Tuesday, September 21, 2010

The Anomaly of Long Tenure

I come to work this morning wondering if I am the longest-tenured editor of a national magazine currently active in the industry.

On this day in 1981 I joined Directors & Boards as a senior editor, and within months took on full editorship of the journal. Thus I begin my 30th year with the publication.

When I am asked about my career, I whimsically describe it in one word: "Preposterous."

How many people have the opportunity in this era to spend that kind of time with one organization? Rare. And especially in publishing, how many editors have that kind of tenure atop one masthead? The rarest few.

In the modern media business, editors are a high-turnover lot. Many editors have the kind of tenure that CEOs have — five or six years being a good run (Mark Hurd, e.g., who joined HP in 2005). Case in point in publishing: the Harvard Business Review, which has had eight editors of that august journal during my tenure here.

I have a few years to go before I reach the lengthy reigns of my two idols:

• In the business magazine category, Jim Michaels (top) was editor of Forbes for 38 years, from 1961-1999.

• And in the general magazine category, William Shawn (bottom) was editor of The New Yorker for 35 years, from 1952-1987.

On my tenure milestone, let me note with admiration a few others in this rare breed:

George Plimpton, editor of the Paris Review, with a tenure record that likely will never be equaled, having co-founded and edited the literary journal from 1953 until his death in 2003.

William F. Buckley Jr., founder of the National Review and its editor for 35 years, from 1955 to 1990.

Paige Rense Noland, editor of Architectural Digest for 35 years, from 1975 until her retirement earlier this year.

Helen Gurley Brown, editor of Cosmopolitan for 31 years, from 1965-1996.

Lewis Lapham, editor of Harper's for 28 years, from 1976 to 2006 (taking a two-year hiatus from 1981-1983).

Stephen Shepard, editor of Business Week for 21 years, from 1984-2005.

Art Cooper, editor of GQ for 20 years, from 1983-2003.

Walter Anderson, editor of Parade (the newspaper magazine supplement) for 20 years, from 1980-2000.

I know of one long-tenured active contemporary: Anna Wintour, editor of Vogue, who has been the guiding force of that magazine for 22 years, since 1988. There may be others, but certainly not many.

What is the secret to being a long-tenured editor? I again have a one-word answer: "Publisher." You don't get to enjoy a lengthy run as editor unless you have the backing of the publisher.

I have been blessed to have the equally long-tenured father and son ownership team of Milton and Robert Rock, who purchased Directors & Boards right before I came aboard and who have had the confidence in me all these years to produce this "journal of thought leadership in corporate governance," as our tagline goes. (Or, as the New York Stock Exchange once said of us in its own nyse magazine: "Directors & Boards is to the field of corporate governance what Variety is to show business.") Simply put, Milt and Bob have been the most supportive publishers that any editor could hope to have.

Just as I now embark on this milestone year of 30, Directors & Boards is entering its 35th year of publication, which will culminate in a special 35th anniversary edition in fall 2011. More news forthcoming on that. Right now all I can do is think back to that 21st day of September in 1981 and be astonished at the anomaly of it all.

Friday, September 17, 2010

Closing the Gender Gap

I am just back from Washington, D.C., where I took part in a most enlightening conference. Themed "Closing the Gender Gap: Global Perspectives on Women in the Boardroom," the daylong program held on Thursday, Sep. 16, was filled with experts from the corporate, diplomatic and academic sectors from around the world — all of them influential in tracking trends in board diversity and even moving the trendline along for increased presence of women on boards.

As a member of the opening panel in the morning, I had the pleasure of sharing with the audience some of the newsworthy data from the Directors & Boards Directors Roster, our quarterly and annual reviews of new appointments to corporate boards.

Actually, SEC Commissioner Luis Aguilar beat me to the punch. He launched the day with a keynote address in which he cited some of our Roster data in his compelling tribute to the value of board diversity and review of what the SEC is doing to move the needle in making it happen.

The key stat that both the Commissioner and I conveyed was that 39% of board recruits in 2009 were women. That represented a big ramping up from the 25% rate of women as new board recruits in both 2008 and 2007 — and a tripling from the 13% rate of women named to boards that we tracked in the first year of collecting this Roster data, which was 1994.

