Bankruptcy

Directors Quitting As Firms Flounder

By Scott Riddle

The Wall Steet Journal has an article about directors quitting as many corporations are experiencing financial troubles, or failing altogether. See As Firms Flounder, Directors Quit by Joann S. Lublin (sub. required).
 

These high-profile executives find it hard to handle the heavy board workload for a company in crisis. Such boards can confer several times a week, often at odd hours. In more normal times, boards meet an average of six times a year, according to a recent survey by the National Association of Corporate Directors.

 

So far this year, 46 outside directors who are CEOs or chief financial officers left the boards of 42 companies in three struggling industries -- financial services, retail and residential construction -- concludes an analysis for The Wall Street Journal by Corporate Library in Portland, Maine.

During the same period three years ago, 31 directors with those titles left. (That total excludes companies that no longer exist.) Paul Hodgson, a senior research associate at the governance-research firm, says time constraints are the main reason for the increase.

The departures come as CEOs had already been trimming their outside board commitments. CEOs of Standard & Poor's 500 companies held an average of 0.7 outside directorships this year, down from one in 2003, according to recruiters Spencer Stuart.

"You will see an increase in board members not standing for re-election" at annual meetings of troubled companies next year, predicted David Nadler, a senior partner at Oliver Wyman Consulting in New York....

 

 

Full post as published by Georgia Bankruptcy Blog on November 22, 2008 (boomark / email).