Sunday, February 28, 2010

Who Speaks for the Board?

In the news coverage of the tumult at AIG, one particular Wall Street Journal article caught my attention — and not in a good way. Last November the WSJ reported that new CEO Robert Benmosche was threatening to quit, and that the AIG board was scrambling to salvage the situation. Pretty momentous developments, considering the still precarious state not only of AIG but of the broader financial community and markets.

Asked by the reporters about what was happening at the board level, this is what ended up in the article: "A spokesman for the giant insurer said the company doesn't comment on board activities."

Well, okay.

Then, next question: Who does speak for the board?

Unfortunately, no one seems to. Many if not most boards simply have no voice of their own.

That has been the longstanding tradition — that the corporation speaks with one voice, that of management's.

Is this a good thing anymore? Is this responsible behavior for boards in today's environment of fuller transparency and disclosure — to have no voice of their own? And, if they were to decide to find their voice, whose voice should it be? And how should it be expressed? Should a board have its own PR representation, just as many are now doing in hiring their own independent compensation advisers? Are we headed down that path?

All good questions, I think. And I am on a search for some answers. Stay tuned. I am going to ask some smart people — in governance, the investor community, and corporate communications — to help me with some answers. I will be making this a major feature article in the Second Quarter edition of Directors & Boards.

It should be a good one — one that advances leadership thinking in what are, or should be, "new normal" best board practices.