'Directors are the front lines of capitalism': be proud--not defensive--about the job you are doing.

• Author: Troubh, Raymond S.
• Position: Endnote

I HAVE BEEN A DIRECTOR of close to 30 public companies and have learned a lot. Some of these were great companies with so-called weak boards and some, ironically, were weak companies with so-called strong boards. I don't believe you can measure weak and strong in a boardroom sense by mechanistic or formulaic gauges, although the business media (which should know better) often mindlessly characterize directors and their performances in this fashion, which is misleading and unfair.

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Actually, it may be that the term "director" does not really portray our true function, and that "monitor" or "guardian" or "trustee" is more descriptive. In fact, I believe that "monitor," "guardian," and "trustee" are more descriptive. Perhaps that very concept of "stewardship" is what we need to continually emphasize and infuse into present-day and future boards.

A 'fix-it' list

From my experiences, pleasant and unpleasant, I have developed a series of notions as to how we, as professional directors and dedicated quasi-public servants, can do a much better job for our constituents, the real owners of these public enterprises.

1. We must stop the outrageous growth of executive compensation, particularly where it does not relate to remarkable or extraordinary executive performance.

2. We must, through independent nominating committees, create better boards. The independent nominating committee is one of the most important new developments in governance. Independence must be a fact, not a theory; there must be an end to cronyism as an entry point for board membership.

   Warren Buffett, not always a great fan of boardroom performance, nevertheless appears to agree that true independence is a desirable asset in boardrooms. He warns us, however, not to let a friendly boardroom atmosphere preclude director toughness. In effect, he says (using a bridge analogy), directors' collegiality must not trump independence. He also reminds us that, in addition to true independence, three essential qualities a director must possess are that they "be business-savvy, be interested in their roles, and be shareholder-oriented."

   When these truly independent committees have functioned for a period of time, better, more cohesive, and more productive boards will emerge and corporations will be better governed.

3. We must insist on a constant review of succession planning and be certain our bench strength is sufficient to enhance and extend leadership--and, if not, we...