“Imagine that Company A wanted to have a business relationship with Company B, and that it took the step of having the chief executive of Company B come onto its board. Imagine further that the CEO of Company A sits on the board of a third company, and now all three companies have interlocking boards. This certainly would spark outrage from good governance professionals, wouldn’t it? Just think about the potential for conflicts of interest. Aren’t all directors supposed to be truly independent? The new standard that seems to be evolving is that directors sitting on a board together should have no other entanglements, real or perceived. After all, they’re supposed to be loyal only to shareholders of the company on whose board they sit,” William J. Holstein reports for Forbes.
Holstein reports, “This interlocking scenario obviously is what happened when Apple Computer invited Eric Schmidt, the CEO of Google, to join its board. In fact, half of Apple’s eight-person board has close ties to Google. And Apple CEO Steve Jobs is on the Disney board now that the Pixar deal has closed. So it’s an axis of Apple-Google-Disney–all aimed at the evil giant of the north, i.e. Microsoft. We might be able to Google for the Disney movie of our choice and download it to our iPods.”
Holstein asks, “If Jobs, Schmidt and Bob Iger are not adhering to the highest standards of integrity and independence, are they still making savvy business decisions? In other words, is it true that the strictest definition of good governance is essential to smart business?”
Full article here.
Related articles:
The ‘Macs Inside Google Group’ launched – October 16, 2006
Google launches official Apple Mac blog – October 10, 2006
Google CEO: ‘Apple is engaged in probably the most remarkable second act ever seen in technology’ – October 04, 2006
RUMOR: Apple and Google to add geotagging to iPhoto – October 04, 2006
What are Apple and Google up to? – September 18, 2006
Newsweek: Apple and Google talks could result in ‘iTV’ menu item for Google Video – September 17, 2006
Enderle: Anticipating an Apple-Google Merger – September 05, 2006
Google CEO declines Apple automatic stock option grant; plans to buy 10,000 AAPL shares instead – September 01, 2006
Google CEO on Apple’s board opens up many possibilities, including outdueling Microsoft – August 31, 2006
Re: Google CEO elected to Apple Computer’s Board of Directors – August 30, 2006
Apple and Google cozy up to make Microsoft jealous – August 30, 2006
Google CEO to help shape Apple’s future – August 30, 2006
Google CEO Dr. Eric Schmidt joins Apple’s Board of Directors – August 29, 2006
This looks a lot like the Japanese model.
Hopefully, after the Enron scandal, opportunites for double dealing become a lot harder to come by.
And what does Company G bring to the table exactly? Is it their network? It can’t be “searching for movies” from Company D as the article suggests, that’s sort of stupid.
Sounds like potential conflicts of interest…but what else is new.
It just means they have to behave ultra-well, or they expose themselves.
To me it seems like a pretty good team. Anything that helps boot MS into the touchlines sooner rather than later has to be a good thing!
One recent study identified companies with closely linked boards as the “centers” of the options backdating behavior, which spread from there. So Apple, Google and Disney directors need to be *very* careful that they fulfill their fiduciary responsibility, that they don’t cross the line.
Yeah, it’s a big scandal to have all these boards intermingling.
It’s much better to have ONE COMPANY BOARD control everything, like search and content and hardware. There is just SO much more oversight that way.
Go Microsoft!!!
{/sarcasm}
-c
MW: ‘list’ (all the things you like a bout Steve Ballmer… Here’s a post-it and 1″ sharpie)
re: chrissyone – agreed. as for that list… for some reason, the only thing i imagined putting on that post-it was a kurt vonnegut-esque sphincter. i couldn’t think of anything i LIKE about ballmer so… i guess i just kinda chose something that closely represents him.
mw: analysis. that’s too rich!
You mean the famous…
*
That’s perfect. =)
Did the author do ANY RESEARCH WHAT SO EVER? Check out almost any large cap, publicly traded company, and look to see who is on the board. There is almost always a CEO or high level offer of another large company on the board, if not multiple CFO’s, CEO’s, SVP’s, etc. Bill Gates is on the board of directors of Berkshire Hathaway Inc. TWO OF RICHEST PEOPLE IN THE WORLD investing billions of dollars into businesses…wouldn’t they in effect be able to put companies out of business or decide who gets huge infusions of cash…that could change the marketplace? Isn’t that more of a conflict? This author is just picking the hot company of the day and trying to drum up some press.
Recall that alliance between Apple, IBM and Motorola? The AIM alliance anyone?
Board members or no, if an alliance is making a company money they are going to stick with it, and if the alliance does not work (they seldom do) each will dive into their own pernicious ways quite quickly. A CEO can only take the heat of a bad alliance that stuffs their pockets for so long…
Make no mistake. Eric is about making Google more pervasive and legitimate pay to play media and its emerging services. Steve is about making sure Apple standards dominate the cell phone, living-room, our every day life. Iger is about making sure his content is accessible, anywhere, anytime.
They are all in the same boat, and they are all rowing against Redmond.
How is this different than Intel devoting a “team” to Apple? How is this different than Dell’s former exclusive deal to sell only Intel chips or Microsoft OS?
Companies make strategic partnerships – executives on BoDs is an investor issue at best. It speaks to the level of commitment Company A has to Partner B.
The question is, if Jobs was no longer CEO of Apple, would he remain BoD for Disney? The answer is that with his stock holdings, he sure as hell would.
Sour grapes. Ballmer and Gates most likely attempted to ingratiate themselves to CEOs of other companies and never received any return phone calls. Intelligent businessmen and businesswomen work with rational and professional leaders whose companies have a commitment to innovation and respect for their business partners. Microsoft needs to demonstrate it has the ability to lead and inspire before it can hope to entice strategic business relationships.
Sorry. Link was bad. Try <a >this one.</a>
Try
” rel=”nofollow”>this one.I need more coffee.
A director is not supposed to have no possible ties to the outside world or be completely independent. If that were the case, no company would be able to fill their board of directors.
A director is supposed to put the best interests of the shareholders and the company first and foremost WHEN HE IS ACTING AS DIRETOR FOR THAT COMPANY. As soon as he steps back into his other job(s), his allegence may completely change. So when Steve Jobs is at a Disney Board of Directors meeting, he is supposed to do what is best for Disney and its shareholders, whether this involves Apple or not. And when he is in his Cupertino office, he is supposed to focus on Apple’s best interest, regardless of Disney.
Now, directors can’t do things that are intentionally conflicts of interest, and often you will see a director abstain from a vote or remove himself from discussion because of a (real or perceived) conflict of interest. THAT’S what a director is supposed to do.
And by the way, the Enron scandal was perpetrated by the company’s officers, not the board of directors.
there is only one way to spell ‘innovation’