Doing something right: focusing on exceptional boards: the best boards rely on a combination of best practices that includes diversity, an independent non-executive chair, superior compensation practices and high-quality skillsets.

AuthorSweeney, Paul
PositionBoards of Directors

According to several ratings and standards, Campbell Soup Co. has one of the best boards of directors in corporate America. Not only is it one of just 16 companies on the Standard & Poor's' 500 Index to be led by a woman--Denise Morrison, a highly-regarded food industry veteran who assumed the role of chief executive and president in August 2011--but one-third of its 15-member board is also women.

That's more than double the average of 16 percent of women serving in S&P 500 company boardrooms, according to a 2011 board survey by Spencer Stuart, a New York-based consulting and board-recruitment firm. Also from a diversity perspective, two members of Campbell's board are African-American.

In addition, the global manufacturer and marketer also gets high marks for both splitting up the roles of CEO and board chairman, as 41 percent of the S&P 500 companies do, as well as for having an independent non-executive chairman.

Paul R. Charron, who became Campbell's chairman in 2009, previously served 10 years as senior vice president, chairman and CEO of fashion clothier Liz Claiborne Inc. (which became Fifth & Pacific Cos. Inc. in May). He has never worked for Campbell.

Clearly, the performance of corporate boards has been facing serious scrutiny in the tumultuous business climate of recent years. By employing best practices that include diversity and having a truly independent non-executive chairman like Charron, however, companies like Campbell's are serving as models for reform, particularly in the wake of the nation's bruising financial crisis.

'Where Were the Boards?'

"Where were the boards?" asked the U.S. Financial Crisis Inquiry Commission last year. And in their scathing book on boards of directors, Money for Nothing (2010, Free Press), authors John Gillespie and David Zweig report that too many board members have simply forfeited their duty to represent shareholders, the actual owners of companies.

"Despite many directors being intelligent, experienced, well-qualified and decent people who are tough in other aspects of their professional lives," the authors write, "too many of them become meek, collegial cheerleaders when they enter the boardroom."

Boards of directors, Gillespie and Zweig add, "are elected to monitor, advise and direct the managers hired to run the company. They have a fiduciary duty to protect the interests of shareholders. Yet, too often, boards have become enabling lapdogs rather than trustworthy watchdogs and guides."

Lost in the shuffle, however, is the fact that the boards at many unsung companies have been employing best practices all along. And in the wake of governmental inquiries and legislation, increased shareholder activism and soul-searching by industry itself--and often in the form of weighty studies by blue-ribbon commissions--more companies are following their lead and incorporating best practices.

Companies are adding directors who provide their boards with both gender and ethnic diversity as well as independence and additional, specialized expertise or skillsets. Says Ralph Ward, editor of Boardroom Insider and an expert on governance issues: "Tech companies like Amazon and Google have clone a really good job recruiting boards with outside directors who have strong resumes. They're...

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