Why Corporate Boards Seldom Do Their Jobs Well

Directors largely responsible for missteps, but keep their jobs
By Wesley Oliver,  Newser Staff
Posted May 28, 2009 2:42 AM CDT
In the apportioning of blame for the financial crisis, corporate boards of directors have remained remarkably unscathed.   (Shutter Stock)
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(Newser) – Recent shareholder meetings at Citigroup and the Bank of America devolved into morality plays—wronged shareholders berated executives, executives apologetically vowed to improve—with a rather curious epilogue: every member of the board of directors was reelected. The reason is that corporate boards are often filled with under-informed, over-paid yes-men who rarely pay any consequences for bungles, James Surowiecki explains in the New Yorker.

Reform that includes new regulations, more independent directors, and greater diversity hasn’t helped. Shareholders have little say in director nominations, independent directors sometimes lack experience, and too often celebrity dominates (Tommy Franks is a BofA director). Worse, board members are part-time employees. “If the last few years have shown anything, it’s that protecting shareholder interests is a full-time job," notes Surowiecki.