“Their flag to April’s breeze unfurled,” they “fired the shot heard round the world.” Thus wrote Ralph Waldo Emerson in his “Concord Hymn” to the American Revolution.
In April 2011, that legendary shot echoes still as ideological battle lines form. Some in this nation favor free markets, some oppose them. Their struggle has put focus on the role of independent directors.
Last month, when USA Today reported a rise in director pay, controversy raged. No matter that the pay reported was only for the very largest companies and included future value that may never actually be. No matter that the average professional experience of these directors was well above the average employee. The reported amounts seemed high to many. Of nearly 400 comments posted to the newspaper’s website within 48 hours of the story’s publication, the vast majority lambasted directors for working fewer hours and earning more dollars than the average worker—and for what?
As one reader of the story commented: “We bleed for the company and all you do is type and talk.” “Cue the class warfare comments,” posted a wry contrarian.
Given Main Street’s low assessment of directors—reflected in the “What Society Thinks” feature in this issue—we directors need to do a better job of explaining our value to the general public. As NACD Chairman Hon. Barbara Hackman Franklin and I noted in a Letter to the Editor of USA Today, “Independent board members are the primary basis of ensuring that the corporate governance system works well, protects investors and supports the economic well being of our society. The system requires experienced leaders with the specific skills, the time and commitment to make it work.” Can a dollar value really be put on this?
The American Revolution was really about finding a balance between freedom and fairness. These same concepts are clashing today. The battle will forge a new spirit of enlightened capitalism—and directors can lead the way.
Kenneth Daly is president and CEO of the National Association of Corporate Directors.