Wednesday, October 24, 2012

The Board Versus The CEO

At one time, a company's Board of Directors was viewed as a rubber stamp for the CEO. Recently, Boards have become more active in the management and control of the company. Citi CEO Vikram Pandit resigned last week after a clash with Citi's Board and in 2011 Yahoo's Board fired CEO Carol Bartz. Other companies that have lost CEOs or Board Chairman leaving because of discord include American International Group and Hewlett-Packard. A recent survey indicates that 21 percent of Board Chairman in 2011 were independent, up from only 10 percent in 2006. Other factors cited which may be leading to the increased activism of Boards includes the recent financial crisis, increased regulation, and fear of investor lawsuits.