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21st Century Corporate Board Hardcover – October 29, 1996
The Amazon Book Review
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From the Publisher
The role of corporate boards or boards of directors has changed dramatically over the past decade. Board members are increasingly responsible for companies' fiscal and legal affairs. This book provides a blueprint for preparing for the boards of tomorrow. Numerous anecdotes and real-world examples make this timely guide accessible and entertaining. Ward has edited a national magazine on corporate boards for six years and offers an insider's guide to the next century of corporate boards.
From the Inside Flap
21st Century Corporate Board Over the last decade, dramatic changes in how corporations are led have radically transformed the board and its role in business. No longer a safe haven for the walnut-paneled aristocracy, todays board is an autonomous power center for corporate leadership. How did this happen, and why? More importantly, how will tomorrows boards consolidate their newfound strength to tackle fresh challenges in the years ahead? 21st Century Corporate Board addresses these critical questions and more, offering both a masterful analysis of the forces driving corporate governance and a bold new blueprint of the structures, tools, and knowledge demanded for the effective boards of the future. Youll find detailed coverage of all of the key issues in board makeup, pay, and trainingfrom strategic board recruitment and "pay for performance" to director certification and high-tech board meetings. The book also helps you make sense of the revolution in board operations and organization, including cooperation with management, liability and compliance concerns, and the structure and use of special committees. In the modern corporate board, directors must think like owners, act like managers, and retain their independence. With its hard-hitting, market-based approach and razor-sharp insights, this book vividly illustrates the contradictions of allegiance and focus demanded by the new corporate dynamicgiving you a crucial jump on the action agenda of the 21st Century Corporate Board.
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Motors. For the first six chapters I kept wondering if I could somehow buy into the movie rights. By chapter 7,
however, he is shifting gears into a history of boards of directors and their function. The likelihood of a movie
faded but the book never looses its lively pace through 60 informative chapters with headings like "How to
Launch a Board Revolt," "Q: Why is Board Education like Sex Education," and "Take Me to Your Lead
Ward tells the familiar tale, chronicled by Berle and Means and updated by Mark Roe, of how owners were
usurped by managers. The recent era of corporate raiders and rubber stamp boards is fading into history as
shareholders and their board representatives gain an equal footing with CEOs. Ward draws on his years of
experience as editor of The Corporate Board to inform the reader of current trends and to speculate on the
For example, Ward tells us that new boards are looking for skills in telecommunications and technology,
marketing, international markets, finance, restructuring, entrepreneurial skills, and service industries, as well as for
demographic diversity. Ward devotes several chapters to describing the work of audit, compensation, and
nominating committees. He also looks examines emerging committees in corporate governance and compliance
as well as more specialized committees. He sees the likelihood that small board secretariats will strengthen the
board's hand in working with management by helping them dig through the data.
Looking at the chair/CEO controversy, Ward concludes that in most cases the independent outside chair "would
not have enough muscle yet to make a difference." "This does not mean we should give up on the idea of a
separate chair, but rather that supporters may have been too early with the idea for it yet to be effective." Ward
sees lead directors as a "fallback" position that is likely to take hold sooner but on a less formal basis.
Most readers will find that Ward takes a balanced and reasoned approach to SEC regulations, director liability,
stakeholder influence, and the dozens of other issues which he covers in brief but informative discussions.
Perhaps most controversial is his contention is that we may soon be seriously considering proposals for federal
the chartering of corporations. Ward breezes through past proposals by James Madison, William Jennings Bryan,
T. Roosevelt, Wilson, Taft, William O. Douglas, Ralph Nader, and more recent efforts. He points out that "the
very Congress that gained power in 1994 by proclaiming a return of power to the states passed the Private
Securities Litigation and Reform Act of 1995" which preempts state powers in shareholder suits and adds federal
Ward argues that several federal laws have defused the radical call for federal chartering while bringing us
closer to a de facto federal system. "While federal chartering waves of the past century were stirred by
politicians, jurists, and consumer advocates, a renewed effort would likely be led by shareholders." "If federal
corporate certification could supersede state lawsuits, coordinate often contradictory federal regulations, and set
clear standards for board behavior, it might well draw new fans from the business sector." I find his arguements
compelling. If shareholders and businesses united around such a proposal now, we might avoid populist based
demands, with confusing stakeholder provisions for constituent based boards, which are likely to resurface in an
How to Build Better Boards
"The Family Circus", Bil Keane's winsome cartoon strip, focuses on the daily ups and downs of life in the often chaotic home of a young family.
