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For a copy of the full article referenced below, and also the previous tribute on which it was based, see

Note: James Kristie, the editor Directors & Boards, has been a member of the Program Panel for the Shareholder Forum's "E-Meetings" public interest program to establish standards for expanded shareholder communications.


Directors & Boards | E-Briefing, December 1, 2011 editorial


Volume 8, Number 12 •  December 2011


Some Governance Goodies to End the Year
Prompted by a “Where was the MF Global board?” query from CNBC, here are several of J. Keith Louden’s prime principles of board effectiveness.

CNBC’s ace correspondent Bob Pisani was the first in the business media that I am aware of to raise the question, “Where was the MF Global board?” When he came to me on Nov. 3 for some insight to help answer that question, the point I made to Bob was the accountability of the board for the now bankrupt investment firm’s — read Jon Corzine’s — changes in strategy and risk appetite. (The New York Times came out on Nov. 8 with its well worth reading “where was the board?” analysis.)

Fresh in my mind when I was making the point about the MF Global board’s accountability was a fellow named J. Keith Louden.


I had just put the final touches on a tribute to Louden that is being published in the 35th anniversary edition of Directors & Boards, coming off press this month. Titled “Keith Louden Knew It All,” our article shines a spotlight on “one of the early wise men of corporate governance,” which is how I characterize him. There will be a link to this article at the end of my editor’s note.

From his vast set of governance experiences, which included serving on more than 25 corporate boards, Louden formulated many prime principles of board behavior. These principles guided his own board service, and he transmitted them as well to countless boards and managements in his consulting and director education activities. Here are a few, culled from our special tribute:

  • Failure of a board and of management to perform effectively is not limited to illegal or unethical acts. They just get the publicity. As unacceptable as these are, an even more serious breach is failure to sense the winds of change and to keep their companies competitive and in a leadership position in the industrial world.

  • One of the primary roles of a director is to be ever on the alert for opportunities, events, information, or anything whatsoever that may have a bearing on the business of the corporation.

  • The job of a director is too important to be bogged down by free riders. In addition to considering the shabby spectacle presented by the noncontributor, the fact that he is blocking an opportunity for willing and able directors makes his presence on the board undesirable.

  • A basic requirement for being a director is experience in management. This requirement does not apply to industrial management only, since management is management wherever you find it. Sometimes people will be invited to membership on a board because of some specific knowledge, such as in the field of science. Unless this specific, specialized knowledge is accompanied with an understanding and knowledge of management, such members rarely make good directors, since they cannot contribute on a broad base.

  • And, finally, Louden’s prime principle that informed my response to CNBC’s “Where was the board?” query: “Directors can delegate authority and responsibility, but they cannot delegate accountability.”

One thing Keith knew was how challenging it is to be a corporate director, which certainly would have been affirmed had he experienced the year just ending. (He died in 1994.) I am happy to share with you the full copy of “Keith Louden Knew It All” for your records. Click here for a copy.

And you won’t want to miss this 35th anniversary special issue. Click here to start your subscription with this issue.

From the editorial team at Directors & Boards, we wish you a happy holiday season this month and fortunate times ahead for 2012. Thank you for your readership and colleagueship.

As always, I welcome your comments at


Jim Kristie is the editor and associate publisher of  Directors & Boards.

Directors & Boards e-Briefing is a monthly service of Directors & Boards. All contents copyright 2011, MLR Holdings LLC.




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