The Way it was: 1991.

On Our 15th Anniversary

DIRECTORS & BOARDS admittedly is not of an age to rival some of the great corporate names that you'll find in the pages of this issue, but we take some comfort in the fact that 22 of the top 100 companies listed by Fortune in its 1979 edition no longer exist as public entities. So, to a certain extent, anniversaries are a celebration of survival. But the pride and joy an anniversary occasions comes in the knowledge that one s survivorship is based on meeting the needs of the marketplace -- in our case, business executives operating at the apex of Corporate America who find value in fundamental, inspirational, peer-level guidance on the governance and management of our nation's leading enterprises.

James Kristie, editor (celebrating 10 years at the helm), in "Peering Into the New Era" [Fall 1991].

Boards Slim Down

The typical board at the start of the '90s is smaller than its predecessor of a decade ago. Among the 100 multibillion dollar companies that comprise the Spencer Stuart Board Index, the median board size is now 14 -- down from 16 at the start of the '80s.

"Smaller Boards, Fewer Insiders" [Winter 1991] highlights from the annual board survey done by Spencer Stuart.

Whoops... I Made a Mistake

Institutional investors keep saying, 'I own the stock.' They don't own a damn thing. What they do is pretend to manage funds that don't belong to them -- over which they have no ownership -- so that if things go well, they can't profit by it, and if they go bad, they'll just blame it on the marketplace. They frequently can't even be fired because they have civil service tenure. What they are is the same thing as a trustee would be in a will. They have a fiduciary responsibility. But there is no God-given information to them. They are not at birth injected with some kind of smart fluid that suggests that they even know how to run anything. If an institutional investor is unhappy with management, he should sell out. That's all he has to do. Say "whoops," admit that you made a mistake, and get out. It is not to say, "I made a mistake, therefore I'm going to punish you, and the way I'm going to do that is I'll scratch my head and look in the phone book and get somebody who is going to tell you how to run your bus iness." What foolishness.

I was a great friend of Ben Graham's, and I used to sit at the feet of his wisdom. He once said to me, "Sonny, let me tell you something. Stocks are not worth book value. They're not worth intrinsic value. They're not worth any of the labels these people give down on Wall Street. They're worth what you can sell them for." And do you know what? He was right!

Charles Wohlstetter, chairman of Contel Corp., in an interview with James Kristie in "Profile of the Contel Board" [Spring 1991]. He was one of three co-founders of Contel, which began operations in 1961 and was sold to GTE Corp. in 1991. He died in 1995.

Interests Are Not Identical

I believe that most managements are reasonably diligent and honest and genuinely work to further what they believe are the best interests of the corporation and its various constituencies. Managements seem to assume, though, that if they sincerely serve the corporation's best interests, they are also serving shareholders well. For this to be so, owners and management would have to have identical interests. They do not. Management's principal interest is in the health, continuity, and growth of the enterprise. The shareholder's main concern is an adequate return on his or her investment...