Board expert Nell Minow says otherwise decent people lose “half their I.Q.’s and all of their guts” when on a board.
Gary F. Grates, left, president and global managing director, Edelman Change, with David Nadler, vice chairman of Marsh & McClennan Co. at the Page event last week.
So we were happy to hear management expert David Nadler of Marsh & McClennan Co. tell the Arthur Page Society last week that the SEC and NYSE are trying to force boards to become more active and independent.
Our experience with boards tracks with what Surowiecki and Minow say.
Although weak, browbeaten and secrecy-ridden, with an exaggerated sense of loyalty to themselves and their organizations rather than to the constituents who elected them, you would be hard-pressed to find a more pompous and self-important group of individuals than a board of directors.
In the case of PRSA, two of the biggest decisions in the group’s history were kept from members and even Assembly delegates until they were done deeds.
One was the move of h.q. to downtown New York for 13 years, dumped on the shocked 2003 Assembly, and the other was the 2005 ditching of the printed members’ directory without any discussion by the Assembly.
PRSA could now easily PDF the directory at virtually no cost to itself but refuses to discuss the subject.
None of the 17 directors, including New York rep Lynn Appelbaum, ever conducted a “live” discussion of last year’s proposed bylaw revision.
All the directors are silent as usual although PRS is currently engaging in an unethical press boycott.
Enron, Tyco, AIG, Citigroup Boards Whiffed
Enron and Tyco are examples of boards sitting silent while far-reaching abuses took place. The same could be said of AIG, Citigroup, Fannie Mae, Freddie Mac and the host of local banks and institutions that caused the current two-year economic downturn.
The SEC and NYSE had pushed independent directors on boards in the 1990s but that didn’t stop the Enron, Tyco and other scandals. Enron’s board was mostly blue-chip outside directors.
CEOs are finding out that they report to the board rather than vice versa, said Nadler.
Financier Carl Icahn and others have been campaigning for years against CEOs also being chairs of their own boards.
This in effect puts the fox in charge of the chicken coop—the CEO being his own employer.
SEC and NYSE rules now say that if one person holds both titles, a “Lead Independent Director” must be named who will conduct at least one part of a board meeting without the CEO/chair or anyone from management being present.
Appointment of directors, traditionally done by the CEO, is now in the hands of a governance committee of the board.
Boards Want Information
Nadler said there is also a trend for directors to become more informed about the industry involved.
Instead of serving on three or four boards, directors now typically just serve on one, he said.
The role of PR pros, he added, is to provide directors with information in usable form, i.e., not swamp them.
Some directors are even pursuing information on their own, monitoring employee and other blogs, he noted.
Get Thee to a Bar
Directors should leave what Surowiecki calls the “echo chamber of their own opinions” where “unity is valued over truth” and hotfoot it to a bar where industry or beat reporters hang out.
We doubt employees are going to level with a director, especially since many of the directors are CEOs or ex-CEOs (Nadler’s recommendation for directors).
It is reporters who serve as the buffer between employees and their bosses. The reporters get the uncensored facts and opinions from workers and pass them on to bosses, directors and PR staffers.
Directors cannot rely on the PR staff to “sock it to them.” PR pros would be over-stepping their roles.
Can you imagine a PR person who knew about Tiger Woods passing this on to directors without going through management? That would be the PR person’s last act with the company.
The May Vanity Fair says that “Team Tiger,” the large group of people surrounding him, knew plenty and so did some reporters. We believe that key people at sponsors of Tiger such as Nike, Accenture and AT&T also knew but kept it to themselves (“hold your nose PR”).
Board members should win the right to circulate freely with reporters, trading information and insights. It’s a delicate situation but a win for both sides.
This sounds difficult in the current hysterical atmosphere surrounding press relations. But boards, management and even PR pros are going to remain in the dark about some key things unless they doff their stiff shirts and mingle with the masses and their press representatives.
SPJ Is like PRSA
Propelled by the March/April “Ethics” issue of Quill, the magazine of the Society of Professional Journalists, we are trying to get the SPJ board to look into the unethical boycott against us by the PR Society.