One reason 39% is a figure worthy of note is that much of the conference centered on analyzing the impressive experience underway in Norway, which legislated a gender balance on boards mandate of 40%. We are not anywhere near that in the U.S., so I did have to temper the enthusiasm over the Roster data by admitting that even a continuing 39% rate of new women directors does not get us anytime soon to a state when women hold 40% of U.S. corporate board seats.

Nonetheless, the Roster holds hope that a progressive trend is in place. We are still maintaining an elevated state of new women directors so far in 2010: In this year's first quarter, the rate was 34%, and in the second quarter (being announced here for the first time), the rate was 36%. (As a representative new woman director elected in Q2, pictured is Christine McCarthy, EVP of corporate finance and real estate and treasurer of Walt Disney Co., who joined the board of FM Global, a commercial and industrial property insurer with $5 billion in revenue.)

Kudos to Susan Ness, senior fellow of the Center for Transatlantic Relations at the School of Advanced International Studies (SAIS), Johns Hopkins University. She brilliantly organized and chaired the "Closing the Gender Gap" conference, which was held at SAIS. If we can keep the Roster (i.e., free market activity) data in an upward trajectory, keep the SEC providing its big-stick backing for board diversity, and keep having impressive consciousness-raising programs like this SAIS conference trumpeting the value that women bring to boards, we are bound to show progress in closing the gender gap in the boardroom.

Tuesday, September 14, 2010

All Directors Are Not Equal

Good things happen again for a past Directors & Boards author. Our congratulations to Dr. Curtis Crawford (pictured) on being selected to receive a special award at next month's annual conference of the National Association of Corporate Directors. He is being honored with the B. Kenneth West Lifetime Achievement Award. This award, named for an esteemed former NACD chairman, recognizes individuals who have been instrumental in bringing management, boards, and investors together to find common ground on issues of transparency, director independence, and corporate responsibility.

In his article for Directors & Boards, which appeared in our First Quarter 2008 edition, Dr. Crawford put the fork into the notion that all directors are equal. Here is a taste of his disagreement with that "polite fiction":

"Corporate directors are chosen from a pool of highly qualified people, and being selected as a shareholder representative is a very significant achievement that demonstrates that the director has cleared a high hurdle of competence. However, it is naive to assume that all directors are equally capable in every respect.

"While traditional boards might find it useful to maintain this polite fiction, all directors and boards are not equal. Maintaining this position is an excellent way to enforce a status quo that limits the board's performance.

"Although all directors are high achievers with equal legal responsibilities to serve, exercise duty of care, and act in good faith, they differ substantially in the kinds of value they can contribute to the board. Each director embodies differences in experience, background, interests, and tenure, which is desirable, considering that multiple talents are necessary for the board to execute its responsibility effectively."

That wasn't the only notion he pooh-poohed in his article. He also had the temerity to argue that "even CEOs who are generally great leaders do not necessarily make the best directors."

Dr. Crawford comes to his conclusions from having been in a lot of boardrooms and seen a lot of directors in action. He is president and CEO of XCEO Inc., a consulting firm that provides governance support to corporate boards. A couple of the boards he currently serves on are DuPont Co. and ITT Corp. He has held positions with such companies as IBM, AT&T, and Lucent Technologies, and is the author of two books on leadership and governance. Additional passages from his article can be found in this adaptation that ran in the September e-Briefing.

I wonder what other notions he may challenge when he takes to the stage of the JW Marriott Hotel in Washington, D.C., on Monday evening, Oct. 18, to receive his award. I hope to be a friendly face in the audience for this past author, and will report back on this blog.

Monday, September 6, 2010

Three Years in the Valley

On the day when the news is breaking that Mark Hurd will be joining Oracle as co-president, here is an interesting passage that I have just come across from the new book, "The HP Phenomenon" by Charles H. House and Raymond L. Price (Stanford University Press). Presented without further comment about the idiosyncratic and sometimes unfathomable C-suite personnel moves in the tech sector:

