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News October 18, 2004 Issue

How to Get Senior Management Buy-in

Behind every happy CCO stands a group of supportive senior managers. But what happens when a CCO isnít getting buy-in?

At last weekís NRS conference, Dechert counsel Elizabeth Knoblock suggested that CCOs who are not getting buy-in seriously consider moving on. "If you canít get your company to take the compliance program as a serious, important new federal legal development," she said, "then you need to either leave, or step down from the position and say ĎIf you donít trust me to do this job, then give it to someone that you will listen to because I donít want the liabilityí."

CCOs looking to leave will have ample opportunity, as evidenced by the number of conference attendees who indicated they are regularly called by head-hunters. But short of looking for a new job, how can a CCO get buy-in at his or her existing firm?

"Fear is a fabulous way to motivate people," said industry consultant Ann Oglanian. (Humor, she said, only goes so far). Try a simple question along the lines of "Are you aware that your e-mails will be singled out, Mr. CEO, for review by the SEC?"

Oglanian said that she tries to build awareness by routinely forwarding summaries of recent enforcement cases to senior management in relevant areas of the firm. Typically, she puts a short description on the top, along the lines of "I thought you would be interested, hereís the bottom line, the firm paid a $5 million fine, thought you should know." Demonstrating how another firm got in trouble for a similar issue, she said, is helpful when "they just donít get it." (Of course, routine forwarding of copyrighted material may violate copyright restrictions, so consider whether you need to ask for permission first.)

Michelle Jacko, V.P. Compliance, at LPL Financial Services, suggested that CCOs build support within the relevant business line before approaching senior management with a resource request. In a previous position, she said, she decided that her firm needed the help of an outside proxy voting service. To demonstrate to her firmís CEO that the cost of the service provider was justified, she created a form spelling out the requirements of the new proxy voting rule. She gave this form to the person who was going to be responsible for voting proxies, and asked the person to fill it out. "It came back with a lot of blanks," Jacko said. She then shared the results with others in the firm involved in the proxy voting process. "They saw the value of getting a third-party service provider," she said. By the time she was ready to ask the CEO for the decision, "I had a whole senior management team coming in saying, ĎWe canít physically do this given the size of our firmí." By helping him understand what the rule really required, by the time that the decision "hit his desk," the CEO already understood that the firm had to go with a third-party provider.

Another tip for getting buy-in: when negotiating a new employment contract, consider asking for language that the firm and its senior management will support your role and provide you with requisite authority within the firm. Jacko said her employment agreement actually has language to that effect.