Final settlement of the WorldCon case, which involved eleven outside directors contributing rather more than they received as compensation for their stewardship of the company and guardianship of the interests of their shareholders, was announced today. The directors’ settlement, announced back in March involved them paying, between them, a total of $20.25 million from their own pockets – and this is in addition to the amounts paid out to the creditors and shareholders under the board’s Directors’ and Officers’ insurance policy.
What does this mean for corporate governance generally, and for IT governance specifically? Well, it clearly establishes the outside directors of a company as a legitimate, attractive target for aggrieved creditors and shareholders when a company goes bankrupt. Given the increasing extent to which organizations are dependent on IT – and the extent to which a significant IT failure can now impact the long term competitiveness and viability of any organization – it’s not going to be long before the expectation of transparency around general corporate governance extends to IT governance.
Sure, SOX has already transformed the early awareness of the need for proper IT governance, that was created by the Turnbull report in the UK, into a far more significant board issue. Let’s hope it doesn’t take a significant IT failure, leading to a corporate collapse, before boards really get to grips with their responsibilities. Reality suggests otherwise, though.