For years, when he wasn’t in a boardroom you could find Thomas O. Ryder at a barbecue. Indeed, he was actually a go-to judge at top competitions across the United States.
Still, no matter how many ribs and sauces he has judged, Ryder, 75, is best known for being a sought-after voice in corporate America. The one-time CEO and chairman of the Reader’s Digest Association has served on 11 boards in the last 20 years, including stints for Quad/Graphics, Virgin Mobile USA, and Starwood Hotels and Resorts. He’s currently one of the longest-serving board directors for Amazon, as well as the chair of the board’s audit committee.
Ryder got his first taste of board work as a top executive at American Express. As head of the company’s Travel Services unit, he was a director for AMEX’s international bank and one of the company’s investments, Club Med. Board meetings for the resort were held in French or Italian. “I ate well in both languages but didn’t speak either,” he deadpans. “They respected me for the way I ate but not much else.” We questioned Ryder about what new directors need to know, what the future holds for boards, and how he thinks many CEOs are overpaid.
How did you become a director at Starwood and then Amazon?
The day after I became the CEO of Reader’s Digest in 1998, requests to be on boards started coming in. Starwood [where Ryder served from 2001 to 2017] was a natural for me, with my food and travel background, and Amazon [whose board he joined in 2002] was, well, probably the luckiest thing I’ve ever been a part of. At the time, Amazon had less than $2 billion in sales, the internet bubble had burst, and there were a lot of questions about whether the company would survive or not. This was a real pioneer, and it was clear to me that the internet was going to completely change the publishing business.
What are the things new directors coming on boards need to know?
You have maybe four board meetings a year, plus four committee meetings. That’s not enough. You have to do your homework, read as much as you can, and between meetings seek out members of the management team to understand their parts of the business. It takes about two years to get up to speed and make a real contribution.
Well-run companies have a good onboarding process, but I’ve never seen a company where there was someone whose job it was to make sure directors got connected. So directors have to take that initiative. But there is a fine line between learning about the company and being too intrusive. You have to be careful.
What is the biggest risk for directors?
Boards get in trouble when they are not allowed, by process or fiat, to extensively discuss an issue. I know boards that are presented to, not listened to. That goes on. Those are not boards I want to be on. Most directors should avoid them at all costs.
What hot-button issue will directors be contending with in the near future?
I think the public and politicians are right to be concerned about the disparity between CEO pay and worker pay. I think many CEOs are vastly overpaid, and boards have an obligation to be much smarter about that. They haven’t done a good job.
But isn’t Amazon’s Jeff Bezos one of the world’s richest CEOs?
I’m proud of Amazon. Jeff Bezos makes $82,000 a year, plus an allowance for personal security. He founded Amazon, sold off shares to fund the business, and the shares he has remaining are now worth a lot of money. The first interview I had with Jeff we talked about compensation, because even then I thought CEOs were overpaid. Jeff said, “I’ve got enough. I never want my compensation to be an issue. I want to make decisions about the good of the company, without any suggestion that my own interest is involved.” Generally, Amazon pays low salaries and gives restricted shares, and that has worked very well over time.