The First Woman Director

March was Women's History Month. Before the month comes to a complete close, let's add one last entry to the history books — the first woman corporate director.

Directors & Boards Publisher Robert Rock had occasion to track down this milestone in board composition last summer. He had just received an invitation from "Vision 2020" — a group that is preparing celebrations for the 100th anniversary of Aug. 26, 1920, when the 19th amendment gave American women the right to vote — which then peaked his curiosity about the first woman to join a corporate board. Drawing from various references, here is what several sources have concluded.

There were a handful of women who upon the death of a husband or father came onto the board of an American corporation, most notably Marjorie Merriweather Post, who in 1914 joined the board of the frozen foods and cereal company started by her father.

Other business historians point to Lettie Pate Whitehead (pictured) as the first independent woman to serve on the board of a major U.S. corporation. An Atlanta business, church and civic leader, she joined the Coca-Cola Co. board in 1934. This was a year after President Roosevelt appointed Frances Perkins as Secretary of Labor, the first woman to hold a Cabinet post. Ms. Whitehead served on the Coke board for 20 years. Her philanthropic legacy continues to this day to benefit charitable initiatives.

Perhaps her legacy also continues to benefit the Coca-Cola company and its board. I just took a quick look at the Coke board today and was pleased to see that three highly accomplished women serve as directors: Cathleen Black, Alexis Herman, and Maria Elena Lagomasino. Three is good, at a time when many companies still have no women directors and many others feel that having one woman is a sufficient nod to board diversity.

You Are Right, Jack

How would you like to be on the receiving end of this blast from Jack Welch: "What, are you stupid!?"

Mary Stengel Austen was — and survived this encounter with a boisterous Welch quite nicely, thank you. So much so that on March 11 she was recognized with the 2010 Paradigm Award for her role as a major corporate leader in the Philadelphia metropolitan region. Austen (pictured above at the award event) is president and CEO of Tierney Communications, a leading advertising and PR firm. "Ms. Austen is truly a remarkable business leader and an amazing asset to our region," declared Rob Wonderling, president and CEO of the Greater Philadelphia Chamber of Commerce, the organization that presents the Paradigm Award.

Now, as to that bump-up against Jack Welch. Here is the story in her own words, which she recounted unabashedly in her award acceptance speech:

"I was at a two-day conference in Boston — billed as 2 Days with Jack — several years ago. I was fortunate enough to be in a room with only a handful of other CEOs. So I was able to get into this great conversation with Jack and he asks me, 'Mary, who's your mentor?' I paused and said, 'Well, I really don't have a mentor.' Without skipping a beat, Jack Welch looks me in the eye and barks, 'What, are you stupid?!' "

"Not my proudest moment," Austen admited.

This character-building moment ended up being a career-enhancing moment. She explained to the 800-person crowd packing the Marriott ballroom that turned out to see her get the Paradigm Award what happened next: Welch "went on to say that people are usually flattered when others ask them for advice or to serve as a mentor. They expect it, and chances are they relied on mentors themselves and see it as an opportunity to give back." Now, said Austen, "I have many mentors."

That's an important lesson in the vital formation of a leader. And Mary's story serves as a useful reminder that a role of a board member is to be a mentor to the CEO and management team. That is a role not often analyzed in the governance literature or emphasized in board-management interaction. In a quick search through the almost 35-year archives of Directors & Boards, I can point to at most a bare handful of articles that touch on this role of the board.

With so much hard-earned — read "hard-learned" — wisdom residing at the board level, it is, in Jack Welch's inimitable phraseology, "stupid" not to channel that into a mentoring relationship with the organization's managers. Who knows, that might be just the ticket to honing a future award-winning business leader like Mary Stengel Austen.

Say Yes

I am constantly hearing directly from, or about, executives who have turned down an invitation to serve on a board. Too risky . . . not enough time . . . already overboarded . . . not the right board . . . not the right time . . . excuse, excuse.

