Editor's Letter: Battle Ready

Even Sherlock Holmes would furrow his brow trying to decipher how the following set of clues fit together: corporate lawyer Marty Lipton, Barbie doll, and Bo Xilai, the Chinese minister of commerce. Yet in one way or another, they all represent the difficult and, at times, conflicting answers to the question: What are a CEO’s priorities when the unthinkable happens? When the CEO is Mattel’s Robert Eckert and he is embroiled in a recall of millions of toys that contain lead paint, whom does he think about first? Is it shareholders? Parents who buy Mattel’s toys? Or is it the Chinese minister of commerce, who has the power to essentially put him out of business?

Eckert’s response showed that he clearly established the consumer as his primary focus, although even that seemingly noble gesture does not come without pain and unintended consequences. When Judy Warner, assistant managing editor, talked to Eckert for our Special Report on Crisis Management, he told her, “We can’t control the events of the world.” True, but despite the arguable difficulty, global companies have an obligation to control all aspects of their supply chain. The lesson for board members is “be prepared.”

Certainly, Mattel’s CEO and other chiefs have a duty to customers and the public at large to sell safe products. That raises a larger question for directors: To whom does the board answer? Is it just to shareholders or to all stakeholders? This question has loomed since boards were first created. As Washington Editor-at-Large Aaron Bernstein reports in our cover story, Bebchuk vs. Lipton, the debate has emerged with new vigor, and a touch of vitriol, as these two corporate-governance eminences advance their arguments.

As we look out for our stakeholders, I want to invite you to have a look at our new website at www.directorship.com, where we are now providing daily coverage of board and corporate governance news. While you’re there, sign up for our weekly newsletter, Governance News.

Joseph McCafferty

jmccafferty@directorship.com