing that in 2003 and forward, we will slowly make a difference. But it will not happen quickly. IW: How will you measure the success of your efforts? Dunham: I think it'll take years of sustained, good performance in this area to change all of the investor concerns, but as more and more investors return to the stock markets -- and you see the market moving in the right direction, which means people are buying and not selling -- that is probably the best indicator of whether or not we're making progress in this area. E-mail nominations for Executive Word to Editor-in-Chief Patricia Panchak at [email protected].

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