You gotta scratch your head sometimes: go figure on some of the moves that boards make.

• Author: Sutton, Gary
• Position: SUTTON'S LAWS

DIRECTORS WITH too much time on their hands can cause more damage than directors who sit on too many boards.

Those excessively busy directors can't hurt a business as much.

I remember the guy who was a top officer of three failed public companies. One held the record for the largest bankruptcy in the U.S. for a few years.

He was an energetic, super-confident, often-in-error-but-seldom-in-doubt type who just kept moving along faster than the tragedies piled up behind him. One day it came to an end. He took me to lunch and asked my advice on starting a wine by direct mail business. I knew little about wines and less about direct marketing.

[ILLUSTRATION OMITTED]

Maybe he tried it. Maybe not. If he did, I never heard anything more about it.

But, as is often the case, he stayed on another board. This was a nationwide retailer. And he began whispering things about the CEO to other directors. With time, the retailer had two soft quarters in a row and he jumped in.

To make this a perfect story, I should report that the retailer soon failed. It didn't. It had some ups and downs. The most embarrassing moment came when the financial advisor he brought in lost $40 million of the retailer's spare cash.

I remember he told me what wonderful things this advisor had done with his personal investments. So he gave the huckster the retailer's cash. He did fine. The retailer lost all its cash and barely survived.

The worst director on a board is the one who's looking for work.

They'll never admit it. They'll find things that "seriously bother them" about the CEOs. When the business has a bad year this director will take over. Expressing regrets.

When a CEO screws up bad, there's simply nothing wrong with a director grabbing the controls, provided a search is started immediately for the next CEO.

Now, about that next CEO. If he doesn't commit to long-term incentives, the business is still in trouble. He or she ought to move to headquarters. Too often, headquarters is moved to the new CEO. That's gotta stop.

Ed Whitacre was an understandable choice to be chairman of GM. He ran AT&T before, having acquired Ma Bell's carcass. So he knew how to work the feds, and, sure enough, union investments got priority over bondholders in the bankruptcy settlements; legal niceties be damned. Washington chipped in $50 billion. GM ran through four CEOs in 18 months, Ed put himself in front of the TV cameras in an Iacocca-like set of ads, got a couple of profits...