Boards of Directors of US corporations seem to have an average IQ somewhat above that of a cobblestone and somewhat below that of a roasted chicken.
Take, for example, the Board of Directors of Peoplesoft. They seem to have suddenly realized enough about their CEO to abruptly change his title from "CEO" to "ex-CEO".
A person's past behavior often suggests what his future behavior might be. And in the case of Peoplesoft's now ex-CEO, there is a body of past behavior that, in the opinion of some observers, might be construed as suggesting that he might bring unhappiness to the corporation, its shareholders, its employees, and its customers.
Was Peoplesoft's Board less than adequately diligent when it hired its now ex-CEO? Did they even bother to make a critical inquiry into his past performance? Or did the Directors of Peoplesoft do what so many Directors of US corporations do - moo loudly and mindlessly follow the leader without even a hint of independent inquiry or judgment?
Even after Enron, Worldcom, and other failures of corporate responsibility, and even after Sarbanes-Oxley the Directors of US corporations seem unaware or uncaring of the nature and extent of their duties and obligations. Shareholders, corporate regulators, and prosecutors should build fires under Directors by making them feel the personal consequences that can come when a Director ignores his or her responsibilities.
If Peoplesoft's shareholders feel harmed by the events of the last few years they might consider whether the scapegoating of their ex-CEO is the end of the road or merely the start. The shareholders might decide that Peoplesoft's Directors have spent too much time with their heads in the sand rather than actually doing their jobs. It might send a much needed signal if a few lax Directors of corporations, who have done so much to destroy corporate value through their inattention and failure to perform even the most minimal of their obligations, were to be financially ruined by shareholder lawsuits.Posted by karl at October 5, 2004 5:07 PM