During the time he spent mired in controversy as Office Depot Inc.'s chief executive, Steve Odland sat on the board of General Mills Inc. He left the CEO spot at the office-products chain last fall, a week after agreeing to pay a $50,000 fine after being accused of selectively leaking information to financial analysts in violation of Securities and Exchange Commission regulations. He neither admitted nor denied wrongdoing.
Then, Mr. Odland submitted his resignation to General Mills. But his fellow directors, with whom he had served for six years, didn't accept it.
Mr. Odland's situation isn't unusual. A surprising number of embattled CEOs, forced out for poor performance or legal problems, find a warm reception from outside corporate boards on which they sit. Charles Prince, for instance, who stepped down under fire as Citigroup Inc.'s CEO in 2007, is a five-year member of the Johnson & Johnson board.
Corporate-governance policies at J&J and many other U.S. companies require outside directors to offer to resign if their "professional status" changes— meaning they lose a post, take a new one or retire.
The rules are in place to allow boards to retain an appropriate mix of retired and active executives and push out members who no longer have the time for outside directorships because of more demanding new jobs. Eighty-one percent of the large companies have disclosed board-resignation policies, reports recruiting firm Spencer Stuart.
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