December 2 marks the 15th anniversary of the Enron
bankruptcy—a near cataclysmic event that ultimately led
to a series of significant legislative, regulatory and public
policy developments that inform governance practices to this day.
The entire board would be well served by a brief overview of the
governance impact of Enron, particularly since many directors were
not in board service 15 years ago.
The primary relevance of Enron to today's corporate
boards—including those of large nonprofits—is twofold.
First, it provides jaw-dropping examples of problematic
governance conduct from which no board, at any time, is safely
immune. The Enron board—once acclaimed for its
performance—committed a series of significant failures of
oversight with respect to multiple fatal, related party
transactions. These failures were grounded in the
"flawed" decision to proceed with major transactions so
complex that even the board lacked an understanding of their
purpose and structure.
