Irving S. Olds, chairman of U.S. Steel from 1940-1952, once opened a speech by declaring, "Directors are like the parsley on fish – decorative but useless."
An appalling statement, no? (That's Mr. Olds pictured above, seated at left signing documents.)
I had occasion to resurrect this infamous quote when I sat in on Prof. Stew Friedman's class at the Wharton School today. A close colleague, Stanley Silverman, gave a guest lecture on CEO and board leadership to about 60 MBA students. It was a superb briefing, covering the highlights — and some lowlifes — that have marked corporate leadership during the past two decades of Stan's public and private company CEO and board service.
At one point in the class discussion, Stan turned to me to chime in with a comment. He didn't need to do so, as he was doing such a good job that I hesitated to try to supplement the wisdom he was passing along. I chose this moment to hit the students with Mr. Olds' brutal accusation against boards. I felt that this might be the worst thing they would ever hear said about a corporate board, so they might as well hear it while they were in school, in an historical context — and hopefully realize that from such a rock-bottom assessment the "stock" of corporate boards has risen inexorably in the years since.
But ... and isn't there always a but? In Stan's own presentation to the class, he splashed up in full-screen PowerPoint this observation by John Schnatter, chairman of Papa John's International Inc., taken from the Wall Street Journal: "Behind every Freddie Mac, Bear Stearns or Lehman Brothers who led their company down the path toward financial ruin, there was a board of directors that sat by silently and let it happen."
In other words, parsley on fish. Ouch.
And double ouch — this lecture coming on the day after the government ousted GM Chairman and CEO Rick Wagoner. A company on the brink of annihilation, accompanied by a government takedown of the CEO, looks suspiciously like more parsley on fish.
I tried to tell the students that at GM there undoubtedly is a board working feverishly to pull the automaker out of its death spiral. The GM directors I've known bear no resemblance to parsley. But who's to say that the final verdict on the GM board will be — "decorative but useless"?
I hope the students believe me. And I trust the students saw in Stan Silverman the leadership talent, managerial expertise, and ethical character that reflect the best that our executive suites and boardrooms have to offer. It's just that this hellacious recession is proving how hard it is to banish the ghost of Irving Olds as simply a curmudgeon from some long ago and far away era of corporate governance.
[Photo by Time Life]