The web of board members that link American corporations, mapped – Info Web Design
Rood, who is also the founder of Data Interview Questions
This connectivity can be positive for companies, since board members can bring good practices from one to another or facilitate deals that may benefit both. For instance, Steve Jobs being on the board of both companies likely played a major role in Disney becoming the first company to bring movies to iTunes. The Harvard Business Review also suggests that interlocking can help companies respond to economic crises.
However, as paul Hodgson explained in 2012, this interweaving of board members can have very negative consequences. According to GMI Ratings–which publishes research on environmental, social and governance practices at corporations–there's a clear link between corporate board interlocks and bad practices, including “egregious retirement/consultancy agreements for CEOs,” along with “excessive pay for failure” and option backdating. “What is needed here is awareness, transparency, knowing about the interlocks,” Hodgson concluded.
Another issue? People with hands in different pots have a tendency to mix things that shouldn't be mixed. Google's Eric Schmidt had access to privileged information about the iPhone when he was a member of Apple's board of directors–which, according to Steve Jobs, gave Google's Android an unfair boost, negatively impacting Apple's smartphone market share and bottom line. Needless to say, it can have serious adverse effects on employees, too. In 2011, 64,000 employees accused Adobe, Apple Inc., Google, Intel, Intuit, and Disney subsidiaries Pixar and Lucasfilm of using “no poaching” agreements that squashed competition and drove down wages. The complaint zeroed on companies controlled by Steve Jobs and “companies that shared at least one member of Apple's board of directors.”
Eventually, Apple, Google, Intel, and Adobe agreed to pay $415 million to settle the case in 2015.
Article Prepared by Ollala Corp