If you have said no to a request to get involved in a board or other advisory role lately, and are in that mindset about future board invitations, you might want to take under advisement the following recommendation. It comes from University of Connecticut President Michael Hogan. As reported in the March issue of The Atlantic, he imparted this advice to graduates at last year's commencement address. According to the Atlantic article, he was addressing the phenomenon of students' turning down jobs, with no other alternatives at hand, because they didn't think the jobs were good enough.

"My first word of advice is this," he told the graduates. "Say yes. In fact, say yes as often as you can. Saying yes begins things. Saying yes is how things grow. Saying yes leads to new experiences, and new experiences will lead to knowledge and wisdom. Yes is for young people, and an attitude of yes is how you will be able to go forward in these uncertain times."

The only nit I would pick with President Hogan's inspiring words is that an attitude of yes is not only for young people. Why shouldn't it apply to someone at any age? In the context of this "Board" blog, why shouldn't it apply to someone who has been identified as the right person for a board or advisory role?

Should such an invitation come your way, think hard about saying yes.

Comcast's Ralph Roberts at 90

I opened up my Sunday Philadelphia Inquirer this past weekend to see an article on Comcast co-founder Ralph Roberts celebrating his 90th birthday. According to the article, Roberts "still keeps a near daily presence at company headquarters as a senior adviser to son Brian Roberts and other top managers."

We had the pleasure of having Ralph Roberts as a member of the Directors & Boards editorial advisory board during the late 1980s and early '90s. How could you be based in Philadelphia and not want such a preeminent business leader also working here to play such an advisory role? Not us.

As you might imagine of someone who has lived a long life and built a major corporation from virtually scratch, many tales abound of Ralph's trajectory of success. In a Fortune profile in 2001, the magazine traced his roots thusly: "Ralph Roberts started humble in 1963, with a 1,200 subscriber cable television franchise in Tupelo, Miss. He'd already been in such varied businesses as golf, cologne, Muzak, and suspenders, so he knew he was onto something with this one when, he says, 'People chased our truck down the street yelling, Please stop at my house!' "

Many tales are of his legendary frugality, perhaps not surprising for a child of the Depression. Here is a choice one from a Philadelphia Inquirer piece in 2001: "Just this past week, Roberts — who routinely is at or near the top of the list of the region's best-paid executives, making tens of millions in salary and stock options annually — proudly boasted of a bargain he found at a local store. 'I wasn't going to buy it,' he said, holding up a bottle of vitamin E tablets — retail price, about $22. But the store was running a deal: buy one, get one half off the next sale. He couldn't pass that up."

I have my own favorite tale that I tell of Ralph. When someone wants to schedule a business breakfast with me, I have us meet up at a restaurant called Little Pete's. It is a 24-hour no-frills diner-type establishment a few blocks from my office — with a long U-shaped counter and a set of about 10 booths lining the wall, serving hearty basic food at reasonable prices (you can scarf down a bacon and egg breakfast, hash browns, toast, coffee and juice for about $6). Who have I seen on a number of occasions also grabbing breakfast there? Yes, Mr. Comcast himself. I get a huge kick out of telling my dining companions that one of the richest men in Philadelphia also eats at Little Pete's. (Ralph has actually gone on record with Philadelphia Magazine as describing the joint as "my favorite restaurant.")

That same Philadelphia Magazine article from 2006 also had Ralph summing up his credo for success: "The advice I gave my son Brian was to follow his own instincts, do it well, don't be thwarted by those who find your objectives are not to their liking. Be creative. Tell the truth. Maintain a high level of integrity. And do the right thing for people."

On his 90th birthday, I can't help but think of this credo as a gift that Ralph gives to all of us to follow — and may we have as near a long and bountiful life in following it as he has had.

Win Churchill's Winning One-Liner

I always take pleasure is seeing good things continue to happen for my past authors. My congratulations to Win Churchill on his receiving the Yitzhak Rabin Public Service Award from the America-Israel Chamber of Commerce this month. Churchill is a founder and managing general partner of SCP Partners, a venture firm that has invested in many Israeli start-up companies.

