Nortel's Board Overhaul
According to the National Post, there is mounting pressure for Nortel to dramatically overhaul its 11-member board. Essentially, it comes down to presssure from large institutional shareholders who want to turf the company's longer-sitting directors - many of whom (surprise, surprise!) have little or no experience in the telecommunications sector. Clearly, Nortel's board has done a disastorous job in many, many respects - highlighted by the controversial compensation packages that go back to ex-CEO John Roth, and the ongoing and troubling accounting scandal. Some of the most vulnerable directors include chairman Red Wilson; Robert Ingram, vice-chairman of GlaxoSmith PLC, who stepped down from the Molson board in July; Sherwood Smith, a former executive with a electrical utlity in North Carolina; former Michigan governor James Blanchard; and lawyer Louis Yves Fortier. To be honest, it's a typical board: older, white, mostly male. You have to ask what exactly have the directors been doing over the past four years since the telecom sector started its severe slump. If Nortel's directors done their jobs properly, would Nortel be in its current mess? And how come Williams Owens, who joined the board in 2002, gets to become CEO when his performance as a director leaves something to be desired? A senior Nortel employee recently told me that employees are increasingly questioning why the company's directors seem to be Teflon-coated while 10s of thousands of Nortel workers have lost their jobs in recent years. In an age of corporate governance and Sarbannes-Oxley, the weak performance of Nortel's board sticks out like a sore thumb.
One last thought: Where have all these suddenly-outspoken institutional shareholders been the last four years, and why has it taken them so long to express their displeasure? If they were so upset - and they have plenty of reason to be given the terrible performance of Nortel's share - how come it has taken them so long to act? Just wondering….
September 29th, 2004 at 10:03 am
Seems to me that many of the high profile corporations caught up in recent scandals and accounting irregularities have boards made up of a Who's Who of corprate celebraties. Seeing what has occured on their watches makes me wonder what's going on in their own companies. Are they too incompetent to protect shareholder interests or are they just too busy doing the same thing back at their own shops?