Kroger Alum Sargent Joins Its Board

By George Anderson


The newest member of Kroger’s board of directors is no stranger to the company.


Ron Sargent, the chairman and CEO of Staples, spent 10 years working for Kroger in a variety of positions before moving to the office supply chain as its vice president of operations.


He steadily climbed the Staples corporate ladder from the time he joined the company in 1989. He was named CEO of the company in 2002 and was elected chairman in March 2005, replacing company founder Tom Stemberg.


Mr. Sargent currently also serves on the boards at Aramark, Mattel and The Yankee Candle Company in addition to his duties at Staples. His term on the Kroger board will last until June 2007 when he will stand for reelection.


Discussion Questions: What benefit or detriment to Kroger is there having an executive from another retail company on its board of directors? Separately,
do you see a problem when an individual serves as a director on five different company boards as is the case with Ron Sargent?

BrainTrust

Discussion Questions

Poll

4 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
B Chris Schwartz
B Chris Schwartz
17 years ago

A well seasoned senior executive can serve on multiple boards and be very effective if they follow proven techniques in keeping up-to-date on the companies they serve and the industries that they compete within.

1. You need a strong administrative assistant to maintain up-to-date files on each company with all of the public and non public information they supply.

2. A standard report format has to be developed between the executive and his/her admin. person to allow the timely posting of information in a format that is second nature to the Board Member.

3. Prior to a meeting or phone session, the files have to be scanned and a review done of the timely facts that are known.

4. The Board Member has to have a sense of where/how they can contribute. This is not a lazy posting; it is an active role that requires a keen sense of responsibility and understanding between the CEO/Chairman and the Board Member of what role the member is to play and why.

5. Time is precious. The ability by the board member to reach out to senior company executives and get answers to queries is essential. Fast response.

6. Clear detailed instructions to the senior management of the company by their CEO/Chairman that their response to a board member must be direct, honest, accurate, complete, and un-biased, and their job depends on their ability to provide such open communication to the board and handle queries as a MOST important task.

7. Never accept a board membership without knowing the industry sector and the competitors in that field or having an open schedule sufficient to become conversant in those areas within the first 3 months.

8. Plan to stay on a board for 6-12 years. Time to understand what the rationale was for each decision and to help make a difference.

9. If due to age or personal job role changes that may be looming you can not make the minimum six year (2 term) commitment then you should pass on the opportunity.

10. A maximum of 4 to 6 boards (or active committee assignments) plus your own active company role is a limit at any one time in most environments. I consider an active voluntary organization role as equal to a commercial board seat as far as impact on available time. The same is true for the role as Chairman of the Audit Company for one of your companies for which you serve as a board member.

11. It helps if the Companies are within no more than one time zone away from your home location and that there is generally not more than one formal Board meeting or conference call every two months and the rest of the time the board member is studying documents and get personal feedback by phone with key executives but on a schedule that the board member sets.

12. It helps if one or two of the other board members sits on a different company board with you so that over time you build a relationship and some level of trust to allow sidebar discussions with an additional well informed outside party whose opinion on pertinent issues can be relied upon.

I have served on 14 boards, 7 of them public companies and over time have evolved the above guidelines to ensure that the stakeholders (not just the shareholders) in the company derive value from your association with their chosen management team. The above fits a seasoned executive that enjoys 60 hour work weeks and is not involved in monumental changes in their own job environment or personal situation.

Gene Hoffman
Gene Hoffman
17 years ago

The true purpose of a board member is to be steadfastly objective in a very subjective environment. But how many directors want to operate with that mindset? That’s a tall order when directors are selected to join the “fraternity” by the company CEO, many of whom usually expect more support than oversight. I have been on several boards including Kroger and have seen – and felt – this condition in operation.

When I served on a tobacco company board I used to sit through emphatic lectures each quarter from a “hired” doctor who came in to tell us how tobacco wasn’t harmful at all to users. I used to regularly challenge his “facts” until I was not placed up for re-election to that board. So, to me at least, so much for expectations for objective oversight from directors.

As for Mr. Sergeant who will now serve on the Kroger board, as well as on four others, it is assumed that someone with his experience and success will be a constructive director for Kroger. I believe this is a new precedent for Kroger — placing former departed executives on their board, but there may also a possibility of a future relationship between Kroger and Staples. Directors are selected for all kinds of reasons.

David Livingston
David Livingston
17 years ago

Sitting on 5 boards is not really an issue but it depends on how active a person is on those boards. Do they attend regular meetings make decisions or are they just a prop to impress stockholders and Wall Street?

Generally board members are nominated because they will rubber stamp the agenda of the CEO and give him a big salary and bonus. I think it would be naive to think otherwise.

Mark Lilien
Mark Lilien
17 years ago

Board members, like any employees, benefit from a variety of experiences. The problem: where to draw the line. For some people, serving on 2 boards is too many. For others, 5 may be fine. Furthermore, there are boards who won’t tolerate active members, since what they want are passive cronies. Those people don’t need to limit their board memberships.