As I, an owner-director, see it.

• Author: Vogelstein, John L.
• Position: Role of corporate directors

Here are several initiatives that will likely improve the functioning of boards.

No product, group of products, or services is so extraordinary that its maker can prosper over the long run without excellent management. In the same vein, management cannot be achieved without a truly superior CEO. On the other hand, I have observed that the worst of all possible worlds can occur when a company is headed by a CEO who is highly intelligent, a charismatic leader, a dynamic personality, and a great communicator - and yet somehow has it wrong. The damage that such an individual can do is incalculable. And the role of the board of directors is the key to preventing such damage.

Boards of directors of publicly traded U.S. corporations continually fail to face up to the issue of an underperforming chief executive officer. Examples of this failing have been celebrated in the popular and business press again and again.

Obviously, there is a problem: Boards don't like to face up to the necessity of removing CEOs. Why is this so? Does the board function differently if major (20 percent or more) ownership is represented on the board? Are there changes in the American system of corporate governance that could be instituted to alleviate the problem?

I believe that the first issue that must be addressed is the combination of human nature and politics. Boards of directors usually consist of friends and acquaintances of the CEO of the company in question. The typical board structure of an American company is such that all board members are equal, which means that leadership within a board doesn't take place easily and that when leadership does emerge, it results more from personality characteristics than from any formalized structure.

Also, most human beings resist the kind of confrontation that is involved in the removal from office of a chief executive officer. This tendency to draw back from painful confrontation is exacerbated by the difficulty of politically corralling other board members to an adversarial point of view. Adversarial mobilization is difficult because too many independent directors just don't care enough; they have no financial incentive driving them, so they see no urgent need to rock the boat.

Additionally, too many independent board members don't do enough homework to understand in depth the business of the companies on whose boards they sit. Therefore, they have trouble judging whether their managements are doing well or poorly. All too...