While contemplating the strange mess that Hewlett-Packard's board of directors has gotten itself into, one of my FORTUNE colleagues asked last week, "Why do companies have boards of directors, anyway?"
Why indeed? I did a little checking (starting with the strenuous act of going to SSRN and searching on "corporate board history"), and discovered that legal scholars have been asking themselves the same question for a while now, and struggling to come up with a convincing answer.
The problem is that the historical purposes for which boards evolved no longer apply, and the task they are now expected to fill--that of vigilant monitors of CEO pay and performance--is one for which they are ill-suited. So why don't we abolish the institution? Perhaps because the two main alternatives just seem so weird. More on that later. But first, a little history.
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