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Some Top Dogs Need Watchdogs

Boards increasingly pushed to establish CEO oversight procedures.


Directors & Boards | December 26, 2018



The Directors & Boards article, “Some Top Dogs Need Watchdogs,” quoted Russell Reynolds Associates Consultant Nada Usina and cited a firm survey on the growing difficulty boards face to oversee their CEOs without overstepping their boundaries. The article is excerpted below.

Even wildly-gifted CEOs need supervision.

That appears to be the takeaway from recent regulatory cases where companies have been taken behind the woodshed for not monitoring their star chief executives.

The most recent example involved swift action by the U.S. Securities and Exchange Commission (SEC) against Tesla Inc., as well as its talented CEO, Elon Musk. The SEC sued both Musk and Tesla after Musk tweeted a series of “false and misleading” statements about a transaction to take Tesla private.

Part of the settlement included corporate government changes: Musk had to relinquish the chairman job, the addition of two new independent directors, the creation of a new committee of independent directors, and additional controls and procedures to oversee Musk’s communications.

...

The challenge for many boards is to oversee without overstepping. “It’s a tricky time out there,” says Nada Usina, a member of Russell Reynolds Associates’ board and CEO advisory group. “I think what we’re seeing is a different level of scrutiny.”

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Some Top Dogs Need Watchdogs