CASH is king: for a director, passion may be a positive value but is not preeminent.

• Author: Kaback, Hoffer
• Position: QUIDDITIES

AT PRACTISING LAW Institute's Eighth Annual Directors' Institute on Corporate Governance, held in New York in early October, two participants endorsed the proposition that you should join a company's board if and only if you are "passionately" interested in that company's business and industry.

[ILLUSTRATION OMITTED]

One was Ira Millstein, a senior partner at law firm Weil, Gotshal & Manges, the senior associate dean for corporate governance at the Yale School of Management, and the person for whom that university's Center for Corporate Governance is named. The other was Patrick McGurn, special counsel at RiskMetrics/ISS. Both have been major, and thoughtful, players on the governance stage for many years.

Should we warmly embrace, or shy away from, their posited prerequisite of passion? Should that trait be in the nature of a "qualification" for directors worthy of being seated at the board table?

Let's first consider some of the many defective aspects of (a) the way directors are chosen and (b) the information that is disclosed about them.

Although some academic research asserts that putting "celebrity directors" on boards leads to immediate positive shareholder value, that practice, it seems to me, has little to recommend it. (See my column, "Celebrity Hit Parade," Second Quarter 2010.)

In addition, we should ferret out the oft-hidden ties between board members and the CEO by going way beyond the existing disclosure requirements ("Pals on the Board," Winter 1997).

And it is long past time to cut back on the many "perennial directors"--those whose names recurrently cross your field of vision when you read the proxy statements of Fortune 500 companies. Though it is illogical and shortsighted to set an artificial limit on directorships ("One-on-One with Chou En-lai," Summer 1997), it is also true that the perennials' high-profile and non-escapable presence reflects, in part, a lack of imagination by the executive search/board recruitment firms. One bad result of this is that many highly qualified individuals who could make palpable contributions to corporate boards have repeatedly been frozen out. They simply can't get past the velvet rope that bars their entrance to the boardroom club.

Moreover, I suggested, almost 13 years ago, that the SEC require by rule that proxy statements contain an essay from each board candidate explaining why he adds value to, and would be a good director for, that board--on the hope that such a required essay...