Learning from BP.

• Author: Rock, Robert H.
• Position: LETTER FROM THE CHAIRMAN

FIFTY DAYS into the Gulf Coast oil spill catastrophe, White House press secretary Robert Gibbs made a confounding pronouncement. When asked why President Barack Obama had not spoken with BP CEO Tony Hayward, Gibbs said that the President has not bothered to call Hayward because BP's board is ultimately in charge and is calling the shots. Gibbs reiterated "that anything that the (BP) CEO wants to do has to be approved by the board," which is comprised of Hayward, five other senior BP executives, and eight nonexecutive directors.

[ILLUSTRATION OMITTED]

Given its limited corporate governance experience, the Obama administration may believe that boards not only oversee but also manage the day-to day affairs of a company, requiring the CEO to continually check in with them. This misconception of how the private sector works is startling, and makes it surprising that the President didn't demand at the outset to meet with Chairman Carl-Henric Svanberg. BP's board has remained out of sight and, to a large extent, out of mind.

Boards of directors can learn from BP's woes. In addition to crisis management, there are also lessons about how to avoid these crises. Such lessons also apply to averting the kinds of dire financial crises that many companies faced in 2009, as covered in this special Year in Review edition.

Recognizing its responsibility for assuring the health and safety of its workforce and communities, boards, including BP's, have set up committees to oversee safety, regulation, and environmental issues.

What does the board in general, and the safety, regulatory and environmental committee in particular, need to focus on in order to avert a BP-type catastrophe? Kenneth G. Brill, founder of Uptime Institute (a data center...