Board of directors system broken

As most investors are aware, these are not the best of times for the board of directors system. And in the quarters and years ahead, we'll likely hear a great deal about how a board of directors should function and what reforms to the system are needed.

Briefly, the board system is under stress. This is definitely not the first period in American history in which board of director prudence and accountability was questioned: the Enron and WorldCom scandals also shook shareholder confidence. Meanwhile, the alarming rise in U.S. senior executive salaries and compensation packages -- packages that exceed compensation increases for previous economic expansions -- further lower shareholder confidence in the system.