As though we needed another reason to be disgusted with corporate governance in the United States, here's a gem from The Wall Street Journal (subscription required): "So far this year, 46 outside directors who are CEOs or chief financial officers left the boards of 42 companies in three struggling industries -- financial services, retail and residential construction -- concludes an analysis for The Wall Street Journal by Corporate Library in Portland, Maine."
Directors at companies like Ford (NYSE: F), General Motors (NYSE: GM), Sprint Nextel (NYSE: S), and American International Group (NYSE: AIG) have been resigning, citing the huge amount of time required to be a director at a company faces extinction.
Oh where to begin. First of all, isn't it a little bit messed up to go along collecting a salary in the $150,000 per year range (which is what GM directors are paid) to go to a few meetings a year when times are good, and then head for the hills when the going gets tough? Isn't that like working for ten years as a security guard at a posh country club without incident and then calling in your resignation at the first sight of a burglar?
But maybe it's all for the best: Are the General Motors directors who were dumb enough to keep authorizing dividends even as the writing was on the wall about the company's problems really going to be helpful in navigating through the current crisis? At the very least, can't they return the fees they received for this "service"?
Ultimately, these are the people who should be blamed for GM's problems. They let Richard Wagoner continue on a reckless course because they didn't have a large stake in the company. The icing on the cake is the fact that Wagoner is still CEO and chairman of the board, a combination of titles that is universally recognized as a sign of overly concentrated power and governance problems.
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Reader Comments (Page 1 of 1)
11-23-2008 @ 11:29PM
BHarrison said...
Well, it was a rhetorical question wasn't it? The answer was clearly provided by the statement: ". . . these are the people who should be blamed for GM's problems."
These are merely the "rats" leaving the sinking ships after they chewed the holes in the ships' hulls . . . they realize that they ARE the guilty parties; and they don't want to wait around for the personal accountability to be laid on their shoulders. Their leaving the Boards will be beneficial in the long run; we need new Boards with ethical and responsible Board members to straighten out the messes created by the old Boards.