CEO in the middle--the board above and the executive team below.


Business leaders have always faced the challenge of satisfying both the demands of an independent board of directors and the needs of their executive team members. But over the past decade that task has become trickier. An increasingly competitive and turbulent landscape is putting pressure on CEOs to ratchet up their involvement in the operational aspects of businesses and functional areas. At the same time, organizations are more complex and operations more global--making it more essential than ever that CEOs build and foster an executive team that can take accountability for broad corporate objectives.

In the meantime, boards have grown steadily more vigilant, scrutinizing leaders more closely on everything from business strategy to CEO compensation and succession. That more-vigorous oversight was initially spurred in part by high-profile failures such as Enron and Tyco and the subsequent game-changing mandates of Sarbanes-Oxley. More recently, credit crises on Wall Street and the global economic downturn prompted the pendulum to swing even further--to the point, many say, of "hypervigilance."

The result? CEOs are being pulled in two directions, trying to reassure skittish directors and develop both key talent and an effective, but not intrusive, board. "Nervousness at the board level is impacting the whole governance system," asserted Tom Saporito, chairman and CEO of RHR International, speaking at a CEO roundtable discussion that RHR held in partnership with Chief Executive. "We've all heard the expression 'nose in, fingers out.' But we're in a phase of nose in, fingers in' because of that overreaction."

Activists in the Boardroom

"There's been a change of attitude and approach," agreed Anupam Narayan, CEO of Red Lion. "It seems to me that right now there's a certain amount of separation, perhaps mistrust, between boards and the CEO. In fact, my suggesting a new board member may be the kiss of death because [the governance chairman and board are so focused on] independence."

Safeguard Scientifics CEO Peter Boni echoed the sentiment, recounting a "meltdown on alignment" with his board when the economic downturn hit. The company's stock dropped from $18 to $2 and the board panicked, he recalled. "They basically said, 'Let's look at 16 different business models.' I said, 'I have combat experience and I'm steady on my feet under fire. I expect the same from my board, and I'm sorely disappointed:"

Ensuing discussions eventually brought Boni...

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