We very much enjoyed the article, As Firms Flounder, Directors Quit, in today’s (November 21) Wall Street Journal.
The title completely summarizes the content: as many firms have faced financial difficulties, outside directors have quit because they’re “too busy” to direct the firm that they agreed to help direct before it was in such dire trouble.
A week ago Thursday, we wrote The Failure of Boards to Direct in response to a different WSJ article about Citigroup. We consider the key line of the article to be an off-hand reference to the fact Richard Parsons was “one of the few Citigroup directors with experience in financial services.”
One of the few! $2 trillion–that’s $2,000,000,000,000–of assets and a market value of $25 billion. Despite the beneficial government subsidies and guarantees of many liabilities, that market value is barely over one percent of the assets at work.
So we ask: do you think that there is a relationship between a(n at least partially) unqualified board of directors and the probability of facing financial difficulty–if not outright ruin–particularly during a global crisis?
If not, why not?
We do note, however, if this current discomfort demotivates dilettantes from serving on other boards in the future, then maybe some good will come out of the crisis.
