More and more corporate governance experts — usually quite careful about ciriticizing current large public company board chairmen — are speaking openly about how Mr. Hassan’s misguided loyalty to another high executive has put a company he stewards in a difficult position. [Regular readers will recall here, the echo of the Carrie Cox situation(s) — at both Pharmacia I (and Pharmacia II), and Schering-Plough.]
Having Ms. Jung “hang around” the board simply makes very difficult the task of retaining a truly hard-nosed, effective leader — to turn the Avon debacle around. Why would a top flight person want to try to run interference between an entrenched lead director (Hassan), and the close friendly relationship he has with Ms. Jung — now the nominal Chairman of the Board — for two years? There are always going to be better situations that this — for the best people, with all the right skills, it would seem. Nicely-done (again!), Fred!
In any event, here’s the concluding bit from this week’s Bloomberg story — do go read it all:
. . . .Most Avon board members have worked closely with Jung for most of her tenure. Five of the nine independent directors have served on the board for a decade or longer. They include lead director Fred Hassan, managing director and partner at Warburg Pincus and chairman of Bausch & Lomb Inc.
“The kind of compromise directors reached to keep Jung on as chairman while also recruiting a new CEO serves no good purpose for investors,” Charles Elson, head of the University of Delaware’s Weinberg Center for Corporate Governance in Newark, Delaware, said in a telephone interview. “But at least the board limited Jung to a two-year contract. It’s a lot harder to terminate an executive with an open-ended contract that automatically gets renewed over and over. . . .”
Caustic — but correct, in my view. And I’ve plainly said so, before — back in December of 2011.