That’s not exactly right. It’s extremely unusual for a board member of a company who is also the CEO of another publicly-traded company to have that company’s CEO sit on the board of their company. Yes, there’s a lot of overlap of boards – don’t get me wrong – but it’s very rare to have the sort of overlapping quid pro quo that you’re suggesting. I think of it more like a club in which lots of folks are scratching each other’s backs, but the direct givers and receivers of back scratches are typically a degree or two apart. That is CEO A is getting his back scratched by board members B and C. CEO A is a board member on D, who is scratching B and C’s backs. It’s not overt.
And when a large shareholder is on the board, I guarantee you they care more about the value of the shares than they do about some measly board fee. (I can speak from experience on this one.) If you’re on the board of a big company and you own a lot of shares – or represent the ownership of a big block of shares – the board fees are a pittance compared to your regular income. This is a red herring.
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Yes, agree with basically everything you said about the CEOs sitting on each other’s boards. That was what I was referring to, because the world of CEOs is rather small, and when you are talking about large corporations, it’s a tiny world, indeed. They are all fairly well inter-connected, either directly or indirectly.
In reference to board members having short-term vs. long-term goals, I’m talking about them making decisions that might prop up stock prices for the short term, but those decisions might have very negative long-term effects for the company as a whole (at which point they will already have retired from the board/company, and sold much of their stock). Short term still could be a long time (5-10 years).
