Richard's Resignation: Boeing's Board Practices Backfire

Includes: AMGN, BA
by: George Gutowski

The Boeing Company (NYSE:BA) may be wondering about how to appoint a Board Director. Friday after markets closed, it announced that Richard D. Nanula resigned to pursue other interests. Richard Nanula only just recently became a Boeing Board member.

Approximately 30 days ago, Richard Nanula was CFO of Amgen (NASDAQ:AMGN) but was forced to resign because of disclosure issues relating to a failure to announce that a critical research study had failed. The SEC is investigating, and it does not look good for Richard Nanula.

Boeing did the right thing. Boeing's corporate governance requires directors to resign if their professional status changes. Their new focus on appropriate corporate governance could not tolerate this kind of controversy. Boeing shareholders deserve better.

How did Richard Nanula come to acquire a seat on Boeing’s board? He made his bones with the Disney (NYSE:DIS) organization following a 12-year career in which he rose like a rocket and then left to become the President of Starwood Hotels. Then he ended up at Amgen, where he basically stepped on a land mine.

The Boeing Board should have had a good view on him. Current Boeing director John Bryson has been on the Disney Board since early 2000 and certainly could have developed an excellent insight into his psyche. Mr. Bryson is currently a member of the governance, organization and nominating committee and has been a Boeing director since 1995. While the time lines do not exactly overlap, Richard Nanula held significant positions and would have left his DNA and fingerprints behind on many Disney projects.

CFOs who just neglect to disclose bad news should not be on boards of other publicly traded companies. This is a gross infraction and there are usually pre-cursor events that may have predicted the problem.

Admittedly, this posting is harsh. But Boeing may have just dodged a bullet. What needs to be nailed down? Perhaps Board members on senior companies such as Boeing should have some experience on other boards and have some seasoning. The bright shiny career rocket may actually be more of a negative when considering Board Members.

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