With the highest percentage of cash now sitting on corporate balance sheets in history and interest rates low, Paul Parker said the American economy is “at a dynamic inflection point, one where the status quo cannot just be accepted by boards.”
Left to right: Henry Meyer, Paul Parker and Matthew Rose
Calling the railroad industry the “great kaleidoscope of the economy,” Matthew Rose said that Burlington Northern Santa Fe is approaching its pre-recession business levels. However, when the outlook question was asked at a recent meeting of Burlington Northern’s “customer” board of directors—a group comprised of 25 large retailers, wholesalers and manufacturers—there was “still just this incredible, nagging uncertainty.”
That uncertainty, said Henry Meyer, will slow the economic recovery, and yet in the financial services sector, “The regulators said something very smart. They said, ‘You know, your job as a bank is to manage risk, not avoid it,’” he said, predicting an increase in consolidation in the banking industry.
“CEOs generally are optimistic,” continued Meyer. “Consequently, I think we tend to err on the side of thinking things are always going to get better,” and boards need to provide a balance to this optimism and focus the CEO on strategy.
Rose agreed that boards’ focus on strategy was their second most important role, bested only by choosing the CEO. “I think if you can get the time, that you’re going to have to be higher focused on the strategic issues that the company is facing.”
Moderator:
Paul Parker, chairman, head of Global Mergers and Acquisitions, Investment Banking Division, Barclays Capital
Panelists:
Henry Meyer, chairman and CEO, Key Corp.; director, United Continental Holdings
Matthew Rose, chairman and CEO, Burlington Northern Santa Fe; director, AT&T, American Airlines