21st Century Corporate Board

Now that the capitalist/communist divide in eastern Europe has fallen, perhaps the greatest remaining human barrier is between those who have served as directors of public corporations and those who have not. From the inside, boards look like groups of honest, smart, hard-working earnest people trying to do a very difficult job with inadequate tools. From the outside, people automatically use words like "entrenched," "greedy," "co-opted" and "lazy." When the stock is going up, no one thinks of the board. When it goes down, everyone is disgruntled and everyone blames the board. Ralph Ward has bridged that gap with a book that brings the outsider into the boardroom, to see real day-to-day board operations. At the same time the book will show the insider the view from the stands. The author is neither a cheerleader for nor an enemy of boards. He shows how a board can add real value to a public company, but he does not hesitate to criticize bad practice. Any board member can use this book to improve their board. Any investor can use it to understand boards, and to encourage improvement. On top of that, it's actually fun to read.

So you've been a director for 20 years and you think you've read it all. Think again. As he opens "21st Century Board," Ralph Ward sets the stage for adventure. "In editing a national magazine for the past six years, I've had a ringside seat for the wildest era of corporate governance change since the New Deal," Ward begins...and proceeds to bring the era to life in 350+ comprehensive pages. It's all here--the issues, the players, the research, the war stories, the trends--from Archer Daniels Midland to Westinghouse--in a tome so comprehensive that any reader is guaranteed to find something new (even this reviewer, who has spent nearly two decades covering the governance scene). But beyond information, this book offers unbiased, well-reasoned, and fair-minded opinions on the most important governance controversies of our day. Readers joining Ward will soon find that their companion is no mere ticket-holder, but a narrative ringmaster who can put even the "wildest" things in their proper place.

Ralph Ward grabs the reader from page one with a Barbarians at the Gate style tale of the board revolution at General Motors. For the first six chapters I kept wondering if I could somehow buy into the movie rights. By chapter 7, however, he is shifting gears into a history of boards of directors and their function. The likelihood of a movie faded but the book never looses its lively pace through 60 informative chapters with headings like "How to Launch a Board Revolt," "Q: Why is Board Education like Sex Education," and "Take Me to Your Lead Director." Ward tells the familiar tale, chronicled by Berle and Means and updated by Mark Roe, of how owners were usurped by managers. The recent era of corporate raiders and rubber stamp boards is fading into history as shareholders and their board representatives gain an equal footing with CEOs. Ward draws on his years of experience as editor of The Corporate Board to inform the reader of current trends and to speculate on the future. For example, Ward tells us that new boards are looking for skills in telecommunications and technology, marketing, international markets, finance, restructuring, entrepreneurial skills, and service industries, as well as for demographic diversity. Ward devotes several chapters to describing the work of audit, compensation, and nominating committees. He also looks examines emerging committees in corporate governance and compliance as well as more specialized committees. He sees the likelihood that small board secretariats will strengthen the board's hand in working with management by helping them dig through the data. Looking at the chair/CEO controversy, Ward concludes that in most cases the independent outside chair "would not have enough muscle yet to make a difference." "This does not mean we should give up on the idea of a separate chair, but rather that supporters may have been too early with the idea for it yet to be effective." Ward sees lead directors as a "fallback" position that is likely to take hold sooner but on a less formal basis. Most readers will find that Ward takes a balanced and reasoned approach to SEC regulations, director liability, stakeholder influence, and the dozens of other issues which he covers in brief but informative discussions. Perhaps most controversial is his contention is that we may soon be seriously considering proposals for federal the chartering of corporations. Ward breezes through past proposals by James Madison, William Jennings Bryan, T. Roosevelt, Wilson, Taft, William O. Douglas, Ralph Nader, and more recent efforts. He points out that "the very Congress that gained power in 1994 by proclaiming a return of power to the states passed the Private Securities Litigation and Reform Act of 1995" which preempts state powers in shareholder suits and adds federal disclosure requirements. Ward argues that several federal laws have defused the radical call for federal chartering while bringing us