The Prime of Ms. Nell Minow

For the shareholder activist, these have been both the best and the worst of times.

The Conference Board recently recommended a structural change — separating the roles of CEO and chairman–although it gave multiple methods for doing it. Why should that work?

Splitting the roles is inconsistent with the cowboy culture, and it’s certainly inconsistent with the popular notion of the CEO as superstar. But my concern is the same as The Conference Board’s — I don’t care how you do it, but you have got to pry the CEO’s fingers off the control of the agenda and the information. And if their egos are so sensitive that they can’t withstand a sharing of a title, then perhaps they should not be in the job.

There have also been calls for boards to meet without the CEO present. How significant is that?

When I testified before the New York Stock Exchange, I told them that that rule was the most important requirement they could impose. There again, you have to get this overpowering presence out of the room and allow for candid exchange. The problem is that the CEOs still pretty much control the nomination process [for board members] and will always say, “I’m looking for someone who has XYZ credentials and is a consensus-builder.” You don’t want people throwing things at each other in the boardroom, but when you have 11 consensus-builders and one visionary, dynamic leader who bosses people around all day, it becomes almost impossible to achieve anything but the lowest-common-denominator sort of performance.

What about independence? It seems to be the common denominator among all the reform proposals.

That’s gone a little too far. Independence does not guarantee competence or commitment, and those are more important than independence. Moreover, it is hard to judge who is or is not independent from the disclosures that we currently have. I once went to an annual meeting and stood up and said, “You’ve got five members on the board of directors: the CEO, a full-time employee, the company’s investment banker, the company’s lawyer, and another guy. Hey, other guy: stand up and tell everybody here what your connection is, because I don’t believe that you are independent.” We found out afterward that he and the CEO played jazz clarinet together. That’s why you can only judge independence by looking at what board members do.

The Corporate Library’s Interlock Tool analyzes the interconnectedness of board members. Just how many degrees of separation are there?

It makes the [six degrees of separation from] Kevin Bacon game look like nothing. Out of the 20,000 directors in our database, you can get from any one to almost any other one in no more than two or three steps. We consider first degree to be their corporate connections; second is their noncorporate connections, which include nonprofits, trade associations, and golf clubs; and the third degree is interlockings among them. If you are on two boards with people who are on a third board together, that’s a third-degree interlock. So they are all pretty connected.


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