Bringing 'another view of life' into the boardroom.

• Author: Kristie, James
• Position: DIRECTOR RECRUITMENT

Directors & Boards and the John L. Weinberg Center for Corporate Governance at the University of Delaware collaborated in May 2004 to host a nine-member panel discussion on dissident directors joining boards. The discussion was grounded on the Circon Corp. case, an epic two-year struggle by the medical devices company to remain independent of U.S. Surgical Corp. A Harvard Business School case study of the company called it "the longest takeover battle in U.S. corporate history." It ended in October 1998 after the board added two dissident directors, ousted the CEO, took over the reins of the company, and ultimately sold Circon to Maxxim Medical Inc.

The discussion resulted in a 10-page cover story, "Dissidents, and Dissent, in the Boardroom" [Fourth Quarter 20041. Charles Elson, director of the Weinberg Center and moderator of the discussion, was one of the two dissident directors named to the Circon board (along with Victor Krulak, a former general in the U.S. Marine Corps). The following excerpt from the article includes observations by three other discussion participants: George Cloutier, a turnaround specialist who was a Circon board member and the swing vote in asking the CEO to step down (and who then became Circon's interim CEO up to its sale); Ralph Whitworth, a fund manager and activist investor who has been a change agent in a number of board situations; and Steve Odland, at that time the chairman and CEO of auto parts retailer AutoZone Inc. and chairman of the Business Roundtable's Corporate Governance Task Force.

Charles Elson: When I was asked to go on the Circon board, I remember being very concerned. Not only was it going to be a rather unpleasant experience, but also people said to me, "Are you nuts to be running as a dissident? You will never be asked on a real board again." The feeling was that once you are branded as a dissident, that's it--you've just shot your career. I decided that, under the circumstances, I would do it anyway.

Up until Circon it was rather rare that someone ended up on a board as a dissident director. The argument was that it would disrupt board process and disrupt the proper monitoring by the board of management. It was just an anathema in corporate America to have a dissenting director.

George Cloutier: I have lived with two dissident directors--Charles Elson and General Krulak. Known as "Brute" Krulak, he had served in Vietnam as the Marine commander and he did not take any prisoners from day one...