Wanted: 100,000 directors -- But who is qualified?;

              Wanted: 100,000 Directors -But Who Is Qualified?
by RICHARD H. MURRAY/General Counsel, Touche Ross & Co.
For most of this country's history, the business community has enjoyed relative obscurity. Dur-ing the past quarter century, how-ever, business has had to open its doors to the media-from the modern muckrakers of network TV to the aus-tere analysts of The New York 77mes.
The spotlight was first turned on during the late 1950s, focusing on the great entrepreneurs and conglomera-te's of our generation. While Jimmy Ling, H Ross Perot, and Saul Steinberg may not have had as much recog-nition as Arnold Palmer or Bob Hope, they certainly did achieve a new level of notoriety for businessmen.
Then, with the collapse of some of their enterprises during the economic downturn of the early seventies, the focus of public attention turned to the professional world: the attorneys and accountants who had been vic-timized, along with the public, by the hoaxes of Equity Funding, National Student Marketing, and the like.
Although the storms affecting the professions have not abated entirely, the focus of attention now has shifted to the directors of the Ameri-can business community. What are their qualifications to serve on cor-
porate boards? This article will nei-ther praise nor condemn the people who fill these positions-ample speeches and pages are being de-voted to both viewpoints Rather, it will stress the glaring absence of any institutional framework to assure the business community that the cor-porate directors it appoints are quali-fied for office.
Before 1970, American corporate boards of directors operated with the undisturbed tranquility of a private men's club. This calm was rocked, however, by the 1970 collapse of Perm Central Suddenly, the thought of more Equity Funding/National Student Marketing embarrassments created an almost perverse assump-tion that clinging to the wings of each business success was a seed of potential failure.
The reaction to these develop-ments was swift. The composition of corporate boards rapidly began to change, as directors assumed greater responsibility and increasing inde-pendence. The role of non-manage-ment directors also changed With their new responsibilities came not only demands for a more active involvement in a corporation's affairs,
but also new legal and financial risks of a personal nature.
• The Foreign Corrupt Practices Act introduced a new stratum of civil and criminal liability for individual cor-porate officers and directors.
• A director's responsibilities were expanded to include social and envi-ronmental concerns.
• Enforcement of antitrust laws lightened. More years of prison sen-tences were imposed for violation of federal antitrust statutes during 1978 than during the prior 89 years of such legislation.
• Numerous seven- and eight-figure judgments were granted and settlements made in civil damage claims, such as in the painful after-math of the Penn Centra! collapse.
As if these risks were not enough, the Washington scene is now being bombarded with proposals to enlarge the responsibilities of corporate directors. The American Law Insti-tute, for example, proposes recodifi-cation of the federal securities laws, with a broad expansion of the re-sponsibilities and risks of directors.
Although former SEC chairman Francis M. Wheat has noted astutely that "when all is said and done about
37