A late April Wall Street Journal article analyzed Coca-Cola Co.'s rejiggering of its board in the decided direction of more youthfulness. Written by Mike Esterl and Joann Lublin, the article cleverly bears the Coke advertising-referential headline “Coke Refreshes Aging Board.”
Esterl and Lublin observe that nine out of 17 members of the Coke board who were elected in 2012 were 70 or older, and that, at PepsiCo, the comparable figure is… zero. Moreover, they note, six of Coke's directors have served on its board for at least 20 years.
It is asserted that Coke needs to “attract teens and other young consumers to keep growing.” Paul Lapides, director of the Corporate Governance Center at Kennesaw State University, opines that the makeup of Coke's board does not reflect its need to “serve a larger market of young people.” He favors Coke's reinstating a mandatory retirement age for directors.
Longtime readers of this column know that I have consistently maintained the propositions that:
1. The checklist mentality concerning self-styled governance “best practices” is misguided
2. What is needed in directors is, instead, CASH (Character, Ability, Smarts, and Honesty)
3. All the rest is noise.
Imposing a mandatory retirement age for directors is an element of a one-size-fits-all, checklist mindset. It is, on net and from a substantive standpoint, confining, not liberating; constraining, not freeing; restrictive, not expansive; short-sighted, not broadening; wasting, not conserving, valuable resources.
When I first served on a not-for-profit theatre board, I was under the age of 30. When I took a seat on a public company board for the first time, I was not yet 40. There are some things I knew better then than I know now (e.g., certain technical aspects of financial accounting, of auditing, and of securities law). But, today, at an age with a “6” in front of it, do I know more than I did then about business, corporate board dynamics, human relations, emotional intelligence, marketing, life — in short, the way the real world works? Yes.
Is not a more sophisticated and refined knowledge of these matters a good and desirable thing for a corporate director to have?
• Item: Konrad Adenauer (1876-1967) was chancellor of (West) Germany from 1949 to 1963 — that is, from ages 73 to 87. He was the oldest elected leader in the history of the world.
• Item: Paul Volcker (born 1927) was chairman of the Federal Reserve from 1979 to 1987. Many believe that it was he who broke the back of inflation in the U.S. economy in the early 1980s. He is, today, 86 years old — and still vibrantly active.
• Item: Felix Rohatyn (born 1928) has been a major figure in investment banking for decades. He was an advisor on many important deals while a partner at Lazard Freres; he served on the board of ITT when the legendary Harold Geneen ran that conglomerate; he was instrumental in saving New York City from bankruptcy in 1975; and he served as ambassador to France during the Clinton Administration. Rohatyn is, today, 85 — and, like Volcker, still active in the business world.
• Item: Sophocles (c. 400 B.C.) was one of the greatest playwrights who ever lived. He developed drama, and character, well beyond what his great predecessor, Aeschylus, had. He wrote more than 100 plays. (Tragically, only seven of them survive intact.) When he wrote his last play, Sophocles was 90.
The point of view expressed in the WSJ article that Coke's marketing to “young people” would be enhanced by its board's being younger is a variation on an old and standard argument.
But, does one need to be a licensed pilot to serve with distinction on the board of an aviation-related company? Does one personally have to have drilled for oil to be a good director of an oil exploration company? Does one have to have been a practicing journalist to do a good job as a director of a media company? Does one have to be under any particular age to assess management's approach to a marketing campaign geared to “young people”?
As I analyzed in my column “Putting the Dalai Lama on the Audit Committee” [Spring 1999], directors don't need to have industry-specific experience. Nor need they fall into any particular demographic categories. These are not criteria for performing well on a board.
What directors do need is wisdom. And judgment. These tend to come with experience. The gnomes know. â–
The author can be contacted at [email protected].