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| Best Practices |
Constructive Contention
Suzanne McGee
06/01/2004
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Furr’s
gradually complied with her request, and the streamlined information flow did
indeed lead to hints of mismanagement. Finally Hopgood withdrew her name from
the management’s slate of directors up for reelection when the board was asked
to approve what she considered to be an overly generous compensation package for
management. Instead she ran in opposition on a slate of directors that pension
fund giant TIAA-CREF put forward. “It was the first time a shareholder succeeded
in replacing the entire board in a proxy fight,” Hopgood says of the battle. She
became chairman of the company in 1998, after TIAA succeeded in ousting
management amid growing concern over flagging sales and losses. The company
eventually wound down its bankrupt business in the fall of 2003, liquidating its
remaining assets.
Tweaking the board’s agenda can help foster constructive
debate and dissent, directors agree. Traditionally, a board meeting begins with
a perusal of budget plans, recent transactions and other routine matters,
leaving longer-term strategic issues such as capital raising, mergers and
acquisitions or new product development until the end. All too often, however,
discussions of the incidentals drag on, leaving little time to explore the big
picture. At Washington Mutual, Doug Beighle, the presiding director, who is in
charge of executive sessions when management is absent, moved the routine
matters to the end of the meeting.
One boardroom practice that new
governance rules now mandate is executive sessions: board meetings that exclude
boardroom observers such as consultants, external counsel and corporate
management and even, on many occasions, the CEO. Beighle is also a director of
Puget Energy, where each board meeting begins with an executive session that
includes the CEO and ends with one for independent board members only. The
independent directors also hold an annual two-day retreat in the San Juan
Islands, and are considering adding a second such off-site meeting. “There is a
big difference between a two-hour board meeting where you listen to a series of
scripted presentations, and going to a two-day retreat where there is lots of
time to dig in and really talk about issues,” says independent board member
Craig Cole, who is president and CEO of Brown & Cole Stores, a family-owned
food retailer based in Bellingham, Wash.
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