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Accountability Comes With the Job for Board Veteran

Accountability Comes With the Job for Board Veteran

SPECIAL REPORT – Banking & Finance: Boards Under Fire What Do They Know?





By CHRISTOPHER WOODARD

Contributing Reporter

Malcolm Currie’s wife is worried. Currie, the 75-year-old former chairman and chief executive of Hughes Aircraft Co., sits on nine boards at a time when directors are under fire for either not knowing enough about management shenanigans or for not doing anything about what they do know.

“She reads all the newspapers and wonders what risks I’m taking by staying on these boards,” said Currie, who also is head of Van Nuys-based electric bicycle maker, Currie Technologies Inc.

Given the spate of shareholder lawsuits, Currie is aware of the potential legal risks and yet, he’s glad that more people are paying attention to what goes on inside boardrooms. “Boards are becoming far more independent, far more willing to question the CEO and make the top management understand that they report to the board,” said Currie. “It’s all to the good.”

He should know. Currie’s current roster of directorships includes mutual fund giant Investment Company of America, semiconductor maker LSI Logic Corp., biomedical device maker Inamed Corp. and start-up Innovative Micro Technology.

Then there’s USC, where Currie serves as a trustee. “He asks a lot of good, tough questions, and he understands the difference between board policy and line operations,” said Steven Sample, USC president.

Spinning the plates

Even so, Currie, like so many executives who serve on multiple boards, has a daunting task: how to effectively oversee so many different operations to the point where he can detect any signs of trouble whether it’s an Enron-type implosion or smaller scale mismanagement.

Currie believes he can devote adequate time to each of his responsibilities, noting that at his own company he leaves day-to-day responsibilities to partner Richard Mayer. Also helping, he said, is that some of his director jobs are for start-up companies that may need advice and direction, but not a lot of his time. “I’m supposed to be retired,” he noted.

Currie puts in 40 hours in a typical week divided between his company and directorships. He is on the road a lot; in just the past week, Currie met with a company’s auditor and was scheduled to attend a shareholder meeting.

Doing the job right takes time. Besides attending shareholder and director meetings, Currie spends hours on the phone with company executives and other directors. “If you’re on the audit committee you also have to meet at least every quarter to review all the financials,” he said.

Currie insists that, current headlines notwithstanding, the days of the board as a rubber stamp and good-old boy network are coming to an end. “In a lot of cases, boards just go along with the management, but that’s changing,” he said.

One of the Enron outgrowths is to shift focus from business strategy to stricter financial oversight. “In that respects the job’s not as fun as it used to be,” said Currie, who expects that in the future it will be tougher for companies to attract good board members.

At the same time, he’s believes that if a board does its job well it will not have to worry about the legal risks.

“It’s a disaster what’s happened to Enron and some of the others. Some of it has to do with a lack of good accounting practices, some of it lack of enforcement by the SEC but a lot of it is a result of less than adequate boards,” he said.

Kent Kresa, president and chief executive of Northrop Grumman Corp., said Currie’s experience and business acumen have made him a popular choice for director posts.

“He’s very smart, energetic, thoughtful and ethical,” said Kresa, who has known Currie for 20 years. “He understands the challenges of doing business because he’s been there himself. That adds an important dimension to a board.”

Why be a director?

Indeed, Currie has been around the track. Beginning his career in the 1950s as a research scientist for Hughes, he quickly advanced in the then-explosive aerospace industry. In the 1970s he served as an Undersecretary of Defense, where he oversaw a $60 billion defense budget that funded development of stealth aircraft, cruise missiles and night-vision goggles.

Currie returned to the private sector in the late 1970s as president and chief executive of Delco Electronics Corp. and later as chairman and chief executive of Hughes. Convinced that the days of fossil fuels are numbered, he has been on a quest to develop hybrid electric vehicles after he left Hughes in 1992 due to mandatory retirement.

Currie finds that people serve on boards for varying reasons. Some see it as a prestige thing or a way to earn income. Others, like himself, are intrigued with new technology or get involved with a company because they believe in the product and the management.

“I enjoy being involved in business strategy, judging the promise of new technology and keeping abreast of the competition,” said Currie, who also is on the boards of Enova Systems, a maker of electric vehicles, Motech Corp., a maker of advanced batteries, and Constellation Communications Co., a satellite communications firm.

While there are still some perks involved, Currie says they aren’t as lavish as they used to be. When he was a director at Unocal Corp., Currie remembers traveling to Thailand to check out the company’s overseas operations. “If you wanted, you could bring your wife and extend your trip,” he remembered.

The closest thing to a perk Currie has received recently was a trip to Phoenix to attend a board meeting. “We did take our spouses, but the idea was to get to know each other better,” he said.

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