In early August, we checked in with Ralph Whitworth, one of the founders of Relational Investors, whose strategy has always been to find undervalued companies (Home Depot, Baxter International) that seem to undergo a transformation once the proper dose of corporate governance is administered. He said that he has learned more in the last two years than in the past twenty. One of the key learnings, it seems, is that the concept of true director “independence” requires that it is accompanied by “competence” in order to work the kind of return that Whitworth seeks. So one of his many observations of the post-crisis landscape is that directors need to be more aggressive in seeking third-party business- and strategy-related expertise, particularly on risk. Independence means more than just compliance.
There’s no doubt that having an expert act as a sounding board to help find the vulnerable points in a strategy is invaluable to directors. Our cover story, Dynamic Duos, reinforces this idea, with a look at some of the great tandems in business history. One of today’s best, of course, is Warren Buffett and Charlie Munger. The lesser-known Munger operates somewhat behind the scenes, but by Buffett’s own admission, is a significant part of Berkshire’s success.
It’s interesting to point out that before Munger joined forces with Buffett, he was a corporate attorney. I’m sure his legal background paid no small part in his ascension to Buffett’s C-suite. Directors also know the value of a top counselor. And with complexity—and litigation—increasing at every turn, directors increasingly are seeking independent board counsel. To help, we offer The 2009 Boardroom Guide to Legal Counsel, which unlike the usual law firm ratings, provides directors with the firms, the partners, and the practices that are most critically needed in the boardroom.
The Guide, which is not a ranking of firms, includes demographic information, firm specialties, synopses of recent high-profile cases for each firm, and more.
We hope, too, to be a better source of insight from the sharpest minds in the field. To this end, we overhauled our website www.directorship.com with more blogs and commentary, more board news, and more features, not to mention a new look. Send feedback to my address below.
Joseph McCafferty
Editor in Chief
jmccafferty@directorship.com