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Great board meetings demand great directors: but even the best can be thwarted by perverse board protocols.

IN RECENT PAST COLUMNS we've talked about the needs to revitalize the labor movement, for more 'adaptability' at the board level, and for new senses of corporate social responsibility and political engagement. This time I am going back to the theme of "for whom do board members work" by asking what makes for great board meetings and thus, in turn, great directors?

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There are only four things that really matter, and they seem obvious to me:

* Be fully informed, in readily understandable ways.

* Get out of the ivory tower.

* Don't let the 'committee' structure be an obstacle to superior governance.

* Don't let the ethical imperative for a 'balanced, representative' board lead to a lesser quality of governance.

Let me elaborate.

Implicit throughout the billions of dollars of financial industry-related misconduct since 2007 has been not just the debate over "too big to fail" but also the truism, too often, of "too big and/or complex to manage."

And I don't think it's an overgener-alization to paint most of the multinational corporations and the nation's large domestic public companies with this same characterization, given the current complexities of cross-border activities and balance-sheet management.

Yet every quarter, just days before and in some cases only hours before their board meeting, directors receive a several-inch-thick agenda book, which is half pabulum and self-congratulation of the senior management team and half financial-related statements that no conscientious director could quickly absorb on his own.

The agenda book often does an OK job of sparking a strategic discussion later in the meeting, but as an accurate 'report card' of what really happened financially over the last quarter and, especially, as a survey of the potential pitfalls and exposures confronting the company, the book usually is pitiful.

The second great fault is that directors almost always meet in a boardroom located about 20 feet outside the resplendent office of the CEO, with all of his awards and tchotchkes hanging on his walls or standing up on his credenza. Too many board meetings are still in reality, just meetings of the CEO's close confidants and supporters who too often are too compromised by the large fees they receive in order to be objective and deeply probing.

No public director should tolerate not having fairly frequent board-related meetings with the company's senior managers and representatives to go over and understand the daily operations of the company.

These meetings need to take place where the managers and employees actually work, not at the corporate headquarters--and I must note that this objective isn't met by the current curious practice of rotating annual shareholders' meetings among far-flung American cities, which most often have no physical connection to the companies holding their meetings.

A third perversity is how board committees have come to work against quality governance rather than contribute to it.

The well-intentioned objective of trying to better inform and engage directors by assigning them to committees, while their fellow directors sit on other narrowly defined committees, has in reality so 'partitioned' the affairs of companies that no director is exposed to or aware of everything.

Take the daunting audit and compensation committees, where so much detailed and nuanced information is disclosed that a director who is not on these committees will never have more than a small fraction of the insights of the directors who actually sit on them.

And don't even get me started on insular governance or succession committees, where we've seen too many new or 'successor' CEOs show up who've never exhaustively engaged with the whole board before the hiring decisions are made.

Finally, there is the challenge of having board members who at once sensitively represent the wide social diversity of our country and, at the same time, contribute to the quality of the board through their hopefully rich business acumen. Right now we too often fail to achieve the 'at once' mandate, such that too many of America's major boards are now socially and culturally diverse but are second-rate management-wise.

What I've suggested is that current board protocols may themselves not be giving us those great board meetings that companies and investors alike should have, and that at least four of these protocols need to be revisited.

The author can be contacted at comments@intermediaadvisors.com. He is the former CEO of Tele-Communications Inc. (TCI), Liberty Media, and their successor, AT&T Broadband, and currently is an investor in media companies as managing partner of InterMedia Partners LP.

Leo Hindery Jr. is chairman of the U.S. Economy/Smart Globalization Initiative at the New America Foundation.
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Title Annotation:IT (STILL) TAKES A CEO
Author:Hindery, Leo Jr.
Publication:Directors & Boards
Date:Dec 21, 2013
Words:762
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