Anchoring Points for Corporate Directors.

• Author: Darazsdi, James

In this, his 17th book, Robert Mueller explores what he describes as the topic of "obedience to the unenforceable" in corporate governance. In the process, he provides insightful commentary which will benefit virtually anyone interested in corporate governance, from the newly elected director to the sage veteran.

Much of Mueller's attention has been directed towards the privately held firm. Here he accurately captures the causes of crises among closely held corporations, the trauma experienced by the founder when forced to let go, the uncertainty associated with generational transition, and the ultimate challenge of succession planning. Regrettably, these tasks are often too long ignored, the victims of an illusion of invincibility from which the founder suffers. However, as Mueller accurately points out, there are other more subtle but nonetheless equally dangerous afflictions which can develop, such as the inertia which accompanies divergent views about risk among family members.

Mueller's solution to these problems is simple and easily achieved: Appoint a majority of capable independent outside directors to monitor performance. In fact, in the second chapter he cites specific criteria to apply in the identification and assessment of such individuals. His criteria embrace a broad cross-section of attributes, including intelligence, integrity, adequate time, sufficient interest, and courage.

Mueller moves on to offer even more specific advice to family businesses. He alludes to possible problems which can develop when family members compete for a future CEO appointment while in the boardroom. Such rivalry can have cataclysmic results. My experience with three closely held family businesses validates the author's concerns and suggests that retired CEOs, where possible, should also retire from the board. Family members intent on holding the post of CEO must be prohibited from practicing theatrics in the boardroom. This stated, Mueller moves on to acknowledge and at times...