"I have received many awards in my life for charitable efforts," Churchill said in an interview with the Jewish Exponent, but the newspaper reported that he points with particular pride to this latest honor. "We are plowing money back into the Israeli economy. ... In terms of covering the broader areas of my life, this is the best award ever."

I have an award I would give Win Churchill. It would be the award for the best one-liner about executive compensation to ever appear in the pages of Directors & Boards.

Let me set the context. In late 1993 Churchill was the kickoff speaker for the inaugural session of a new corporate governance program being launched in Philadelphia — the Wharton/Spencer Stuart Director's Institute (formed by prime movers Dennis Carey and Robert Mittelstaedt). He was then chair of an investment firm, Churchill Investment Partners Inc., that he had formed in 1989, a few years after practicing law for a lengthy spell with a Philadelphia law firm. He was also serving on several boards then, as chair or director. So with that background he had quite a bit of wisdom and counsel to offer to the attendees of this board educational initiative housed at the Wharton School.

His talk was titled, "The 10 Commandments of Ownership." (I kept that title when I published his speech as an article in the Spring 1994 edition of Directors & Boards.) He presented a set of guidelines for how institutional investors should be thinking about exercising their role as responsible professional owners. The guidelines had crossover application to how board members should be acting as responsible overseers.

Commandment 9 is the one that wins the alltime best one-liner award for governing executive compensation: "Successful management should end up wealthy; unsuccessful management should not end up wealthy."

Now, I ask you: Is there not more wisdom in this baker's dozen worth of words than in any, or all, book and article texts ever devoted to the topic of managing exec comp?

Win, the award is all yours.

Stop Being Stupid

I am borrowing the title of today's blog post from one used by New York Times columnist Bob Herbert in December 2008. Here is a sample of what he had to say in his column:

"Americans must resolve to be smarter going forward than we have for the past few years. ... We have behaved in ways that were incredibly, astonishingly and embarrassingly stupid for much too long. We've wrecked the economy and mortgaged the future of generations yet unborn. ... We were stupid in so many ways. We shipped American jobs overseas by the millions and came up with the fiction that this was a good idea for just about everybody. We could have and should have taken the time and made the effort to think globalization through, to be smarter about it and craft ways to cushion its more harmful effects and to share its benefits more equally. We bought into the dopey idea that you could radically cut taxes and still maintain critical government services — and fight two wars to boot! ... It's time to stop being stupid."

This appeal to "resolve to be smarter going forward" readily applies to what goes on in the boardroom. On the day that I write this, March 12, the Wall Street Journal is reporting three developments that absolutely cry out for someone to say, "Stop being stupid." Allow me the dubious honor:

• AIG is announcing that it intends to recoup millions of dollars in retention payments slated for employees who have already left the firm.

• The Black & Decker board felt there was no perceived conflict of independence in putting on a special committee charged with appraising the company's acquisition by Stanley Works — which would trigger an enormous payout to Black & Decker's CEO — a member who was significantly invested with the CEO in a personal real estate development.

• What the WSJ describes as a "scathing report" has been released on the collapse of Lehman Brothers, alleging transaction designed to distort a clear picture of the financial soundness of the firm; a follow-up statement from a lawyer for Lehman's then CEO, Richard Fuld, is saying: "Mr. Fuld did not know what those transactions were — he didn't structure or negotiate them, nor was he aware of their accounting treatment."

C'mon, people. What is a board doing when it approves a multimillion-dollar compensation arrangement designed to reward executives to stay but will still pay them royally if they leave? What is a board doing permitting a director who is in bed with the CEO on a personal investment to be on a special committee approving his merger-instigated huge payout — and not thinking that's a conflicted situation? What is a chairman and CEO, well-documented for his hands-on role in running the firm, doing in saying that he had no involvement whatsoever in a tactic crucial to staving off the collapse of his company? (Granting that he had no such involvement, why would he issue such a statement anyway — what kind of a reflection is that on his leadership to be claiming such ignorance?)

