Page 262 - Executive Warfare

EXECUTIVE W ARF ARE

BOARDS—AN OLD BOSS WITH A NEW MOOD . . . PARANOID
Since the great scandals of recent history, lots of new rules have been put
in place for public companies surrounding the independence of their
board members. While boards are no longer stuffed with insiders, that
doesn’t mean that the types of people
who serve on these boards have changed
IT’S LIKE YOUR all that much. It’s not as if everyone who
MOTHER TOLD YOU: comes to board meetings now is wear-
STEAL A PENNY, ing Birkenstocks. They still wear ties
YOU’LL SOON BE and wingtips and appropriate Hillary
STEALING A Clinton–like pantsuits. They may not
DOLLAR. come straight from the organization’s
club, but they are still plenty clubby.
What has changed, however, is the
lens through which board members view the executives they oversee.
Directors all over America watched the boards of Enron and WorldCom
pull money out of their own pockets to settle securities class-action law-
suits—and shivered. More frightening to directors even than a financial
hit is a reputational hit—such as the
one Home Depot’s well-respected
I ALWAYS cofounder Kenneth Langone took after
ENDORSED THE defending outsized pay packages for
IDEA THAT IF YOU former New York Stock Exchange chief
WANT TO SELL THE Richard Grasso and former Home
STOCK, SELL THE Depot chief Bob Nardelli.
STOCK. “What about me?” your directors are
now always thinking. “Could I get in
trouble if I agree to this decision? If I
place my trust in this particular executive?”
They are far less likely now to take any risk that may come back to
haunt them—unless, of course, their paranoia deteriorates into a witch
hunt, as it clearly did at Hewlett-Packard in 2005 and 2006. There, former

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