Corporate Boards Need Better Members

Felix Salmon at Reuters savages Ruth Simmons, the President of Brown University and a member of Goldman’s board of directors. He points out how completely unqualified she is to provide governance to a financial firm, and how she seems more interested in the benefits her board membership can bring to her than she is in her fiduciary responsibility to shareholders. His points are true for many members of corporate boards. Board members need to provide tough, knowledgeable oversight, not a comfortable pillow for management’s decisions. The lack of strong boards is a major component in both corporate malfeasance and ludicrous executive pay schemes.

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One response to “Corporate Boards Need Better Members

  1. A college prof. for whom I have great respect, was invited to sit on the boards of directors of a couple of local companies. To both firms he replied with the question: “what do you believe I can bring to your board of directors?”

    Perhaps this is another area where investors need some help. Who makes a good director? Who will not look the other way if a CEO decides to loot the firm that is at the heart of my 401K? How can the investor influence the makeup of a publicly held firm’s board of directors?

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