Some of the best minds in governance believe that "courage" is the most important attribute in being a director. Last year I devoted an editor's note to that very topic. Yes, exhibiting courage in the boardroom is one way to have a governance system that functions the way it should. Another way is to stiffen the spine of the system through legal and regulatory ordering — hastily enacted legislation like SOX or some of the stuff now spewing from Washington.

A third way, and maybe the best way — thank you, Bob Herbert — is to just stop being stupid.

On the Dot-Com Bust's 10th Anniversary

Ten years ago today the dot-com bubble burst. I never drew much from the tech sector for authors for Directors & Boards. Rightly or wrongly, I guess my feeling was that Silicon Valley was not a hotbed of "thought leadership in corporate governance" (the tagline of our journal).

One author I did turn to from the tech sector to write a piece for me is Regis McKenna. This was a no-brainer to invite this tech expert into our pages. He has been a longtime technology industry marketing consultant who helped launch important innovations, including the first microprocessor (working with Intel Corp.) and the first personal computer (working with Apple). In addition to his marketing counsel, he has been a venture partner with Kleiner Perkins Caufield & Byers and has done boardroom duty. There was no question in my mind that he was the kind of thought leader who would have something of consequence to say on corporate governance for the Directors & Boards audience.

So in 1995, as the tech boom was entering blastoff stage, we connected on an article, titled "Boards of a Different Breed" — in which he addressed the set of issues facing early-stage companies and the character and capabilities needed to be a good director in such a situation. Here was one extremely important point that he made that has application far beyond the confines of Silicon Valley's boardrooms:

"The board must allow management to make mistakes and, at the same time, keep the company from turning mistakes into catastrophic failures. An entrepreneur told me once that he woke up one day with a $500 million company in trouble. But no one had ever taught him how to manage trouble. Entrepreneurs do not often admit to weakness, and boards too often are little more than monthly or quarterly financial review sessions. Entrepreneurs need training as well as everyone else. This is one of the chief responsibilities of the board — educating the president and CEO."

How many CEOs have woken up over the past two years with a company in trouble? On this 10-year anniversary of the rolling over of an entire sector of risk-taking entrepreneuralism — that admittedly inflated into a sphere beyond the absurd — this is a worthy reminder of, again in McKenna's words, "each board member's responsibility for helping the CEO and management learn, grow, build relationships and alliances, raise capital, and compete more effectively."

[Regis McKenna pictured in 1995 at the time of his article's publication.]

Women on Boards: It's All in the 'Velocity'

Today is International Women's Day — a day to mark the economic, political and social achievements of women. The first IWD apparently was celebrated in 1911, so this special day of recognition is impressively headed toward its centenary.

I can't think of a better way for Directors & Boards to mark this day than to highlight the strong numbers that we are seeing in our Directors Roster of women being named to corporate boards. The Roster is the special feature published in each edition of Directors & Boards that tracks quarterly appointments to corporate boards. It is our mini-database in each issue of new directors compiled by our research pro, Roster editor Kelly McCarthy.

The just-published First Quarter 2010 edition of the journal includes our tracking of new directors added to boards during the final three months of last year, October-December 2009. Here is the number: Of the 111 new directors we recorded, 46 are women. That is 41%, for those counting in percentages. And that is a noteworthy percentage, for sure.

To put this in some perspective, when we first started the Directors Roster quarterly recording of new directors in 1994, it was more the norm for the percentage of new women directors to be in the low teens if not high single digits. Yes, that's right. Take the final quarter of 1996, as a rather inglorious example: Of the 199 new directors in that Roster, 16 were women — 8%, if one has the temerity to count.

Our numbers are very much different from the results reported by the major surveys on board composition, which still show a poor representation of women on boards — solidly anchored for years, it seems, in the teens.

But a business colleague with whom I recently shared our numbers put her finger on the nature of this discrepancy, even better than I have been in framing our results: the Directors Roster, she recognized, measured the "velocity" of new women entrants onto boards. If that quarterly velocity stays strong, the overall representation that is measured by the annual surveys should gradually rise. In other words, the Roster is an early indicator of a "change in the atmosphere."

