The Good, the Bad, and the Gutless
from November/December 2006
During the past five years, what trends in America have you most admired — and most disliked?
The emphasis on ethics is good, greed is bad, and one board member wishes the up-and-comers of the younger generation weren't such wimps .
One trend I see is that today no one seems to want to take a position on their own. Everyone makes decisions, but in teams. And at some point you have to stand on your own and make a decision. The younger generation doesn’t want to stand on its own and make a decision. But by standing up you learn to deal with the repercussions, you learn not to hide by being part of a team.
Louise C. Forlenza, 57
President, L.C. Forlenza CPA PC, New York City
Innodata Isogen Inc.
I have most admired the increasing recognition that responsible stewardship of the environment can become a profitable business. What I dislike is the tendency of too many companies to disregard the ethical and operate under the assumption that what is not illegal is therefore okay to do—for example, companies that lay off workers and then transfer the savings entirely to the executive team in the form of bonuses paid for the layoffs.
David L. Bodde, 63
Professor and Senior Fellow, Clemson University, Clemson, South Carolina
Great Plains Energy
I guess there are a few companies that I could cite for outstanding ethics, but I’m disgusted at the lack of ethics in many major companies. It just blows my mind. It’s absolutely disgusting; we might as well put the money in a black bag and hand it to them. I don’t understand it, particularly when the people who are sponsoring it are highly compensated already. For whatever reason, some top executives must have a totally inflated opinion of their worth to the shareholders.
In the aggregate, I do admire the way people have, sometimes grudgingly but authentically, made the commitment to live up to the letter of the Sarbanes-Oxley initiative. I know many boards and corporations who’ve gone all out to make sure they comply.
Robert L. Rewey, 68
Former Group Vice President, Ford Motor Co., Dearborn, Michigan
LoJack Corp., Sonic Automotive Inc., Speedway Motorsports Inc.
The trend I most dislike is the greed factor of CEOs who feel that even though they’ve been compensated appropriately while they’ve run the company, they need additional perks after they’ve retired. I find that despicable.
David A. Rosow, 64
Chairman and CEO, Rosow & Co., Southport, Connecticut
TD Banknorth
I think the focus on ethics and transparency is a welcome development in corporate America. It’s increasingly governing their behavior with ethical principles and the “front page of the New York Times” test: Are you willing to have that decision laid out on the front page of the Times? That’s a radical—and good—change.
Charles Yamarone, 47
Executive Vice President, Libra Securities LLC, Los Angeles
Continental Airlines, El Paso Electric Co.
What is the most interesting thing you've had to deal with as a director? The most disturbing?
Your war stories include the time one director actually proposed a resolution that the board declare one of the others as a dumb ass.
I am fascinated with the process of naming new directors to a board. The recruitment process is an utter delight for me. The most disturbing thing I’ve had to deal with was the departure of a CEO who stayed on the board for about a year and a half after stepping down as CEO. I do not understand why any departing CEO would want to stay on the board. Once he retires, I think he ought to say goodbye. It’s like somebody retiring from a job and then staying in the office; it just doesn’t work. It’s a mistake under the best of circumstances, and under less good ones, a disaster. It jeopardizes the new CEO’s authority and ability.
Dorothy K. Light, 69
Former Chairman and CEO,
Alden Enterprises LLC, Aurora, Colorado
New Jersey Resources
The most interesting thing I’ve dealt with is recruiting new board members. And while I can’t get into specifics, the most disturbing thing, without a doubt, was dealing with an ethics violation at the board level.
Wesley E. Cantrell Sr., 71
Retired Chairman and CEO, Lanier Worldwide Inc., Atlanta
Ann Taylor Stores
For me the most interesting thing has been when the board and the CEO have been very creative in their problem-solving, whether it has involved strategy or people issues or customer issues. Those are times when you say, “Boy, you know, eight or 10 heads are definitely better than one.” The most disturbing thing had to do with an employee the FBI went after. We had a lot of products disappear, hijacked in the supply chain. They had serial codes and showed up through a secondary distributor in another part of the world. This was a relatively senior person who the FBI was tracking, and I was the lead independent director in that area, so I was involved with what was going on. Eventually the person was apprehended.
