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Tuesday, December 02, 2003 - Page updated at 08:56 A.M.
Stephen Dunphy / Times staff columnist
If we learned anything from Enron, WorldCom, Tyco, Adelphia, HealthSouth and all those other corporate scandals, it is this: Those who serve on corporate boards hold the ultimate power and the obligation to run the company for its true owners, the shareholders.
That's what makes the decision by Boeing to name Harry Stonecipher president and chief executive officer (after Phil Condit's resignation yesterday) so wrong. The former president of McDonnell Douglas is on the board, one of the 11 men and women who have been asleep at the switch instead of doing their jobs.
To name a current board member to run the company is to perpetuate its problem. It's a wink and a nod to the situation. It's insider, closed-door decision-making of the worst sort.
Boeing CEOs such as Bill Allen and T.A. Wilson dealt with similar situations but so differently. Allen testified before Congress during an investigation into profiteering by companies in the 1950s and was so forthright he got a standing ovation.
Fortune magazine earlier this year named Allen No. 2 in a list of the best CEOs ever. Fortune said Allen "endured the swarming gnats who think small: short time frames, pennies per share, a narrow purpose. Allen thought bigger and left a legacy to match."
Wilson, deeply involved in the financial and operational problems of the early 1970s, was caught off-guard when several Boeing executives were involved in a 1974 foreign-payment scandal. He went before Congress and admitted honestly everything that the employees had wrongfully done. He accepted full responsibility for their actions, apologized and promised not to let it happen again. He launched a complete review and overhaul of many of Boeing's policies. Ethics became a part of Boeing. How different things are now. The lapses in judgment are at the very top. There are no ethics, no standards, no judgment.
Phil Condit's conduct of Boeing has been in question for more than five years, ever since the production snafu in the commercial-airplane division in 1998. I suggested then that Condit might not be long in his position because of the failures. Unfortunately, I was wrong. Now Boeing's board seems ready to make another mistake. They should be taking the high road and looking outside their ranks for a leader. Instead they are using the old ways of doing business, the ones that have produced failure.
The board should be leading, not following. Where is the vision of a Bill Allen when you need it? The stock market can be a good gauge of how the board's decision is going over on Wall Street.
Boeing closed down 38 cents at $38.02 yesterday. The interpretation? More of the same.
The board named another of its members, Lew Platt of Hewlett-Packard, as non-executive board chairman. One of his first moves should be to start the process of replacing Stonecipher with an outsider. Maybe then Boeing will right itself and move on.
Stephen H. Dunphy's columns appear Tuesdays-Fridays and Sundays. Phone: 206-464-2365. Fax: 206-382-8879. E-mail: email@example.com.
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