Regular readers of the strip have learned that in addition to mother, father, four young children, and three pets, there are two other residents in the household who make regular, if furtive, appearances. Whenever the mother finds a broken dish, a piece missing from a birthday cake, or muddy footprints tracked through the house, we know that the ghostly characters "Ida Know" and "Not Me" are lurking nearby. All the mother has to do whenever she finds something broken, missing, or in disarray is confront her youngsters with the question, "Who is responsible for this?" to elicit the collective response, "Ida Know!" or "Not Me!"
These two troublemakers have apparently expanded their families and sent their children off to inhabit the most senior executive offices of many of the world's best known corporations. Their names are on the tongues of virtually every executive who has had to explain why his or her corporation has collapsed. Listen to the CEOs of Enron, Polaroid, Global Crossing, Warnaco, or Arthur Andersen, for example. The top executives of each of these companies have assured us that they themselves had nothing to do with the collapse of their companies, putting the blame squarely on "Ida Know" and "Not Me" in virtually every case.
Exasperated shareholders wonder whom ultimately to hold responsible for the collapse of these companies and their investments. Ever so slowly, the glare of the lights is shifting to the boards of directors, as questions are raised about board accountability and responsibility. The boards of these companies all seemed to have been napping as they waited for their options to vest.
For all the time, energy, and resources organizations put into training executives, it appears that they put considerably less into training directors and helping them to understand their responsibilities. Type the words "board of directors" or "corporate governance" into the search engine at Amazon.com and you will see a fraction of the number of books that you would find had you typed the word "leadership."
Among the books that stand out are two by Ralph D. Ward: The 21st Century Corporate Board and its follow-up, Improving Corporate Boards. Ward, the editor of Corporate Board magazine, has filled the pair with well-written and insightful case studies, along with specific recommendations for changes in practices and procedures. Together they make an excellent handbook both for companies and for individual directors. In fact, "required reading" is the term that best describes them.
The 21st Century Corporate Board focuses on the turbulent era of the early 1990s, which saw a series of sackings of CEOs at corporate giants GM, Kodak, IBM, and American Express, among others. The frenzied era of hostile takeovers and leverage buyouts in the 1980s was still fresh in the minds of corporate boards. If a CEO failed to keep his company's stock price high enough to ward off potential raiders, boards were not hesitant to send CEOs packing.
Ward divides the book into two sections - an examination of how things got so bad as boards grew increasingly somnolent, and then a prescriptive section, with specific recommendations for changes. Among his most powerful suggestions is that the board have its own office and staff within the organization. Typically most boards rely on assistance from the CEO's or corporate counsel's office. The board needs more independence and autonomy, especially as the prospect of increased government oversight grows.
His more recent book, Improving Corporate Boards, provides more detailed and specific recommendations for improving each branch of a board's function. The audit committee of Enron's board might have spared themselves and the rest of the company more than a little trouble had they read Ward's pithy chapter entitled, "Smarter Audit Committees." Two suggestions seem especially on point: "Make sure the company is looking at the real numbers" and "Learn where right and wrong really are for the company's financials."
Polaroid CEO Gary DiCamillo managed to work the stock price of his company consistently down over his six-year tenure: from a high of ... per share to its recent value of pennies following the company's bankruptcy. Amazingly, near the end of DiCamillo's initial three-year contract, with the stock price at half of what it had been when he first took over as CEO, Polaroid's board paid him a ... cash bonus, extended his contract, and affirmed their support for him. DiCamillo banked the bonus and bankrupted the company. He is still CEO. We can only surmise what might have happened had Polaroid's board members read through Ward's two books and then acted on even a small number of Ward's sound suggestions. As it is, the board has no doubt provided Ward with an unfortunate but instructive case study for a future edition of either of these two solid handbooks. ...