Steven C. Wheelwright, 63
Senior Associate Dean, Harvard Business School, Cambridge, Massachusetts
Quantum Corp., Zions Bancorp
Taking a company through a turnaround, which I have helped architect several times. It’s exciting when you have to put the building blocks in place after a period of turmoil, and then the market recognizes your effort and rewards your patient investors. It’s white-knuckle stuff, not for the faint of heart, but it’s very rewarding.
Elisabeth H. DeMarse, 52
CEO, DeMarse Co., New York City
EDGAR Online, Heska Corp., ZipRealty Inc.
One of the most satisfying experiences for me happened on the FNB board. Half of our franchise was in western Pennsylvania, the other half on the west coast of Florida. It was a mismatch, and a decision had to be made. With a tremendous amount of study, we decided to spin the Florida half off into a separate corporation, splitting the company into two different stocks. It clarified what the two companies were and how they were different, and it created a 60% gain for the shareholders. That was great fun.
Robert B. Goldstein, 66
Former President and CEO,
Bay View Capital Corp., Buffalo, New York
FNB Corp., Great Lakes Bancorp, Luminent Mortgage Capital Corp.
At one company whose board I served on, we had to downsize out of some of our acquisitions. So we brought on an asset manager to help. The asset manager was pretty critical of the board and some decisions we had made. You reach a point when you say, “You weren’t here; it’s easy to come in and second-guess.” It wasn’t a happy board scene, but we managed our way through it.
Donald W. Thomason, 62
Former Executive Vice President for Corporate Services and Technology, Kellogg Co., Battle Creek, Michigan
Semco Energy
The most interesting one, and the most fun one, involved one of my first boards. The very first meeting I attended, I walked in and discovered that all the other board members were suing each other. They were calling each other names. One of them actually proposed a resolution that the board declare one of the other members a dumb ass. Some of the board members were significant shareholders, and that’s an example, I think, of where people who have too many shares have their own agenda. Some of these guys were also customers of the company, and there were various factions fighting against each other. The company, I discovered, had a huge debt maturity coming up, and since I knew the lenders personally, I called them and they said, “No way in hell are we renewing that loan, or extending it, or anything else. If it’s not paid on time, we’re taking the keys.”
So they truly were in crisis. They had financial problems, they had personality problems on the board, they had a very ineffective management. They had fired the previous CEO, who was also a significant shareholder, but left him on the board. There were just constant battles and a seemingly insurmountable financial crisis. The operations were bad. Oh, and the stock price had gone from $29, which was an unrealistic number, to $9.
The former CEO and I met and talked about his vision for how the company should be run. He clearly had a much better understanding of this business than anyone else in the room. He soon brought in a new equity investor who proposed to buy out the other guys and put some fresh capital into the company. At the same time, I found a new lender who would refinance the debt. We spent the next six months negotiating with the equity guys and me negotiating with the board, trying to get them to hold together and vote for this business deal. We finally got the deal closed the day before the debt matured, bought out the guys who were so contentious on the board, and ultimately replaced within the next two months all the members of the board except me and the former CEO, who we reinstalled as CEO. He hired a new CFO and new COO, and within a couple of years the stock price was back up from $9 to $18 and the preferred price was up from $10 to $23. Shortly thereafter, we sold the company through a reverse merger into one of the companies I’m involved with today.
It was so exciting; the negotiations would change from hour to hour. I’d get on an airplane thinking I had gotten everybody happy, and get off at the other end to hear a message in my voice mail saying, “Sorry, we’re not going to do this deal, we’ve changed our mind.” We’d get back on the phone, work through it, and the next morning it would change in a different direction. This also qualified as my most disturbing experience. We were very concerned about whether we were ever going to get out of it.
G. Steven Dawson, 48
Retired CFO, Camden Property Trust, Houston
American Campus Communities Inc., AmREIT, Medical Properties Trust, Sunset Financial Resources, Trustreet Properties
