A celebrity board director is an officer with significant influence in the company's governance decision-making process and who possesses one or more celebrity traits including credibility, goodwill, rights, image, influence

Social influence

Social influence occurs when an individual's thoughts, feelings or actions are affected by other people. Social influence takes many forms and can be seen in conformity, socialization, peer pressure, obedience, leadership, persuasion, sales, and marketing...

, liability, and standard of value. A director's leadership and decision making affects the governance and wealth maximization of shareholders’ wealth.




A question remains whether the perception of a celebrity board director is a universal phenomenon or specific to boards within the United States. A definition for celebrity is a famous person or a person who is widely known in society and business who commands a degree of public and media attention.




The phenomenon of celebrity

Celebrity

A celebrity, also referred to as a celeb in popular culture, is a person who has a prominent profile and commands a great degree of public fascination and influence in day-to-day media...

 that indicates celebrity requires not only fame but also fame with an evident monetary value.


In the case of a celebrity board director and corporate governance practice, the shareholders’ wealth

Wealth

Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...

 potential is at stake. Effective corporate governance requires leadership in addition to influence. Many U.S. companies have long stocked the company’s board with a number of influential directors (see Table 1). A company’s leadership expects the celebrity component of a celebrity director to bring perceived value, press, and investor interest.

Celebrity	Organization
Kim Alexis Kim Alexis Kim Alexis is an American model and actress.- Career :Alexis was one of the top models of the 1980s, identified along with Gia Carangi, Carol Alt, Christie Brinkley, Kelly Emberg, Iman, and Paulina Porizkova...	Drugstore.com
Neil Armstrong Neil Armstrong Neil Alden Armstrong is an American former astronaut, test pilot, aerospace engineer, university professor, United States Naval Aviator, and the first person to set foot upon the Moon....	USX
Dick Cheney Dick Cheney Richard Bruce "Dick" Cheney served as the 46th Vice President of the United States , under George W. Bush....	Halliburton Inc
Al Haig Al Haig Alan Warren Haig was an American jazz pianist, best known as one of the pioneers of bebop.Haig was born in Newark, New Jersey...	America Online
Steven Jobs	Walt Disney Company
Michael Jordan Michael Jordan Michael Jeffrey Jordan is a former American professional basketball player, active entrepreneur, and majority owner of the Charlotte Bobcats...	Oakley Inc.
Henry Kissinger Henry Kissinger Heinz Alfred "Henry" Kissinger is a German-born American academic, political scientist, diplomat, and businessman. He is a recipient of the Nobel Peace Prize. He served as National Security Advisor and later concurrently as Secretary of State in the administrations of Presidents Richard Nixon and...	Revlon Group, American Express Company, Union Pacific Corporation, R. H. Macy and Company
Sidney Poitier Sidney Poitier Sir Sidney Poitier, KBE is a Bahamian American actor, film director, author, and diplomat.In 1963, Poitier became the first black person to win an Academy Award for Best Actor for his role in Lilies of the Field...	Walt Disney Company
Colin Powell Colin Powell Colin Luther Powell is an American statesman and a retired four-star general in the United States Army. He was the 65th United States Secretary of State, serving under President George W. Bush from 2001 to 2005. He was the first African American to serve in that position. During his military...	AOL
Nancy Reagan Nancy Reagan Nancy Davis Reagan is the widow of former United States President Ronald Reagan and was First Lady of the United States from 1981 to 1989....	Revlon Group
Al Gore	Apple
Beverly Sills Beverly Sills Beverly Sills was an American operatic soprano whose peak career was between the 1950s and 1970s. In her prime she was the only real rival to Joan Sutherland as the leading bel canto stylist...	Time Warner
Samuel Skinner	Essential.com
Martha Stewart Martha Stewart Martha Stewart is an American business magnate, author, magazine publisher, and television personality. As founder of Martha Stewart Living Omnimedia, she has gained success through a variety of business ventures, encompassing publishing, broadcasting, and merchandising...	Drugstore.com

Table 1 - Notable Celebrity Board Directors




Celebrity Board Director or Not?

