That is the question.

• Author: Rock, Robert H.
• Position: Bob Mueller's services and appreciation

'IS THIS THE DAY we fire our CEO?"

Robert K. Mueller suggested that every board meeting begin with this question. Bob was chairman of Arthur D. Little from 1977 to 1986, and during a long and distinguished career, he served on and counseled many corporate boards. Bob also served on DIRECTORS & BOARDS' editorial advisory board. As a recognized expert in board governance, he authored a seminal piece in our Spring 1976 premier edition, and over the next two decades he continued to contribute thought-provoking articles.

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Bob's question gets at the fundamental purpose of a board of directors. The most important decision continually facing a board is whether the top leadership, in particular the CEO, has the strategic vision and personal capacity to drive the company forward. Each year the board is required to assess the chief executive, but often this assessment amounts to little more than an exercise in evaluating past performance. Performance evaluations often look backward, comparing results against pre-established performance standards that focus on financial measures such as earnings growth and total shareholder return.

This evaluation is very important, especially for determining bonus awards, but it often fails to address the more important question; namely, whether the company has the right leader to create its future. This question is often not asked until it is too late, when the company is in trouble and the board has few alternatives. If directors at companies such as Disney, AIG, and Morgan Stanley had...