So far, SPJ has a perfect record of failing to help us on any issue.
Gary McCormick, of HGTV Scripps Networks, and Bill Murray COO of PRS, came to our office March 19 to state numerous times that we had committed unforgiveable offenses and would not be dealt with in any way.
Scripps has an elaborate 21-page ethics code (link to PDF) and Scripps is highly active in SPJ.
When SPJ executive director Terry Harper died June 2, 2009, a weekend remembrance was conducted June 6-7 in Indianapolis and rural Eminence, Ind. The SPJ staff, “in between, conducted a Scripps leader retreat for almost 50 journalists.”
SPJ president Dave Aeikens spoke to the “Scripps” attendees and there was duckpin bowling as part of the “Scripps weekend,” said the SPJ website.
PRSA has been ducking us for many years so what Murray and McCormick said wasn’t exactly news. What was new was the ferocity of their resolve.
Our worst offense, they said, was e-mailing the chancellor of the University of Nebraska after Prof. Gail Baker of that school refused to talk to us. She had just been named Ethics Board chair.
We sent Chancellor John Christensen four pages of details on the Society’s practice of copying and selling authors’ articles without their permission. Within four hours Baker had quit as EB head. PRSA has never challenged a word of this article.
That was “stepping far beyond the bounds of accurate and professional reporting,” said a full page attack on us in the April 2008 (“Ethics”) issue of Tactics.
We had shown a copy of this attack to McCormick and Murray and when we pressed for the “smoking gun” against us, Murray pointed to that attack.
What Is SPJ’s Opinion?
The Ethics issue of Quill is loaded with all sorts of commitments to high ethics including an article by Kelly McBride, ethics group leader for the Poynter Institute, St. Petersburg, Fla.
We talked to McBride by phone and sent her, as well as the 19-members of the board of SPJ, materials on the PRSA boycott. We want to know whether calling and e-mailing the chancellor of U of N about Baker was an ethical violation.
We also want to know if McBride and SPJ leaders have anything to say about the boycott against us led by an employee of Scripps.
President of SPJ is Kevin Smith, assistant professor of journalism, Fairmont State University, Fairmont, West Va.
Executive director is Joe Skeel, who has been with SPJ since 2004. He was with The Republic 20,500 circ. newspaper in Columbus, Ind.) from 2000-04 and other newspaper jobs after graduating in 1997 from Ball State University. From 2002-04 he was “presentation editor” (design) of The Republic. There are no directors from New York, Boston, Chicago, Los Angeles or Washington, D.C. Closest to New York is Luther Turmelle of the New Haven Register. The other l7 are spread throughout the U.S..
No Help from SPJ
We’re batting zero in previous encounters with SPJ, to which we have belonged more than 40 years.
We sought coverage of the $21 million lawsuit against us in 1994 that charged us with inaccurate coverage of a speech at the 1993 PRS annual conference. Not a word appeared in Quill even after we won the suit although numerous legal tomes wrote about it. The American Journalism Reviewgave it a page. The Deadline Club, New York chapter of SPJ, said in a banner headline that it “supports Jack O’Dwyer in lawsuit.” The New York Times skipped coverage of both the suit and our victory although, oddly, it had spent about a column on coverage of the speech that we gave it.
Attempts to get the SPJ or Quill to pay attention PRSA’s extensive copying and sale of authors’ articles without their permission (3,800 packets yearly) went nowhere.
Last year we sent SPJ/Quill articles on major journalistic figures speaking annually at PR Seminar without ever reporting the existence of this group. Ethics specialist Peter Sussman of SPJ said that such journalists broke about ten articles of the SPJ code.
The SPJ ethics committee itself, as well as the SPJ board, refused to take a stand. Sussman had emphasized that he was speaking for himself alone.
SPJ, with revenues of $1.6M and cash/savings of $502,309, is a fraction of the size of PRSA (revenues of $11.7M and cash/savings of $4.6M). The XVP post at SPJ pays about $78,000 while PRSA's Murray got a $50,064 raise (19%) in 2008 to $312,779, plus $30,500 in retirement pay and non-taxable benefits of $16,587.