A number of important board member considerations relevant to considering whether or not a board director holds celebrity status, are celebrity

Celebrity

A celebrity, also referred to as a celeb in popular culture, is a person who has a prominent profile and commands a great degree of public fascination and influence in day-to-day media...

, credibility

Credibility

Credibility refers to the objective and subjective components of the believability of a source or message.Traditionally, modern, credibility has two key components: trustworthiness and expertise, which both have objective and subjective components. Trustworthiness is based more on subjective...

, goodwill

Social capital

Social capital is a sociological concept, which refers to connections within and between social networks. The concept of social capital highlights the value of social relations and the role of cooperation and confidence to get collective or economic results. The term social capital is frequently...

, rights

Rights

Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...

, standard of value, directorship, image

Image

An image is an artifact, for example a two-dimensional picture, that has a similar appearance to some subject—usually a physical object or a person.-Characteristics:...

, influence

Social influence

Social influence occurs when an individual's thoughts, feelings or actions are affected by other people. Social influence takes many forms and can be seen in conformity, socialization, peer pressure, obedience, leadership, persuasion, sales, and marketing...

, as well as celebrity liability

Legal liability

Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...

.

A celebrity is a famous person or a person who is widely known both in society and in the business community who commands a degree of public and media attention. A celebrity possesses one or more traits of the following traits: credibility, goodwill

Social capital

Social capital is a sociological concept, which refers to connections within and between social networks. The concept of social capital highlights the value of social relations and the role of cooperation and confidence to get collective or economic results. The term social capital is frequently...

, rights, image, influence, liabilities, and standard of value.

Celebrity credibility represents a situation in which an individual has been elevated to the level of a celebrity due to his or her degree of recognition and distinctive qualities.

Celebrity goodwill reflects a number of factors including age, health, past earning power, reputation, skill, comparative success, and length of time in business.

Celebrity rights represent a person with celebrity status and associated rights where specific, identifiable, and tangible assets or items of intellectual property relate to a person’s celebrity status.

Celebrity standard of value represents a measure of celebrity goodwill. Celebrity goodwill can be associated with a celebrity’s image and influence can be expressed through a celebrity’s endorsement, a celebrity’s credibility, or a celebrity’s goodwill.

Board Director is an officer with significant influence in a company’s governance decision making who is charged with impeccable credentials as an agent on behalf of the shareholders.

Celebrity Image, Celebrity Influence, and Celebrity Liability

A celebrity is an individual who represents symbolic icons popular in a culture and transfers his or her symbolic meaning to the product endorsements and services offered by a person with celebrity goodwill. A person with celebrity goodwill casts images that influence product images when the celebrity is associated with the product through product endorsements.

Likewise, a person with celebrity goodwill has been known both to possess the ability and to communicate distinctive bundles of various meanings or images, kinds of images or meanings. However, the root cause for the underlying causal effect of celebrity is unknown. A liability can be attributed to celebrity status to specific identifiable tangible assets or items of intellectual property. Celebrity liability takes the form of intrusion into personal affairs from publicity. For example, celebrity liability might occur if a celebrity director dines at a restaurant with his or her family and is overheard making comments about leadership problems at the company where he or she holds a board position.

Clearly defined in U.S. business law, a board is a corporation’s ultimate authority. A director is an officer with significant influence in the company’s governance decision making and who is charged with impeccable credentials as an agent on behalf of the shareholders.

Leadership

A person’s leadership

Leadership

Leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task". Other in-depth definitions of leadership have also emerged.-Theories:...

 skills associated with a directorship are essential for holding a governance position at a company. Leadership is the ability to influence, motivate, and enable others to contribute toward the effectiveness of the organizations of which they are members. Leadership and management are both stressful during times of economic downturns yet an opportunity for optimizing operations, and it is not necessary to be in a formal leadership position to exert leadership behavior. A director as leader must (a) involve the right people in the decision, at the right time, in the right way; (b) use a process that keeps people engaged and on track; (c) recognize the power of shared decision making; and (d) ask a series of key questions to avoid ineffective decision making.

