Smale at Wharton: What is really relevant to good governance

A speech, by John Smale, former chairman of General Motors, is presented. It is imperative that the board ensures in good times as well as bad times that the management is extra careful with its responsibilities. The board encourages that by the nature of its questions and its requests for information. The board's responsibility is to regularly monitor the effectiveness of management's policies, its decisions, and how well it is carrying out its responsibilities to the corporation. If the chairman of the company is also the CEO, the board should designate a lead director. Those who serve on corporate boards know this: every board member is human. The board has the important role of helping the management succeed. The board will succeed only if the management succeeds. Mutual trust and respect between the board and the CEO is essential for the board to have a relationship that is effective.