9:33A Voj)** LTE1|6-4 Case Assign...Vignette 6.4 SHOULD THE BOARD CHAIRPERSON BE AN EXECUTIVE?Burrin Corporation's sales and profits had slipped from their highs of 3years ago. Everyone knew that the company faced increasing pressurefrom foreign competition and general maturing of the industry. However,some directors wondered whether Jay Kelly, CEO and chairman of theboard, was the man to turn the company around. Kelly was a "numbersman" who had come up through corporate finance. He had an exceptionallygood feel for the bottom line but had demonstrated little ability to sensetechnological and market trends.Prior to the June bimonthly board meeting, venture capitalist Linda Lopezand another independent board member requested a full discussion ofKelly's performance. Kelly had no option but to comply. However, hemanufactured 12 other agenda issues, guaranteed to generate extensivediscussion, and put them ahead of Lopez's item.By the time Lopez's agenda item was reached, it was late in the eveningand some of the directors had already left. One of Kelly's cohorts on theboard proposed deferring discussionnext meeting "because of its obvious importance to all of us." Lopez hadlittle choice but to concur. After the meeting, several board membersexpressed support for Lopez's position and shared their own impatiencewith Kelly's stalling tactics.the CEO's performance until theHowever, when Lopez received the agenda for the August meeting, shewas surprised to see several items still ahead of her requested discussion.Fortunately for her cause-although not so fortunately for the company-2days before the meeting, Kelly was bound over to a grand jury on a fraudcharge. With the board shaken by that event and some other suspicions ofhigh-level fraud, Lopez was able to convince the directors to appoint anonexecutive chairperson. Kelly remained as CEO pending the outcome ofthe grand jury's deliberations. Meanwhile, the board instructed the auditcommittee to conduct its own investigations into possible fraud and toreport to the October meeting.Thought Questions:I. What are the conflicting incentives that Jay Kelly was facing (e.g.,shareholder incentives vs. management incentives)?2. What are some things that the board could have done to moreeffectively address the issues brought up by Linda Lopez and theother independent board member?

In the accompanying contextual investigation including Burrin Organization, we dive into the…

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Understanding Business

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1. What are the conflicting incentives that Jay Kelly was facing (e.g., shareholder incentives vs. management incentives)? 2. What are some things that the board could have done to more effectively address the issues brought up by Linda Lopez and the other independent board member?