The Q4 Roster caps the strongest year we have ever seen here at Directors & Boards for women joining corporate boards: In the Q1 2009 period, we recorded 38% representation of women; Q2 came in at 39%; and Q3 totaled 43%. And now for Q4 we only ratcheted back a notch to 41%. These are breakthrough numbers.

So on this International Women's Day let's give a cheer for the velocity with which women are being appointed to boards. By the centenary celebration could I be in position to report that our velocity number has cracked 50%?!

My thanks to Autumn Bayles, SVP of strategic operations for Tasty Baking Co. and an officer of the Forum of Executive Women in Philadelphia, for refining the "velocity" nature of the Directors Roster data.

Pictured is Lisa Caputo, EVP of global marketing and corporate affairs of Citigroup Inc., who was a representative member of the Q4 2009 grouping of new women on boards; she was added to the board of Best Buy Co. Inc. And what a fitting new director she is to single out on this International Women's Day-themed blog posting: Her background includes being founder, chairman and CEO of Citi's Women & Co., an education, resources and networking initiative that helps women build financial knowledge.

The 'Great Divide' II: It Is Inevitable

Here is round 2 of the debate on separating the chair-CEO roles, as explored in an eight-page cover story in the Directors & Boards First Quarter edition just off press.

The first shot highlighted in this blog came from former American Express Chairman and CEO James Robinson, in the posting of March 4th below. Now we turn to panel member Reuben Mark, who retired from Colgate-Palmolive Co. at the end of 2008 after having served as chairman of the board for 22 years and CEO for 23 years. His outside directorships have included Cabela's Inc., Citigroup Inc., the New York Stock Exchange Inc., Pearson PLC, and Time Warner Inc. Listen to what his long tenure of holding down both the chair and CEO positions has led him to conclude:

"Now having stepped down from both positions I have become convinced that separation is required. During the last three or four years of my tenure as chairman-CEO, I was devoting an increasing amount of my time to board management — eliciting directors' opinions, bringing them together on issues, and so on — and less time perforce on the CEO job. The president ended up absorbing more of my CEO duties. It became clearer and clearer that being chairman was virtually a full-time job.

"Also, let me acknowledge this. People who serve as CEOs, and I certainly include myself among them, tend to have a touch of megalomania or a leaning toward tyrannical action. After all, a corporation is a kind of benevolent dictatorship. If there is a separation, and assuming good faith and assuming the right people are in place, the board has an additional conduit of information and oversight that they would not have had. So even though my personal experience is contrary to this conclusion, I believe that separation of the roles not only should happen but inevitably will happen."

When one of the nation's most respected business leaders has convinced himself that there is a new and better way of running a corporation and its board, attention must be paid. A recommendation like this can kick the "great divide" debate into a higher gear.

Reuben Mark, in white shirt, is pictured above at the Weinberg Center on Corporate Governance at the University of Delaware, where the debate was held in November 2009; also in photo are (l. to r.) shareholder activist Bob Monks, HealthSouth Corp. Nonexecutive Chairman Jon Hanson, and Charles Elson (standing), the center's director who moderated the panel discussion.

The 'Great Divide' I: 'Do No Harm'

The First Quarter edition of Directors & Boards has come off press today. Our lead story is a debate on the wisdom of separating the chair and CEO positions. Our commentators are a panel of business leaders assembled at the Weinberg Center for Corporate Governance at the University of Delaware. Under the deft moderating by the center's director, Charles Elson, the group was tasked to think through the many critical dimensions — from governing theory to practical applications — of splitting these two top leadership roles.

Charles and I did not decide willy-nilly on this topic. This is a vastly important subject that is transcending the normal debate over governance best practices. Capitol Hill pols are eyeing this structure of board leadership — legislation that would separate the roles has been introduced in Congress — and, as Prof. Elson warns in the article, a mandated separation "is an issue that the courts ultimately may deal with as well." So we assembled a superb group of thinkers to tackle the pros and cons while this issue is still on the cusp of decisive action. I commend the article to you as a distinctive examination of board leadership.

