The problem with Boards of Directors…

On Tuesday night, I ventured out of my SEC filings hidey-hole to attend a party to mark the publication of “Money for Nothing” a new book by John Gillespie and David Zweig. The book focuses on a problem we’ve written about all too often here at footnoted: boards of directors who seem to take up time and space and provide little value to shareholders, even as they collect hefty salaries for what can charitably be called a part-time job.

The two authors, both graduates of Harvard Business School, would be among the last you’d expect to take on the dysfunctional nature of boards of directors. Indeed, at the party, Zweig joked around that both he and Gillespie, a former investment banker at Lehman Brothers, Morgan Stanley and Bear Stearns, were considered traitors by many of their Harvard B-School classmates.

Footnoted regulars will be familiar with some of the examples mentioned in the book, including Chesapeake Energy’s (CHK) infamous map collection, which won the dubious honor of worst footnote of the year, Washington Mutual’s many missteps, and even smaller questionable items, like the decision by Crox to sponsor a NASCAR race car that happened to be driven by the son of one of its directors. There’s also a healthy dose of Countrywide in there too.

We’re still in the process of reading the book, so we can’t give a comprehensive review. And in the interest of full disclosure, we should note that the authors have nice things to say about footnoted. Over the weekend, the Times ran a more comprehensive review which ends with a funny story about a jailhouse interview that the authors had with former Tyco CEO Dennis Kozlowski this past summer and his relationship with Tyco’s board of directors when he was running the show.

The book’s website also has a funny game called “Pay that CEO” and a video that’s also worth watching. Hopefully, the pedigree of the two authors will force more people to pay attention to the problems of the ineffective board.