Three years is a long time in the Valley and in the high-tech world. It was, for example, only three years from the acme years of both John Young and Lew Platt that the HP board ended their careers. John Akers retired in disgrace from IBM three years after its high point in revenues under his leadership. DEC’s best two revenue and profitability years ever were in 1987 and 1988; Ken Olsen was fired three-and-a-half years later after winning international accolades for the 1987-1988 comeback. Ed McCracken at Silicon Graphics delivered 52% growth and 10% net profits — bests on both scores — as SGI attained $2 billion in 1994; three years later, he was fired. Rod Canion had many great Compaq years — 1989 saw 40% growth to $2.8 billion, two years before he was cast away when Compaq lost its way. Successor Eckhard Pfeiffer in 1997 delivered 30% growth in revenue (to $31 billion) and the highest profit on record (7.7%); 15 months later chairman Ben Rosen removed him. No CEO escapes the question, “What have you done for me lately?”
Actually I do have one add-on comment: Perhaps no shareholder escapes the question, "What in tarnation is the board thinking . . . both in its firing — and hiring?"

Thursday, September 2, 2010

Good Move: Bess Joffe to Goldman

Now here is a smart move by Goldman Sachs to address its impaired reputation and strained shareholder relationships. The firm has hired Bess Joffe as vice president-governance, and she will join the firm's investor relations team starting on Oct. 4.

That's none too soon, as shareholder forces are already starting to mobilize for the 2011 proxy vote. Crain's New York Business has just called the firm "target No. 1 for activist investors looking to shake up corporate boards."

So Bess will have her work cut out for her. But from my recent experience in publishing her in Directors & Boards, I see her being a dynamic new asset for the firm in constructively engaging with investors on behalf of Goldman's board and management.

She will be joining Goldman from Hermes Equity Services Ltd. in London. Here is her bio note that I ran earlier this year: "She joined Hermes in 2005 to work on corporate governance and responsible investment in the Americas. In her role, she actively engages at the board level with underperforming companies that are fundamentally sound but have a variety of strategic, financial or governance issues, with the objective of helping improve long-term financial performance."

Bess was a forceful contributor on a panel discussion that Charles Elson and I organized and conducted at the Weinberg Center for Corporate Governance at the University of Delaware (where the above photo was taken). That discussion, held in November 2009, addressed the pros and cons of separating the chairman and CEO positions. The resulting article, titled "The Great Divide," appeared in the First Quarter edition of Directors & Boards.

Here is a telling comment she made in the article: "We at Hermes are responsible for protecting the interests of long-term shareholders. We recognize that different boards face different situations at different times. But shareholders need to understand with much more specificity why boards have made particular decisions at a particular time. Right now that information is really lacking."

My bet: With Bess Joffe's experience as an investor advocate, starting in October Goldman shareholders, and the financial markets in general, will start getting much more clarity into the firm's governance and board conduct. Her hiring is a signal that Goldman is getting quite serious about its needs in this area.

Wednesday, September 1, 2010

Proxy Access: Brace Yourself

Approved by the SEC on Aug. 25, the proxy access rule, years on the drawing board, is now with us. Thus begins a new era in shareholder-board relations, and, perhaps, board composition.

We will have to wait and see if the dire predictions come true of those who fear that this rule will be a tool for unions and other politically driven and issues-oriented activists. Often the worst projections fail to materialize.

But Corporate America might well brace itself. Proxy access's impact could be huge.

Why do I suggest that? I am mindful of something that one of the preeminent shareholder activists said to me about the one thing that truly leads to change in board behavior and, consequently, in company performance: The addition of new members to a board.

This was a fundamental lesson learned by Nell Minow (pictured). She shared it with me when I interviewed her in 2001 for an "Oral History of Corporate Governance"-themed 25th anniversary edition of Directors & Boards. Here is what she had to say, and it is worth paying close attention to in light of proxy access's passage:

"If there is anything that I've learned in all that I've done, it's that what really matters is who is on the board. I saw that with Sears. After Bob Monks left ISS in 1990, I rejoined him a year later, in time for his second proxy fight with Sears. In settling the shareholder lawsuit, the company agreed to add two new independent directors — thinking, I imagine, that they would be two more patsies. It was the presence of those additional directors that I believe made more difference in what Sears did to restructure itself to unlock shareholder value than anything else that we could have done. I was to learn that lesson over and over again. The only thing that ever brought about change was adding new directors to the board."

That is a powerful bit of learning — for CEOs, boards, and shareholders. The prudent and foresightful will take this under advisement as the era of proxy access gets underway.