It’s so hard to fire a CEO for cause that many boards don’t try, even when ethical problems are involved.
—The Wall Street Journal, October 30, 2006
Scary, isn’t it? In the often courage-challenged culture of the North American boardroom (British boards are having more success in curbing runaway CEO pay, according to a recent Financial Times report)) the full extent of directors’ inability to assert common sense and protect the interests of stakeholders becomes increasingly apparent. A central problem persists. As long as boards are composed mainly of current and former CEOs who have a vested interest in perpetuating the status quo and all the trappings that go with it, as long as board membership continues to be drawn from the same overused pool of like minded people with similar backgrounds, as long as directors continue to think that all the problems of the company can be solved by doling out more and more millions to the CEO like some giddy aunt stuffs fruits and nuts in the annual Christmas cake, the disconnect among pay, performance and the board’s ability to govern will continue.
There is only one missing factor that is required to bring about the change the whole world outside the boardroom, including every directors’ mother, knows must take place. It’s called leadership. North American boardrooms need to find their modern-day Churchill. Now, there was a man who knew a thing or two about turning a dysfunctional ship around. Real leaders like this have taken on world scale tyrants and dictators with amazing success. There is no reason why they cannot set things right with a few petulant, garden-variety CEOs. No reason, except that there is no one even close to the boardroom equivalent of the man who saved civilization.
Why this is so is a question shareholders and thoughtful stakeholders might wish to ponder.