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BUSINESS AVIATION AND THE BOARDROOM
Look Inward, Board Possibly the world’s most recognized expert on the value of Business Aviation, Jack Olcott is a former Editor and Publisher of Business & Commercial Aviation magazine and Vice President within McGraw-Hill’s Aviation Week Group. He was President of the Aviation Business National Association from 1992 through 2003, and today Jack’s network and personal knowledge of Business Aviation uniquely qualifies him to oversee Business Aviation and the Boardroom. More information from Jack@avbuyer.com
Failures in Governance can Precipitate a Spectrum of Problems. Recent media coverage of lapses by the GM Board regarding defective ignition systems highlights the need for creative thinking and ongoing due diligence by Directors, observes Jack Olcott.
S “...for years Directors were either disinterested or deceived at a time when they should have been more diligent.”
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AVBUYER MAGAZINE – October 2014
hould there be any doubt that oversight neglect can be costly, look no further than the failure of General Motors’ Board of Directors during the decade or so in which ignition switches on various GM models were malfunctioning. To date, nearly 30 million vehicles have been recalled, at least 13 deaths were linked to the defect and nearly $4 billion in GM assets have been set aside to cover costs related to the problem, according to an article published in the New York Times last month. Numerous law suits have surfaced recently against Directors for failing to exercise their fiduciary duties to oversee management, and the corporation is being investigated by the Justice Department, the Securities and Exchange Commission and the attorney generals of 45 states. The same news item (NYT, Page 1, September 8, 2014) stated that the GM Board took a “handsoff” approach to safety issues. Directors were satisfied with periodic reviews of product quality and left safety matters in the hands of company executives. GM’s recently appointed Board Chairman, Theodore M. Solso, said he had only a vague recollection of the ignition switch issue even though he was a Board Member since 2012. For reasons not stated, the Board either did not know or did not demand to know the problems affecting GM ignition switches, even though it appears that company officials had been aware of the issue for more than a decade. Only now is the GM Board and the corporation it is responsible for governing confronting the reality that for years Directors were either disinterested or deceived at a time when they should have been more diligent. www.AVBUYER.com
HOW’S YOUR GRASP ON BOARD OVERSIGHT?
Aircraft Index see Page 4