What Was Your Biggest Battle —So Far?
from
November/December 2002
John Gerdelman, 49
President and CEO, Metromedia Fiber Network, White Plains,
New York
APAC Customer Services, McData, Sycamore Networks
It
was a proxy fight—a war between the CEO and the founder. That was one
of the biggest nightmares I’ve ever gone through. It lasted for a year,
and during that time business did slip. It came down to me as the
deciding vote. I voted with the CEO. And in retrospect, it was the
right decision for the company.
|
Fight Card
44% of outside directors think top managers who receive stock as part of their total comp should keep it as long as they have their jobs. But only 29% of directors who are also CEOs like the idea. |
Robert E. Mittelstaedt, 59
Vice Dean, Wharton School of the University of Pennsylvania, Philadelphia
Innovative Solutions & Support, Laboratory Corp.
of America Holdings
I
was on a board many years ago, and it was over an ethical issue that
had to do with the CEO and a vacation home. It got resolved by my
leaving the board, because the CEO was committed to doing it and the
other board members were willing to go along with it.
Michael S. Ariens, 68
Chairman, Ariens Co., Brillion, Wisconsin
WPS Resources
About
10 years ago, I was president of my family’s business. We were
struggling; we were not doing well financially. One of my directors, a
dear friend, came to a board meeting and said, “Mike, we think you
should bring in a president. We don’t think you should continue to run
the operation. This corporation may not make it if we don’t get some
new blood in here with a different approach to your marketplace and the
financial requirements of the corporation.” I said to myself, “I hired
these guys to protect the family if they saw I was not being adequate,
or if something was missing.” It was their responsibility to do
something about it. It could have gone into a fight, but that would
have caused a horrible breakup. So I said, “Okay.” They had an
individual available; I met with the guy, approved it, brought him in,
and he was here for five years. It worked out pretty well.
Mark A. Anderson, 45
President, CEO, and Director, Community First Bankshares, Fargo, North Dakota
The best boardroom fights I’ve seen I would never want to appear in print.
Hal Logan, 57
CFO and Director, TransMontaigne Inc., Denver
Graphic Packaging International, Suburban Propane Partners, Union Bankshares
This
had to do with a company, 10 years ago, not a board I’m on now, that
had been spun off by a corporate parent. The parent company had two
representatives on the board.
They
were trying to sell the company behind our backs. I settled it by
throwing a temper tantrum in the board meeting, saying I thought their
actions were irresponsible and harmful to common shareholders, and if
they didn’t stop I’d resign and hold a press conference and tell people
why I’d resigned. I said they should let our management and our board
control the process. They stopped. About nine months later we sold the
company, but we did it in a manner that was beneficial to the
shareholders and management. I’m not a confrontational board member,
and I think I caught them by surprise.
Roderick M. Hills, 71
Partner, Hills & Sterns, Washington, D.C.
Chiquita Brands International, ICN Pharmaceuticals
It
was over a number of decisions, including an effort to acquire two
companies. It struck me and one other director simply as the desire of
the CEO to run a bigger company, rather than any strategy to enhance
the company; the risk-reward ratio was way out of whack. It became so
bitter that the CEO told me I wouldn’t be on the management slate for
reelection, that that would take care of me. By myself I conducted a
proxy fight, and my side took control of the company. It was true
adventure, but I wouldn’t want to do that more than once in my life.
Daniel W. Derbes, 72
President, Signal Ventures, Solana Beach, California
WD-40
The
biggest fight in my memory took place over a six-month period and
involved a very truculent board member who wanted to see the CEO fired.
This member actively lobbied all the other board members with long
phone calls about why the CEO’s performance was not satisfactory. The
majority of the board disagreed, but we had several special meetings of
the board to consider all the grievances. Each member was polled for
opinions on the CEO’s performance and on how, if dismissal was
approved, we might wind up removing him. The board elected to support
the CEO—but also pointed out to him the deficiencies in his performance
that came out of all our discussions. He made successful modifications.
And the dissident member would probably admit that although he lost the
battle, progress was made.
John Bohle, 59
Partner and Senior Vice President, Ray & Berndtson, Los Angeles
Aztar
Any
strong disagreement between the CEO and boards I’ve been on has been
open and direct. We told one CEO that he would have to change or we
would go. I ended up going—resigning.
Sheldon Lubar, 73
Chairman, Lubar & Co., Milwaukee
C2, Grant Prideco, Jeffries Group, MGIC Investment, Weatherford International
Ultimately, that’s the one thing you can always do: vote with your feet.
Adam Aron, 48
Chairman and CEO, Vail Resorts, Beaver Creek, Colorado
As
president/CEO and member of the board of Norwegian Cruise Line Ltd., I
was as strongly opposed as one could be to the board’s strategy for a
financial turnaround at perhaps the most precarious time in our
history. The plan required a vote, and I politely and respectfully but
unswervingly informed the other board members that I would vote against
it.
In seven
hours of stressful face-to-face and continuous debate, I held to my
guns that the board needed to (a) change the plan materially in five
specific ways, or (b) fire me and then do what it wished, but with me
as a vocal opponent. I had no choice but to be firm, as thousands of
jobs and hundreds of millions of dollars of lenders’ money were at risk
if we were to misstep in any way.
Fortunately,
the board accepted my changes, the modified plan worked, and the
company became successful instead of collapsing. Drawing a line in the
sand should be done in only the most dire circumstances. But when
principle demands resolve, directors have no choice but to trust their
gut and hold dearly to their views.
Charles F. Pollnow, 70
Chairman, President, and CEO, Brulin Corp., Indianapolis
DT Industries
Years ago I was a director on a board and happened to be a large stockholder. The board wanted to merge with another company, and I saw it as a total disaster. We got into very serious discussions, and it finally got to a point where I said, “If this proceeds, I’m going to use outside counsel to try to stop it.” The other company went bankrupt about a year and a half later. But nobody told me thanks down the road.
