Why retired CEOs can be a board's MVPs; They have four essential qualities, grounded in a fearless sensibility: 'I'm old, I'm rich, and they can't mess with me.'.

• Author: Delves, Donald P.
• Position: BOARD COMPOSITION

WHEN FORMER Secretary of the Treasury Paul O'Neill was asked if he feared any recriminations for being an outspoken a critic of the Bush Administration, he reportedly replied: "I'm old and I'm rich ... What can they do to me?"

Like it or not, this blend of experience, wisdom, and feisty independence born of age, wealth, and status makes for a good corporate director. In today's boardrooms, where high quality governance is at a premium, companies need more O'Neill-minded directors who have the courage to speak up and the intelligence and experience to say the things that are highly relevant.

Based on what I've seen in more than 20 years of advising boards as an executive compensation consultant, there are a number of attributes that make a board member--and particularly a compensation committee member--effective. I have also observed that retired CEOs best and most consistently exemplify these qualities. Their experience, wisdom, status, wealth, age, and independence are a powerful combination, which makes them the MVPs of many boards.

The right balance for the right battles

Retired-CEOs-turned directors often have the right balance of courage and ego. They have enough courage to take on the right battles and to spark the heated discussions that need to take place in order for things to get done. At the same time, they are able to keep their egos in check so that the focus remains on the key issues--not the drama of the moment, and not their own aggrandizement.

Retired CEOs are typically not looking to use their director status to launch another career, make a name for themselves, or bolster their social standing. They've already had their proverbial day in the sun, and are firmly entrenched in their personal and professional circles.

Having held the CEO post, they are comfortable in the "post-peak" phase of their careers, when they can bask in the reflected glow of the spotlight but avoid the high-intensity glare. It's somewhat analogous to star professional athletes who, after leaving the game or having their numbers retired, become great sports analysts, strategists, and commentators. They have already made a name for themselves, and they know the game; now they can use both qualities to contribute to the sport in a different capacity.

While retired chief executives are often uniquely qualified as board members, they are certainly not the only good directors. There are other independent-minded, intelligent, and highly capable...