The Dysfunctional Board

Introduction: Five Enron Directors Testify

The Senate Subcommittee wanted answers. What is the role and responsibility of a corporation’s board of directors in safeguarding shareholder interests? What was the role of Enron’s board of directors in its collapse and bankruptcy? The Senators hoped to ask those questions and many more at the May hearings of the Permanent Subcommittee on Investigations. Five directors appeared voluntarily, and under oath, and were anxious to tell their stories. They were obviously confident that they were not to blame. Several of them struck out, placing blame on Enron’s management for lack of communication or misinformation.

This section starts by quoting the five directors’ opinions in their opening testimony. That usually includes a bit about the management. The directors have not yet been introduced; they will introduce themselves in “The directors introduce themselves.” Each of the five Enron directors had been chairman of a major Board committee. (Those committees are listed below in Table 3.1), which lists all of the Enron directors before chaos broke out.)

The five witnesses at the Hearings were:

• Norman P. Blake, Jr (1994 - 2002), Interim Chairman of the Enron Board and former member of the Enron Finance and Compensation Committees, has extensive corporate, Board and investment experience, including past service on the Board of General Electric and current service as Audit Committee Chairman of the Board of Owens Corning;
  
  
• Herbert S. Winokur, Jr (1985 - 2002), current Board member, former Chairman of the Finance Committee, and former member of the Powers Special Committee, holds two advanced degrees from Harvard University and has extensive corporate, Board and investment experience;
  
  
• Dr Robert K. Jaedicke (1985 - 2001), former Chairman of the Enron Audit and Compliance Committee, is Dean Emeritus of the Stanford Business School and a former accounting professor;
  
  
• Dr Charles A. LeMaistre (1985 - 2001), former Chairman of the Enron Compensation Committee, is former President of the M.D. Anderson Cancer Center, a large, well-respected and complex medical facility in Texas
  
  
• John H. Duncan (1985 - 2001), former Chairman of the Enron Executive Committee, has extensive corporate and Board experience, including helping to found and manage Gulf and Western Industries