What’s Your Biggest Frustration or Gripe?
from
November/December 2002
William Robinson, 61
Professor of Law, University of the District of Columbia, Washington, D.C.
Nordson
My biggest frustration doesn’t pertain to the operation of my own company, but rather the impact on our organization caused by the turmoil we are experiencing as a result of malfeasance at other companies. That results in a lack of confidence in our economy. That, in turn, has an impact on our company. It’s like you don’t control your own destiny.
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OOPS
But of the 19% of directors who are individually evaluated, only 37% say it's effective. |
Carol Mills Baldwin, 49
Former CEO, Acta Inc., Mountain View, California
Adobe Systems
If you’re a hands-on person you can get frustrated, because that’s not your role as a director. It’s frustrating to sit there and think, “I would do a better job if I had that particular function.”
Howard Picking, 64
Chairman, Picking Co., Johnstown, Pennsylvania
AmeriServe Financial
My frustration comes when the CEO and certain directors develop this tree-house mentality, as I call it. During my younger days, I think I accidentally became part of a tree house and didn’t know it. We were exclusionary—“Some are in and some are out”—and it was ridiculous. When I realized I was in the club, it was too late and the company was in trouble. That’s why I’m against governance by executive committees.
Jeffrey P. Gotschall, 53
Chairman, President, and CEO, Sifco Industries, Cleveland
National Processing
The board can’t be responsible for audited figures. Management is supposed to put the numbers right. Auditors are supposed to check management. The board will make sure that auditors and management are independent. Okay?
Wade F. Meyercord, 62
CFO, Rioport.com, San Jose, California
California Micro Devices, Microchip Technology
I’ve been on a couple of boards that are large—one of 18 members, another of a dozen— and they are dysfunctional animals. They cannot get anything done as a group. I’m a staunch advocate of small boards where you get to know each other, work together, and get this energy going.
Joe R. Micheletto, 65
President, CEO, and Director, Ralcorp Holdings, St. Louis
Energizer Holdings, Vail Resorts
Trying to find out who is the proper authority on defining directors’ responsibilities. The Securities and Exchange Commission and New York Stock Exchange are trying to change the rules, and now Congress wants to get into the act. Where does the Financial Accounting Standards Board fit in, and who’s going to be the authority?
Frederick Frank, 70
Vice Chairman, Lehman Brothers, New York City
Diagnostic Products, Landec, Pharmaceuticals Product Development
In a public company, it’s the problem of getting appropriate investor funding if you’re not among the Fortune 1,000 companies.
Gilbert S. Omenn, 61
Professor of Internal Medicine, Human Genetics, and Public Health, University of Michigan Health System, Ann Arbor, Michigan
Amgen, Rohm & Haas
The hardest thing is that the stock market doesn’t always value objective performance. There can be so many other factors—psychological and economic, especially—that play a role in a stock’s performance.
Rick L. Burdick, 51
Partner, Akin Gump Strauss Hauer & Feld, Washington, D.C.
AutoNation, Century Business Services
You fly in, meet, and fly out. I don’t think most boards spend enough time talking about the fundamental strategies of the company. In corporate America we tend to shoot where the duck was, not where he’ll be.
Scott Anderson, 44
Principal, Cedar Grove Partners, Kirkland, Washington
Triton PCS, Wireless Facilities
The bone-crunching litigation fear. It’s a very difficult time to be an outside director, because you see folks getting sued for what at worst were mistakes in judgment and at best were situations where the directors simply had no idea what really happened. The risk-reward ratio is out of whack. As a director, you have no real-time information on how the business is operating. All the information you have is filtered through management, which is fine, but only as long as they are forthcoming and honest.
Gregory A. White, 46
Senior Vice President, Conning Asset Management, New York City
Acadia Realty Trust, New Plan Excel Realty Trust
In today’s litigious world, you put yourself at peril of litigation when serving on a board. Even though 99% of the people running companies are honorable, that doesn’t stop the trial lawyers from bringing class-action suits that we can get dragged into.
Theodore H. Schell, 58
General Partner, Apax Partners, New York City
Flag Telecom Holdings, Time Warner Telecom
My biggest concern is the level of personal liability. It is not to say that one shouldn’t take the endeavor seriously and be held accountable for it; throughout my life, I always have assumed I would be accountable for my actions. But I’m consistently concerned that no matter how right I try to act, or how carefully we go about our business, the personal liability I’m taking, when you look at the trivial economic benefit we get for this, is totally out of whack.
Curtis H. Barnette, 67
Of Counsel, Skadden Arps Slate Meagher & Flom, Washington, D.C.
MetLife
Putting so much focus on corporations and directors to resolve issues through the litigation process is clearly the most uncertain, time-consuming, and expensive way to find solutions for these problems.
