I don’t think there is an intrinsic problem with having a senior manager on the board in a non-chairman role. Understanding the business is a necessity. Rather, the issue is the lack of broader stakeholders.

Most corporate charters don't allow their management in board positions as the purpose of the board is to oversee management. If one sits on a board of a company but manages another that experience is no more applicable than that of any other shareholder.

At the least, managers should be forced to recuse themselves when voting on salary or benefit packages and no manager of a hedge fund type company should occupy any board position. Their potential investment is likely to cause them to gain a majority of voting stock or proxies from investors that often aren't even aware of their holding.