IN THE SPIRIT of the oral history presentations found throughout this special Silver Anniversary edition of DIRECTORS & BOARDS, we asked five newly appointed directors who joined boards during the July-September 2001 quarter to dig into their own personal time capsules and share their early perceptions of boards. For this task we recruited a diverse group, whose ages range from 36 to 66. Each voiced in their own way what they believe have been influential developments in the corporate governance landscape during the past 25 years.
Gerald Greenwald, age 66, is chairman emeritus of UAL Corp., the holding company for United Airlines, where he retired in 1999 after serving as chairman and CEO since 1994. From 1979-1990 he held senior executive positions at Chrysler Corp. Greenwald joins the board of Calpine Corp., an electric utility provider. He also serves as a director of Aetna Inc. In addition, he serves as a founding partner of Greenbriar Equity Group, an investment firm specializing in the transportation sector. He is the author of a new book, Lessons from The Heart of American Business, published by Warner Books in February 2001:
"IF YOU GO BACK 20 years with regard to board governance and contrast that with boards today, the single biggest difference that comes to mind is that there is a much better balance of power between boards and CEOs. But it seems to me that in a different way we need another rebalance. We've come to a time where boards compensate CEOs almost like sports figures. And there's an attitude that if they don't perform they're out. The rebalance needs to deal with more appropriate compensation to the employees and, at the same time, there should be better job security for today's CEOs. In the early days there were very few CEOs whose tenure and compensation were judged objectively. Compensation should have everything to do with how boards and directors conduct themselves.
"Another change from early boards to today is the issue of succession planning. Back at Chrysler when I was the No. 2 man in line to becoming the CEO, I didn't feel it was my place to initiate a dialogue with the board. The board wanted to speak with me, but also felt it wasn't appropriate. In contrast, boards today try to work with their CEOs in doing succession planning, which I think is quite healthy.
"As corporate governance evolves I would like to see CEOs and top management invest some meaningful amount of their own net worth into companies. For example, at the Green-briar Group we have a pool of money with which we are looking to buy 12-14 companies in the transportation sector. Our desire is to invest in or buy companies with really good management. We will do our best to have these managements have some "skin in the game," meaning that they invest into the company out of their own pocket. This is in contrast to public companies where their view is that CEOs and their senior management are given an equity stake in the company so as to align their objectives and incentives with shareholders -- which is good, but my point is that it's time to explore the greater effectiveness of the technique that is used in the private equity world."
Mary Schapiro, 46, brings a strong seasoned regulatory background to the board of Kraft Foods Inc. In 1988 President Reagan appointed her commissioner of the Securities & Exchange Commission, and in 1989 President Bush reappointed her to a five-year term. In 1994 President Clinton appointed Schapiro...