As we move into the year, companies and their leaders are under greater scrutiny than ever. In one of my meetings with institutional investors recently, someone asked whether chief executive officers should sit as independent directors on the boards of other companies. CEOs who sit on too many boards risk getting overloaded and splitting their time, energy and commitment to the extent that they do none of their jobs well. Get the balance right, though, and CEOs on outside boards can bring benefits to all the organizations with which they are involved.
An example of the thorny issues at play: While serving as CEO and chairman of Avon, Andrea Jung sat on the boards of Apple and General Electric. Her outside board commitments became a point of contention as her performance at Avon came under question. Jung stepped down as Avon’s CEO and chairman last year but continues to serve on the Apple and GE boards.
A number of other high-profile CEOs sit on the boards of well-known companies: Netflix CEO Reed Hastings sits on the board of Facebook, as does Donald Graham, CEO and chairman of the Washington Post Co. Xerox CEO and Chairman Ursula M. Burns is a director at American Express and ExxonMobil. Apple’s board has Millard Drexler, the chairman and CEO of J. Crew, and Robert Iger, president and CEO of Walt Disney.
The debate centers around the sliding cost-benefit scale for CEOs who sit on boards other than their own. Here are some things to keep in mind while judging what’s best.
A director who works on the front lines of business can bring a great deal to board discussion. Who better than a sitting CEO to understand the vagaries of the economy and the challenges of trying to navigate through it?