Other Celebrity Board Director Characteristics

Other characteristics of a celebrity board director include ethical, solid business judgement, reliable agent, informed stakeholder, and effective stewardship. First, business ethics

Business ethics

Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.Business...

 is important not only to the overall effectiveness of corporate governance

Corporate governance

Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...

 in place at a company but also to the person who holds the director’s position because business ethics reflects the director’s judgment and decision-making abilities. Corporate failures such as Enron’s as well as economic conditions have resulted in increased regulation and legislation. Each member of the board must take his or her position on the board seriously and apply due diligence during the decision-making process. A lack of ethical judgment in the decision-making process can erode the governance and also possibly lead to poor stewardship on behalf of the stakeholder. The virtue ethics model supports corporate governance with the idea of creating the greatest good for the overall stakeholder collective Each board member must demonstrate trustworthiness and virtue as well as act in good faith as an agent on behalf of all company stakeholders.

Second, effective corporate governance

Corporate governance

Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...

 ability and legal compliance are intertwined, and each board member must be familiar with the legal consequence of his or her decision making as part of the company’s governance body. Two primary legal aspects of governance that a director must pay attention are the Sarbanes-Oxley Act

Sarbanes-Oxley Act

The Sarbanes–Oxley Act of 2002 , also known as the 'Public Company Accounting Reform and Investor Protection Act' and 'Corporate and Auditing Accountability and Responsibility Act' and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law enacted on July 30, 2002, which...

 and business judgment rule

Business judgment rule

The business judgment rule is a US case law-derived concept in corporations law whereby the "directors of a corporation . . . are clothed with [the] presumption, which the law accords to them, of being [motivated] in their conduct by a bona fide regard for the interests of the corporation whose...

. The Sarbanes-Oxley Act of 2002 addresses financial stewardship concerns by shareholders with a company’s leadership Like the Sarbanes-Oxley Act, the business judgment rule

Business judgment rule

The business judgment rule is a US case law-derived concept in corporations law whereby the "directors of a corporation . . . are clothed with [the] presumption, which the law accords to them, of being [motivated] in their conduct by a bona fide regard for the interests of the corporation whose...

 is useful when members of the board come under scrutiny from upset shareholders. The business judgment rule is a good faith effort to obtain information to avoid class-action lawsuits by shareholders.

Third, each member of the board must be familiar with the consequences of not acting in the best interest of the shareholders. Agency theory provides the framework for a board member’s behavior that aligns with effective corporate governance. In agency theory and corporate governance, self-interested directors appropriate value to themselves. The traditional perspective on corporate governance includes agency and stakeholder theories. When a leader is considering what constitutes shareholder value; the leader should also consider that in practice the value proposition might not hold up given the gap between the stakeholder expectation and the realities of fulfilling that expectation(p. 140).

Fourth, the stakeholder theory

Stakeholder theory

The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. It was originally detailed by R...

 is as important as agency theory. Each member of the board must be familiar with the consequences of his or her actions given the competing interest of both internal and external stakeholders with interests in the company. Without familiarity of stakeholder theory, the board member is less than prepared to contribute to an effective governance body. With stakeholder theory the existence of a complex bargaining process involves multiple interests. The multiple competing interests can be found at each level of management within a company, starting at the top with the board of directors. A stakeholder board may be less efficient at generating total benefits. The stakeholder theory defines different groups of interest represented by stakeholders where stakeholders have competing interests yet the desire for the same end, which is to receive some type of benefit.

Lastly, stewardship theory is another building block that provides a foundation for an effective governance body. In stewardship theory and corporate governance, directors maximize value for the company where the allocation of the board is by shareholders in agency theory and by managers in stewardship theory. According to stewardship theory applied to corporate governance, a director is an agent on behalf of the stakeholder. The director’s motivation essentially is to do a good job with managing corporate assets as a good steward.

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