Directors, Your Image Problem Isn’t Going Away

The curent issue of Newsweek features an interview with John Gillespie, one of the authors of Money for Nothing:  How the Failure of Corporate Boards Is Ruining American Business. The title alone is fairly daunting for directors who have served and are serving on boards.  Even if the public at large doesn’t read the book, the broad reach of Newsweek will brand boards as “inept.”

Charles Elson, the corporate governance expert at the University of Delaware, traces the origins of  shareholder activism to the anger shareholders were feeling that they were being ignored.

The truth is that there are strong energized boards and business leadership dedicated to delivering durable long-term value through sustained economic performance, sound risk management and high integrity and through meaningful consultation with shareholders.  But the new book paints a dark picture because so little was known about corporate governance until the financial collapse.

Good directors should be concerned about “Money for Nothing.”  If they thought the legislative changes were merely grandstanding efforts by politicians, they are wrong. Actions by the SEC and Congress reflect the general concern that governance isn’t being carried out effectively.

Good boards are stepping up to the new environment to demonstrate that they can make corporate governance more effective to serve the company, its shareholders and stakeholders.  It will take reevaluation and rededication.

In this era of transparency, everyone will be watching.  The public won’t settle for less than effective oversight.