Boardroom INSIDER for… DECEMBER

 

SHOULD CEOS PICK THEIR OWN BOARDS? – THE GE QUANDARY

For the CEOs of big U.S. companies, boardroom relations used to be pretty simple.  A group of older white guys who looked like you would vote Yes on your ideas with little fuss, and accept you serving as both CEO and board chair.  Plus, when you first took the CEO job, you could disinvite any directors you didn’t want around, and suggest their replacements.

The “new CEOs get to pick their own board” rule would seem a relic in a time of board and investor empowerment.  Yet it can live on, says Ralph Ward, writing in the December issue of online monthly Boardroom INSIDER.

The succession of John Flannery as new CEO at General Electric is seeing just such a boardroom shakeout.  GE’s bloated 18-member board will shrink by a third, and several long-term incumbents will retire.  This looks like the bad old days of the CEO tail wagging the boardroom dog, but Ward observes that GE has been drifting for some time, and this year “missed earnings projections, and cut its dividend.”

Analysts have applauded Flannery’s boardroom defenestration, which triggered an uptick in GE’s stock price.  Further, he writes, “the usual activist voices for good governance are silent.”   He notes that Steve Jobs led a similar coup on his return to Apple in 1997, with spectacular results.  “Perhaps there are times when a CEO should pick his own board.  But still…”

Also in the December Boardroom INSIDER:

pink   Answers to 3 of your biggest boardroom quandaries.
pink   How 3 women directors make their voices heard in the boardroom.
pink  Q&A:  Do “job references” really work for the board wannabe?