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It's now especially all about people: today's directors would do well to learn from the honorable individuals who preceded them.

IT'S SAD TO SAY, but this is certainly not the golden age for corporate governance. At a time of such economic peril, we desperately need diligent, thoughtful, and ethical hands on the tiller of corporate America. Yet, too many current directors of major corporations are either lackadaisical "yes" men (and women), or, more insidiously, they put themselves and their selfish economic interests first, ignoring blatant conflicts of interest and abandoning principals of honor and integrity.

One glaring example comes from Hewlett-Packard, where Carly Fiorina was hired by the HP board in 1999 and then fired in 2005, with the stock price half of what it was when she was hired. The board then hired Mark Hurd, whom they then fired after five years for expense account irregularities. Most recently, Leo Apotheker was hired after only four out of 12 total directors could find the time--or the sense of corporate responsibility--to even interview him. Mr. Apotheker was fired just 11 months later following a calamitous 40% drop in HP's stock price during his brief time as CEO.

The founders of HP, Bill Hewlett and Dave Packard, whom I knew, would have been furious at these behaviors.

Unfortunately, HP is not an outlier. I am extremely disappointed as well with the actions of a number of current directors, including most recently those at Yahoo, where its co-founder, 3.6% shareholder and current board member (and self-appointed "Chief Yahoo") is acting at once as a potential buyer and seller personally, despite numerous reasoned calls by shareholders for his recusal from relevant board votes.

I have known and observed some truly great directors, and it's a privilege to now write about one of them in particular, Ed Littlefield.

Edmund Wattis Littlefield was at once chairman and CEO of Utah International Inc., chairman of the Business Council, and a director of General Electric, Chrysler, Pan Am, Wells Fargo, and the Stanford Research Institute. I became assistant to Mr. Littlefield right out of Stanford Business School in 1971, and Ed introduced me to and would often let me work alongside Fred Borch and Reginald Jones of GE, Bill Hewlett and Dave Packard of HP, Ernie Arbuckle of Wells Fargo, and Arjay Miller, who was then dean of the Stanford GSB and former CEO of Ford.

But what really stands out about Ed Littlefield is that he is indisputably the 'author' of the view--which Reginald Jones of GE later carried into the broad public domain upon his own elevation to be chairman and CEO of GE, in 1972--namely, that a responsible CEO has equal and concurrent responsibility to his employees, shareholders, customers, communities, and nation. This sense of responsibility also was applied back then to directors, without exception.

And though this was an era when corporate directors were, to be honest, an elite group of individuals who knew each other commonly in multiple contexts and who often had large shareholdings dating back to the early days of these companies, it was not an era known for cronyism and mutual back scratching.

It really was just the privilege of being a director which compensated these individuals, and excluding the occasional all-electric kitchen (from GE) or souped-up Imperial (from Chrysler) or free airline tickets (from Pan Am), nobody got rich from being a public company director. This was consistent with the fact that the average public company CEO back then earned only about 15 to 20 times what his average employee earned.

These directors, with Ed Littlefield being in my mind the prototypical one, took most satisfaction in succession planning and governance. They knew every candidate for every senior position in the company at hand, and they would have quickly recused themselves from considerations for which there was a legitimate conflict.

Today's directors would do well to learn from the honorable men who preceded them.


The author can be contacted at He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications Inc. and Liberty Media, and is currently an investor in media companies.

Leo Hindery Jr. is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, co-chair (with Leo Gerard) of the Task Force on Jobs Creation, and founder of Jobs First 2012.
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Title Annotation:IT (STILL) TAKES A CEO
Author:Hindery, Leo, Jr.
Publication:Directors & Boards
Date:Dec 22, 2011
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