The Wall Street Journal article, “Corporate Boards Suffer From an ‘Experience Gap’ as Coronavirus Upends Business,” quoted Russell Reynolds Associates Consultant Rusty O’Kelley on the concern of ‘overboarded’ directors during this time of crisis. The article is excerpted below.
In late 2008, with financial panic gripping the economy and automobile demand evaporating, General Motors Co.’s board met three times a week. The car company’s health was failing as executives tweaked forecasts daily. The job of pressing executives for a realistic rescue plan fell to 12 independent directors.
As the new coronavirus wreaks havoc on U.S. corporations, and entire industries teeter, it’s fair to ask how prepared today’s boardrooms are. I would argue that a movement that was designed to make boards better may instead leave some of them flat-footed as their companies face this crisis.
The culling of the ultimate boardroom insider has taken place over the past couple decades without much fanfare, as investment advisers and governance experts made war on the “overboarded” director.
These are the directors who held a half-dozen or so public board seats at the same time. Some companies sought out such people to fill their directors chairs, believing their broad perspective on a multitude of industries and companies made them experts on best and worst practices.
“The reason there are concerns about overboarding is exactly times like these,” said Rusty O’Kelley, co-leader of Russell Reynolds Associates’s Board & CEO advisory. “It may be easy to juggle multiple boards when times are going well, but what happens when too many board seats and other commitments get in the way?”
Mr. O’Kelley estimates a board seat consumes 200 hours per year, and the obligation was growing even before the new coronavirus pandemic. “More is being expected of directors by institutional investors,” he said. The list includes dealing with an onslaught of activist investors, keeping tabs on disruptive technologies and paying attention to environmental and social-good initiatives.
To read the full article, click here.