Robert Furgason, 67
President, Texas A&M University, Corpus Christi, Texas
Hanover Compressor
You’d like to know lots more about the business. But since it’s not a full-time job, you have to assess what’s really important and say that the rest has to be taken care of by others who have the time and responsibility to do it. The board is not there to micromanage. It has to look at the big picture.
Herbert P. Ladds Jr., 68
Chairman, Columbus McKinnon Corp., Amherst, New York
RP Adams
I’d like to see more of a sense of urgency in the companies that I am associated with.
Barbara T. Alexander, 53
Senior Adviser to UBS Warburg, New York City
Centex, CRH, Harrah’s Entertainment, Homestore
The press, particularly in the past few months, has been way too simplistic in its coverage of issues such as accounting matters and the differences of opinion that auditors can have about how best to handle something. The press has created a perception in the minds of Congress and many in the public that there’s a right way and a wrong way—that it’s binary—and that if something has to be restated, then obviously these are bad guys or they’ve done things the wrong way. I don’t mean to imply that there aren’t some instances where it appears that is precisely what happened, but there are also situations where the Financial Accounting Standards Board has changed the way they want things accounted for, or where half of the accounting profession thinks things should be handled one way and the other half feels they should be handled the other way, and there are no bright-line rules.
Tod R. Hamachek, 56
Chairman and CEO, Penwest Pharmaceuticals Co., Patterson, New York
Northwest Natural Gas
Being
a CEO with an outside board, and serving on other boards, I have two
different answers. As a CEO, my first gripe would be the lack of
continuity directors have from meeting to meeting. You have certain
directors who not only don’t do their homework but may be too busy
doing other things, and every time you go to a board meeting you have
to reinvent the wheel for them. Also, occasionally there’s an
individual who clearly doesn’t understand the distinction between
governance and management. It’s not that boards shouldn’t get involved
in management at times—they have every right to question it—but there
are those individuals who get involved in minutiae to the point that
it’s irritating to other board members, because it’s a waste of time.
In the worst cases, people are wearing their egos on their sleeves.
On the other side of the coin, the thing I think is most irritating is if the board tends to treat its members in a two-tier fashion: Those on the executive committee are the inner board, and then there’s the other board. To me, everybody’s a peer on your board, and you have to treat them like that. Also, selecting board members can be an irritating experience, because people tend to look for somebody they know; it’s cronyism.
Robert B. Hodes, 77
Of Counsel, Willkie Farr & Gallagher, New York City
LCH Investments, Loral Space & Communications, Mueller Industries, Restructured Capital Holdings
I think that the idea of putting technical responsibilities on audit committees is wrong. When it’s presented with accounts vetted by good outside accountants, an audit committee cannot detect underlying fraud, any more than the accountants are able to if management is out to deceive them.
Thomas D. Clark, 61
Dean, E.J. Ourso College of Business Administration, Louisiana State University, Baton Rouge
Ocean Energy
My fear in today’s climate is that we will rush to legislation and rules that will produce a multitude of unintended consequences that will take years, and perhaps decades, to play out. The free-market system is working. The problems have been identified, and adjustments are naturally occurring. Systems change best when there is evolutionary change.
Errol B. Davis Jr., 58
Chairman, President, and CEO, Alliant Energy Corp., Madison, Wisconsin
BP, PPG Industries
The major gripe I have is being taken for granted, or not having your input valued. Different industries value boards differently. Industries that are moving from their traditional functions into new areas tend to value boards more than industries that are static, don’t have shareholders to be accountable to, or only have a board because they are mandated to. Mutual insurance companies are a good example. I’ve been on the board of a mutual insurance company, and I have friends who have been on the boards of mutual insurance companies. The commitment to corporate governance, the commitment to keeping board members informed, it’s not nearly as refined there as in a publicly traded company. And that’s not company-specific—it’s industrywide.
Jean Picker Firstenberg, 65
CEO and Director, American Film Institute, Los Angeles
Trans-Lux
Your time as a board member is limited because it is not your primary responsibility, and the frustration is figuring how much you can do within these limitations and still make a significant contribution.
Gary Hedrick, 48
President, CEO, and Director,
El Paso Electric, El Paso, Texas
Regulators, by their nature, have a number of masters to serve, and because of that they aren’t always experts in the field they are attempting to regulate. Oftentimes you feel like the regulators don’t fully appreciate the issues, the facts, the problems that you’re encountering, and sometimes appear to be more politically driven than you would think appropriate.
