Ed. Note. The following is an excerpt from a cover story by Harvey Golub in the Winter 2004 issue titled "A CEO Looks at the Director's Role." The article was drawn from a chapter that he wrote for the book. How to Run a Company by Dennis C. Carey and Marie-Caroline Von Weichs. Golub had retired from American Express Co. in 2001 after seven years as chairman and CEO and spent time on the boards of Campbell Soup Co., Dow Jones & Co., and Warnaco Inc., along with several private companies. (Ahead for him was the hot seat of the chairmanship of AIG in the Financial Crisis period.)--J.K.
Some argue that board members would be better able to immerse themselves in the details of running a company if they served on fewer boards; some corporate governance experts propose limits on the number of boards on which a director should serve.
In my view, any arbitrary limit would be a mistake. In fact, one should be wary of any list of corporate governance procedures, with all companies expected to simply check the boxes. The notion of a limit on board memberships is a good example of the shortcoming of check-the-boxes governance.
The reason that some individuals are directors of several companies is that they bring the most important qualities a board member must have--judgment, maturity, intelligence, and an ability to work in a collegial fashion. Why would we want to restrict people with these qualities from serving on a large number of boards and spreading their talent as widely as possible in corporate America?
A good example is Vernon Jordan, a former Washington lawyer and currently a senior managing director of Lazard. Some corporate governance gadflies would look at the number of boards on which he serves and conclude that he spreads himself too thin. Apparently they have never heard the old saying, "If you want something done right, ask a busy person."
Vernon serves on a lot of boards because he provides valuable advice, which is why he has been recruited to join the boards of such companies as Bankers Trust, Dow Jones, Revlon, J.C. Penney, Xerox, and Sara Lee, as well as the Ford Foundation and Howard University. The fact that so many companies want Vernon Jordan on their board simply proves that you...