Connecting the Dots
from
November/December 2007
by Colin Leinster
Among themselves, directors tend not to pull their punches. Publicly, for obvious reasons, they’re more circumspect. But over the years a good number of you have spoken out forthrightly about a variety of touchy subjects: greedy CEOs and how to trim their demands, lazy fellow directors and what to do about them, the trials of dealing with foreign partners, why you resigned, and, yes, whether or not even independent directors should speak to the media without the CEO’s okay. (Most, to my regret, thought you shouldn’t.)
I know that some of you have taken heat for the opinions you’ve shared with us. The candid views in this “What Directors Think” special issue put more of you at some risk. But openness helps other directors do their jobs better.
As always, this issue is based on our annual survey of directors, done in partnership with PricewaterhouseCoopers LLP. Even though the 1,000-plus respondents have the benefit of anonymity, some findings are surprising if not sobering. Notably, 32% identify security analysts as the outside group most likely to influence their boards—prompting both us and Catherine Bromilow, a partner at PWC and head of its corporate governance practice, to wonder how this plays out in the boards’ decision-making. Does it push them to place too much emphasis on the short term? Directors are also rethinking some issues. Last year 88% welcomed the new executive-compensation disclosures in proxies; this year only 76% feel such transparency is positive. What’s changed? “Perhaps last year directors didn’t appreciate just how much work is involved in these disclosures and what changes to compensation plans they would prompt,” says Bromilow.
The challenge of surveys is to discern trends or, as Bromilow puts it, connect the dots. She cites the answers to questions about board evaluations. While 88% of the respondents say their boards do these regularly, only 57% find the process effective or very effective. “Does this mean evaluations have become little more than a compliance exercise?” Bromilow wonders. “Are boards missing a key opportunity for continuous improvement?” (The full survey is available at boardmember.com.)
On a lighter note, we asked some of the same directors to identify their favorite movies. A sampling of their choices starts on page 15. Some respondents drew parallels between the films and their jobs as directors, and that set me to thinking about movies that portray journalists. I suppose the classics are
The Front Page
and
All the President’s Men
, but my personal favorites are
Ace in the Hole
(filmed in 1951 but still an all-too-current tale about a trapped miner, and one of Kirk Douglas’s very best), 1982’s
The Year of Living Dangerously
(Mel Gibson in the vortex of government violence in Indonesia), and
The Quiet American
(the 2002 remake about the French war in Vietnam, featuring Michael Caine).
What sets these three films apart is that the protagonists abandon dispassion toward what they’re covering and become characters in their own stories. That’s a no-no among professional journalists. I remember that when I worked for a newspaper in New Orleans, a couple of the old hands didn’t vote lest it impugn their objectivity. Maybe that’s extreme, but it can be a relief not to take any side. So far, directors at odds with one another have resisted asking me to opine on how their board should vote on a particular problem or, heaven forfend, to help it break a tie. Thanks for that, dear reader.
