D&B: Are you saying, then, that a more activist board could have made a difference in Penn Central or Baldwin-United?

Palmieri: Certainly, with no question in my mind. Collegiality on the board is a very nice thing. It creates a sense of ease and comradeship. It also makes it very difficult to raise the hard questions.

D&B: Do you sense any fundamental changes in the corporate governance process over the past decade?

Palmieri: There are changes. There is certainly increased awareness of some of the potential liabilities that cling to a director. But I don't think the changes are fundamental - they are not unimportant, but they're not fundamental.

D&B: Where have boards made the most progress?

Palmieri: I think boards have made the most progress in opening up traditionally dosed ranks of what have tended to be long-term-membership clubs. They've opened them up to so-called outside directors who have less in the way of affiliations and ideological loyalties. It's these directors who, time and again when the crunch comes, tend to play the vital role. Also, the movement to create more structure and to organize boards so that directors have to be accountable in certain specific ways - most notably for the audit process with the audit committee, and also in nominating committees and compensation committees - has been healthy. This did two things: It made the directors more knowledgeable about the internal process and internal operations of the company, and it gave them more of an opportunity to ask questions and to develop information. This has helped companies and helped boards. They're more knowledgeable. They're less innocent And it has created more of a control on what has for so long been the kind of uncontrolled monarchy that the American corporate organization has represented.

D&B: When chairmen talk about whom they most want as directors, more often than not they want an active CEO. Isn't this kind of director most inclined to go along with management- in the sense of understanding managements desire to pursue a strategy that it has devised for itself?

Palmieri: There are a lot of benefits to having an active CEO as a director. One, he is totally committed to the idea that the CEO ought to have minimum interference - read "hard questions" - in the exercise of his responsibilities. Two, he brings a certain amount of prestige. And three, he's very busy by definition. Put all those things together and you have the perfect board member - from the stand-point of the CEO himself.