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Just who are the Board of Directors?

By Maxine Shapiro, KERA 90.1 commentator.

Dallas, TX – Every public company must have a board of directors who make decisions on behalf of the company and the investor. So, who are these people and just how powerful are they? I'm Maxine Shapiro with KERA Marketplace Middays.

Now I don't mean to add to the distrust that is growing amongst investors about corporate America. But I do want to shed some light on just who's running the show here. As Don Hultgrin, Executive VP of S.W.S. Securities stressed, structurally the board of directors holds the ultimate responsibility for the company. But we agreed that the CEO is the true director. It is almost safe to say that all board of directors follows the lead of the CEO and when that changes, the CEO is usually gone. The average life of a CEO is five years.

I asked Hultgrin, "What's the average life of a board member?" Without any exact number he, without hesitation, replied, "probably more." That said, those that sit on the Board of Directors are very influential people. And most of these people do not confine their influence to one corporation.

For example, last week it was revealed that Radio Shack Chairman and CEO Leonard Roberts has joined the board of director of J.C. Penney Company, Incorporated. This is where I get uncomfortable.

Based on what I found from the website, four of the JC Penney board members also serve on the board of companies such as International Paper, Sara Lee, American Express, New Life Insurance, Ingram Micro, and Pfizer. That's more than five. That's because two members serve on two other boards. There is an ex-governor, an ex-aide to a former president, the current president of SMU, an executive officer of Texas Instruments, and the retired chairman and CEO of Bankers Trust.

And this is just the Board of JC Penney's, a nice established retail company. Wait 'til we get an Exxon-Mobil. Any way you look at it, I think calling these people "influential" is an understatement. And I'm not even sure if anything can be done or should be done about this sphere of influence. But I for one will be watching the action of these boards a little closer. For KERA Marketplace Middays, I'm Maxine Shapiro.

Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 PM.