There's nothing quite like having friends in high places. Just ask former Citigroup (NYSE: C) CEO Charles Prince, former Zale (NYSE: ZLC) CEO Mary Burton, former Freddie Mac head Richard Syron, and former Office Depot (NYSE: ODP) CEO Steve Odland. What do these bigwigs have in common? All four were pushed or embarrassed out of the organizations they led. And as a recent Wall Street Journal article pointed out, each stayed on as a director -- essentially one of the CEO's bosses -- at another well-known company.

Board seats are plum part-time jobs that typically come with plush pay and perks. It's great work -- if you can get it. Getting it has traditionally been all about your network. And once you're in the club, it seems that almost nothing you do will get you thrown out. 

Friendly back-scratching is pervasive in the business world. But when failed CEOs retain lucrative, powerful director seats, investors should question the boards that keep them. Who are these boards looking out for, anyway -- the shareholders or themselves?

What were these boards thinking?
Even after leading Citigroup to the brink of catastrophe, Charles Prince retained a seat on the board of Johnson & Johnson (NYSE: JNJ). On his watch, the company that was hailed as a "hero" for the way it handled the 1982 Tylenol recall has been accused of blundering and cover-ups in countless recent recalls.

Mary Burton quit Zale after the retailer lost market share and missed earnings expectations, but remained on the board of challenged office supply retailer Staples (Nasdaq: SPLS). According Staples, she brings "extensive executive level experience within the retail industry." Why doesn't Staples get someone whose experience includes a successful track record?  

Richard Syron, ousted from Freddie Mac as part of the government's 2008 takeover, nonetheless retained a lucrative seat on Genzyme's board. He may face a civil action from the Securities and Exchange Commission for not properly disclosing Freddie Mac's exposure to subprime loans. Steve Odland left Office Depot last year after agreeing to pay a $50,000 fine for allegedly violating SEC regulations, but retained his seat on General Mills' board. Whatever happened to avoiding even the appearance of wrongdoing? And if you can't trust the board, can you trust the management it oversees?

Hooray for AMD
In contrast, Advanced Micro Devices' (NYSE: AMD) board demonstrated integrity and sound judgment after onetime board member David Edmondson left his CEO position at RadioShack (NYSE: RSH) under fire for puffing up his education background. Edmondson offered to resign from AMD's board -- many boards have a policy requiring that a member offer to resign if his or her professional status changes -- and the board accepted.

Foolish takeaway
It's hard to find good help these days. In evaluating company management, don't forget to consider board members' track records and integrity.

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