Boards of Directors: Their Changing Roles, Structure, and Information Needs

Boards of Directors: Their Changing Roles, Structure, and Information Needs

Boards of Directors: Their Changing Roles, Structure, and Information Needs

Boards of Directors: Their Changing Roles, Structure, and Information Needs

Synopsis

Charles Waldo takes a penetrating, behind-the-scenes look at today's trends in the corporate board room. He details the current and likely future roles boards of large firms will have to play and describes the interplay between the CEO and the directors. He describes current board composition and committee makeups and suggests the need for some new and uncommon committees. He notes the impact that changes in roles and structures have on the need for better information by board members and details the the types of financial and operating information directors receive from management today. Waldo prescribes a model information package, emphasizing the use of trend charts, financial ratios, and other kinds of visual and comparative data put together in simple, easy-to-use formats. He also addresses the need for softer, qualitative kinds of information not generally derived from accounting systems, but even more important for directors trying to analyze what is going on and what is likely to happen.

Excerpt

Within the past decade or so a number of major U.S. corporations have had the dubious distinction of making the financial news headlines as a result of their rapid demise from prosperous, well-established companies to ones winding up in the bankruptcy courts and, in some cases, going out of existence. In the late sixties firms such as Singer (consumer and industrial goods manufacturing), A & P (grocery retailing), the Penn Central Railroad (transportation), and W. T. Grant (mass retail merchandiser) were large, public corporations with good market shares, large staffs, and, seemingly, all of the tools of modern management at their disposal to anticipate and avoid serious problems. Yet, Grant failed, A & P almost did so, Penn Central went into bankruptcy and is still struggling, and Singer suffered a profit deficit of more than $300 million from 1974 to 1982.

In the late seventies corporate giants such as Chrysler Corporation and Lockheed Aircraft, among others, had to be bailed out with massive U.S. government-guaranteed loans. Braniff Airlines, flying high in colorful planes a few years ago, was grounded due to severe cash-flow problems in 1983. A host of other large companies got into such financial straits that they either had to merge voluntarily with other firms to survive or were involuntarily gobbled up by unfriendly acquirors. Even Texas Instruments (TI), generally a consistent profit maker and known for its good management, is not immune to severe problems as evidenced by its late 1983 pullout from the home computer market after suffering losses in the multimillions. TI's computer problems are shared: General Electric and RCA, both huge, mature organizations, tried to make it in computers--and didn't.

The primary responsibility for at least the approval (if not the for-

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.