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Directors--the men and, infrequently, women responsible under state laws for managing publicly-held companies--are all too often dominated if not co-opted by the executives they are supposed to be overseeing, charges the author of this brief but important study. A consultant who has served on many boards, McSweeney points out that directors are not only surrogates for shareholders but also trustees of the public interest. Until recent years, these duties were ""more honor'd in the breach than the observance."" But Penn Central's 1970 bankruptcy, along with post-Watergate revelations of bribes and political payoffs, prompted widespread demand for greater corporate accountability. As one consequence, directors no longer can afford, for reasons of personal loyalty or business friendship, to rubberstamp plans, policies, and procedures of the managers who nominate them for office. McSweeney offers an objective review of the present system and suggests practical ways in which directors can recover control. Audit committees could help put directors back in the driver's seat, he believes, as could opinions and information from independent sources not beholden to management. He recommends further that no chief executive officer chair a corporate board and outside directors (as opposed to hired hands) be in the majority. Pressures from the public and groups championing its interests, he predicts, inevitably will force reforms. Only independent directors, in his view, can save American free enterprise from ""total control by government agencies."" His book valuably spells out the sociolegal responsibilities and liabilities of directors, puts freewheeling corporate executives on notice, and provides a disturbing inside view of the autocratic way that many major corporations are run.

Pub Date: April 1st, 1978
Publisher: Harper & Row