Corporate boards’ systematic failings cry out for accountability
The excellent Globe series on corporate boards, led by Sacha Pfeiffer and Todd Wallack, raises critical corporate governance and board performance issues. It also demonstrates that, while measures of transparency and accountability alone have an impact, these corporate boards act as if above the law.
Having written about, reviewed, and observed the performance of corporate boards of all shapes and sizes, I believe the real scandal, and most debilitating governance aspect, is that they function with virtual legal immunity and impunity. This goes on even though the board is supposed to be, as a matter of corporate governance, the independent overseer of the corporate executives, structure, strategy, and mission — the so-called adult in the room, in other words — providing perspective, wisdom, AND supervision. The board’s existence is supposed to ensure some measure of accountability and transparency, even if within a limited circle, for the entity and its employees, shareholders, and consumers.
The fact that most major corporate boards have failed, systemically, to provide that role is what makes the defense of the current state of board compensation, composition, and performance fail to pass the smell test. The fact is that boards function at often outrageously high pay and perks and in virtual secrecy.
The Globe series at least begins to shine some light on this deep, dark secret level of power, whose failings are a source of the cancer that is eroding the ties that bind our community. Reforming this governance system and holding it accountable under law should be a common cause for the 99 percent.
The writer is a former Massachusetts attorney general.