Herman Morris Jr., 51
President and CEO, Memphis Light, Gas & Water, Memphis, Tennessee
Perrigo
I think the most frustrating part is the learning curve, in terms of understanding the jargon of a particular business and industry. Each has its own language—acronyms—and many times that presents a barrier to full understanding and communication. I frequently want to say, “Let’s use words instead of acronyms.” We’d be a lot better off if we just spoke plain English. It would make meetings a lot shorter, and it would better facilitate discussion. I’m an attorney by education and training, and when I used to try lawsuits I loved adversaries who used jargon, because I knew I could communicate better by just being plainspoken.
Craig J. Duchossois, 57
President and CEO, Duchossois Industries, Elmhurst, Illinois
Blue Rhino, Churchill Downs, Trinity Industries
CEOs who don’t know what they don’t know and refuse to listen.
Patrick Norton, 80
Chairman, La-Z-Boy, Monroe, Michigan
Culp
The
biggest frustration is very simple: It’s when you feel that you’re
doing the best for the board, and the management has pretty much made
up its mind on what it’s going to do and isn’t really receptive to fair
input. You walk out of the room, and you feel like “Why did I waste
this time? These folks already had their minds made up, and they really
weren’t interested in some possibly beneficial dialogue.”
Oftentimes it’s kind of like with children: The medicine they’ve got to take doesn’t taste very good. Down deep, on one hand, they want the help, they want the monitoring, and they want to tap into your brain and all that kind of stuff. But they would sure prefer that they agreed with your recommendations first. And when they don’t, it is sometimes tough.
Joseph L. Bower, 64
Donald K. David Professor of Business Administration, Harvard Business School, Cambridge, Massachusetts
Anika Therapeutics, Brown Shoe, Loews Corp., New America High Income Fund, Sonesta International Hotels
My biggest gripe is when meetings are insufficiently staffed and prepared, so that the board has to manage the process of informing itself as if it were an inquest.
William G. Oldham, 64
Professor of Electrical Engineering and Computer Science, University of California, Berkeley
Cymer, Nanometrics
I’m most frustrated, probably, by the posturing needed to keep the market happy. In reality, growth happens in spurts, but the conventional wisdom all boards of public companies follow is that there must be this wonderful regularity and predictability of growth.
C. McCollister Evarts, 70
Professor of Orthopaedics, Penn State College of Medicine, Hershey, Pennsylvania
Kensey Nash
It would be helpful if the level of information going to board members was greater. You want to anticipate where your next problems are going to come from and how to deal with them. And you need to move through the mundane and perfunctory things you do on a board, so that you have more time for meaningful discussions about the issues.
Hal Logan, 57
CFO and Director, TransMontaigne Inc., Denver
Graphic Packaging International, Suburban Propane Partners, Union Bankshares
The biggest frustration is probably not being given enough time to discuss or think about major issues. Typically what happens, whether it’s a big new acquisition or a big new compensation plan, they’ll call and tell you it’s coming and then send you a big report, and then you get together on the phone or in a person-to-person meeting and they say, “Have you got any questions?” Quite often there’s not enough time spent laying the groundwork as to why are we doing this.
Charles F. Pollnow, 70
Chairman, President, and CEO, Brulin Corp., Indianapolis
DT Industries
I always feel I don’t know enough about the operation of a company. That’s one of the reasons I cut down on my boards and directorships.
Dennis Foster, 62
Owner, Foster & Leonard, Lexington, Kentucky
Alltel, Nisource, Yellow Corp.
I
hate meetings that are like getting a scorecard. I’m interested in what
happened, but I also want to know what is going to happen and why.
Also, I get really frustrated by rubber-stamp processes. There are a
few directors that agree with everything; they seem to wear a hat that
causes them to think everything said is gospel and every action is
appropriate. It’s nice to have harmony in the boardroom, but you only
get stronger through challenge and good questions.
Finally, learn from the past; don’t go down the same trail to a dry well or poisoned water.
Michaela K. Rodeno, 56
CEO, St. Supéry Winery, Rutherford, California
Silicon Valley Bancshares
For board meetings there’s a huge amount of material to go through, and we don’t usually get it very far in advance. If we could have it even a week in advance, it would make a huge difference. The way it shakes out is that I have two evenings to read through reams of material, and very often that’s not easy to do. I’ve actually taken to blocking those two evenings before board meetings, so I don’t book myself into something else and lose one of them that I need for preparation.
Joseph Cappy, 68
Chairman, President, and CEO, Dollar Thrifty Automotive Group, Tulsa, Oklahoma
BOK Financial
Throughout big companies, there are interlocking relationships of directors—it’s a good old boys’ club, or boys and girls. When they need to fill a position, they say, “So-and-so is a good board member.” Some of these people are on three or four different boards together, and they have a tendency to solidify on a position.