Here is a taste of the flow of the debate. We'll first turn to James D. Robinson III, and then in the posting on March 5 to follow I will highlight a comment by Colgate-Palmolive's retired chairman and CEO, Reuben Mark.

Robinson was chairman and CEO of American Express Co. from 1977 to 1993. He has been general partner of venture capital firm RRE Ventures since 1994 and also president of JD Robinson Inc., a strategic advisory firm. He is presiding director of the Coca-Cola Co. board, and from June 2005 until February 2008 he was nonexecutive chairman of Bristol-Myers Squibb Co. A superb background to make this statement:

"I have been an independent director. I have been a nonindependent director. I've been a chairman and CEO. I've been a nonexecutive chairman. There are times when the best course of action is to split the roles. There are times when it's best to combine them. My conclusion is a simple one: Do no harm.

"Beware the simplicity of saying that two heads are better than one. What about the 12 heads of the full board? You have to be careful that you don't create a passive attitude among directors who think they can just sit back and watch while the chairman and the CEO run the show. You want all board members to be actively engaged. Once you start separating the duties and acknowledging that two heads are running the shop, you risk disenfranchising the other board members and not getting the active contribution you want from each and every director."

Beware the simplicity of saying two heads are better than one. That's an important insight to carry forward as this separation debate heats up.

Koz on the Cover

As I admitted in my editor's note for the March e-Briefing, I don't generally like to be reminded that I featured Dennis Kozlowski on the cover of Directors & Boards. This was back in the year 2000 — palmier days when the head of Tyco International was considered a paragon of good corporate governance. Not to hide in a crowd, but our cover story — a Q&A interview conducted by our lead columnist Hoffer Kaback — joined many other laudatory reports at the time on the dynamic growth of Tyco and the leadership qualities of its CEO.

Well, authors John Gillespie and David Zweig just gave me a big reminder of our Kozlowski spotlight when they cited it in their new book, Money for Nothing [Free Press, 2010]. At first I didn't know whether to be appalled or flattered. But the book is a good one. Its subtitle pulls no punches — How the Failure of Corporate Boards Is Ruining American Business and Costing Us Trillions. The book has gained traction, with admiring reviews in the Wall Street Journal and New York Times and other worthy spotlights, including an excerpt I am running in the Q1 edition of Directors & Boards coming off press later this week.

The authors called our Kozlowski material that they cited in their book "fascinating," and I return the compliment. Their jailhouse interview with the ex-Tyco CEO, which is the excerpt that I am publishing, yields several fascinating reflections on how it all went wrong between this CEO and his board. Three snippets from this book section:

• "Kozlowski said that he considered himself a victim of the times and a weak board. He felt he had become the poster boy for excessive pay in the wake of public anger over the Enron, WorldCom, and other scandals."

• "He said he got irate when thinking about the directors at his two trials who testified that they had been kept in the dark about his compensation: 'If they did not know what was going on, they certainly should have. I just don't buy that.' "

• "Kozlowski didn't think much of the Tyco board. 'I treated some of the directors as an afterthought because there's only so much time in the day. ... There were only two or three directors who, if they nodded yes, chances are the other directors were going to go along with it. I guess I should have been as diligent about selecting directors as we were about acquisitions.' "

Gillespie and Zweig draw from their interview with Kozlowski and their fuller analysis of what went wrong at Tyco an important conclusion: "It's clear that Kozlowski and his directors shared the same flawed relationships that have plagued so many other boards. For Kozlowski, the board faded into irrelevance compared to the power, prestige, and satisfactions provided by the acquisitions he engineered. Perhaps with a stronger board to keep his talents within legal bounds, Kozlowski today might still be on top of the world instead of washing inmates' clothes at the correctional facility."

On top of the world . . . and perhaps due for a return appearance on the cover of Directors & Boards — something that I would have been happy to arrange if things had not gone so amiss in the Tyco boardroom during these intervening 10 years.