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Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

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A Shift in Direction

The aforementioned Newsweek article continues: “A lot of disillusioned board members . . . [say they] are completely captured by the CEO in most companies. CEOs either have selected you, or approved your being on the board. They control your renominations, your perks, your pay, almost all the information that goes to you, your committee assignments, your agendas.” That's an interesting perspective, which too often was the case years ago—but we've seen that today's board dynamics generally are very different. With the vast majority of directors now being independent, along with private meetings and separation of the chair and CEO roles or putting in place a strong lead director, the dynamics have changed. Certainly in many companies the CEO-chair wields significant power, but that person no longer smacks of absolute power.

Here's one telling anecdote about how power has shifted. A nominating committee chair told me the company's board had a strict policy: Any board candidate put forth by the CEO will be eliminated from consideration. Yes, the names of candidates identified by the nominating committee will continue to be discussed with the CEO, but they won't be selected by him. And shareholders are pushing the point. As noted in Chapter 4, when the new CEO of HP was involved in identifying new board members, Institutional Shareholder Services objected, recommending that shareholders withhold their votes for three members of the nominating and governance committee. ...

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