Larry Prince retired as the CEO of Genuine Parts Co. eight years ago. He hasn’t been a member of the company’s board since he turned 72.
But Prince, who is a month shy of his 74th birthday, still knows exactly what is happening with the company he used to run. So do a dozen other former executives and board members, even though in some cases it’s been decades since they last received a Genuine Parts paycheck.
Four times a year, the retirees meet. They listen to presentations from current executives, and they grill them on the rationale behind potential acquisitions. They offer advice, and they dole out encouragement.
While about 9 percent of Fortune 500 companies have emeritus — or retired — directors who stay involved with their companies in various ways, the involvement of former Genuine Parts executives goes further than most, said Dan Dalton, director of the Institute for Corporate Governance at the Kelley School of Business at Indiana University.
“I’ve never heard of such a thing,” he said of the group of retirees, which Genuine Parts refers to as an emeritus board. “To the best of my knowledge, it is without precedent.”
For the Atlanta-based automobile replacement parts company, keeping in such close contact with former leaders is simply an extension of the way it does business, Prince said. The 84-year-old company has had just four CEOs. The two former CEOs who are still living — Prince and 93-year-old Wilton Looney — are on the emeritus board.
“It fits our culture to do something like that,” Prince said of the continued involvement of the retirees. “We like long-term relationships. Folks come and stay.”
The emeritus board started 30 or 40 years ago, when a mandatory retirement age meant Genuine Parts was about to lose a slew of leaders who were valued at the company, Prince said. It was modeled after an advisory board at a bank that later became SunTrust, and its existence allowed Genuine Parts to continue relationships with large shareholders and well-connected Atlantans who were prominent in the community.
Bestowing the emeritus title on an executive or director is a good way to maintain access to previous leaders, said Paul Lapides, director of the Corporate Governance Center at Kennesaw State University. Because such people are intimately familiar with a company, they are steeped in knowledge about what has worked and what has not.
After all, Lapides said, the point of boards is to have access to wisdom. Keeping people involved in the company after their retirement simply increases the knowledge base. Genuine Parts directors are not paid once they reach emeritus status, and Lapides said the retirees may be more comfortable questioning the decisions of current leaders.
“What have they got to lose?” he said. “Generally, friends tell you stuff that others don’t want to tell you.”
Genuine Parts’ current CEO, Thomas Gallagher, said he hears from former executives and board members on a fairly regular basis. They call when they’re thinking about an aspect of the business, he said, and ask questions when the company plans an acquisition. Gallagher called their continued commitment — which is optional for directors — “unbelievable.”
“When they sit down at the board table, they’re acting as if they’re still active directors, which is great,” he said. “We deal with the emeriti group the same way we deal with the board. The only difference is they no longer have a vote.”
The meetings are part company update, part reunion, the executives said. And Gallagher said he values the arrangement, which gives him access to more institutional knowledge than would ordinarily be the case. But just because the directors have retired, Prince said, doesn’t mean they’re thinking only about the past.
“It’s not all history with these guys. We’re contemporary thinkers,” he said. “We’re not just a bunch of old guys out to pasture.”
Still, Prince said, he and other former executives understand that Gallagher and other leaders no longer have to take their suggestions. Most of the time, Gallagher said, the advice the former leaders offer is good. Their encouragement is appreciated.
While Dalton said it is often difficult for executives to have their predecessors involved in the business, Gallagher said it has not been a problem for the company. Unlike many other businesses, he said, there are few politics at Genuine Parts.
“I just know it works for us,” he said of the emeritus board. “I think it’s a real resource. I hope my successor feels the same way.”
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