Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 16, 1993 TAG: 9305140131
SECTION: BUSINESS PAGE: D2 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
"But over the last 10 years, that has changed. More directors are doing their homework and asking harder questions," says Barnard, who teaches business law and corporate governance.
Barnard developed an interest in the responsibilities of directors while working with corporate boards in Chicago, where she practiced law before joining the Marshall-Wythe faculty in 1985. She was interviewed about corporate boards by Tom Shean of Landmark News Service.
Q. What led to the recent rise in activism among corporate directors?
A. Initially, it was litigation, but the real drama has much more to do with powerful shareholders, including some institutional investors. There was a wonderful quote a few years ago from the head of the New Jersey state pension fund: "I call these people up, and they won't even give me the time of day."
Four or five years later, that is absolutely not the case. Corporate executives are meeting with influential shareholders, and they are much more receptive to suggestions.
Q. In recent years, women's organizations and minority groups have called for greater representation on boards. Does diversity in the board's membership board matter?
A. It depends on the type of company. A consumer-products company probably needs a diversified board more than a steel manufacturer does. The thinking has been that the more cohesive the group, the more effectively the members will work together because of the social comfort level.
Q. Is there a large enough pool of qualified individuals from which boards can draw new directors?
A. Some companies would argue that the pool of available and willing people is declining. A lot of individuals are no longer interested in serving on boards, and some who might have been on several boards in the past now are willing to serve on only two or three. There are really smart people out there who have not been sought by corporate boards.
The pattern has been for corporate chief executive officers and retired CEOs to serve on boards, but there are other people who would be valuable.
Q. Do you see any evidence that boards are looking beyond their conventional sources for new directors?
A. Some are looking for individuals with scientific expertise, some for individuals with international expertise. More boards are looking for corporate executives who have not risen to the top of their companies but are at the top in their particular fields of expertise.
Q. You have suggested that the terms of directors at publicly held companies be limited to three to five years. Why?
If someone is going to run for a board seat for three years, he or she would have to run on some sort of platform and then be accountable for what they did during those three years. Right now, there is very little accountability for what a director has done.
One problem is that the members of many boards have gotten so comfortable and entrenched. New blood would be invigorating. Term limits may not be right for every company, but an occasional shakeup of outside board members could be very healthy.
by CNB