Gretchen Morgenson, the New York Times’ well known business reporter has done it again. Sunday’s business section included a story by Morgenson entitled, What Iceberg? Just Glide to the Next Boardroom, in which she examined many of the board members that were pushed out of their positions after the financial crisis of 08′ and 09′ and how they managed to get new board positions elsewhere. One would assume this is exactly the kind of circumstance that would not occur but it did.
Three large public companies provide excellent examples. They are Sunoco, the oil company; Paccar Inc., a truck manufacturer; and Tetra Tech Inc., a management consulting and technical services concern. Each of these companies has two directors who, until recently, were on the boards of institutions that were centrally involved in the mortgage meltdown.
… The main reason for director dysfunction is that board members have little fear of being fired for incompetence or sleepwalking through meetings. Because of the way director elections are structured, board members can win their seats if they receive just one vote of support. And even if a majority of shareholders withholds support from directors at annual elections, the directors who are singled out are often allowed to stay.
Anyone interested in corporate governance must read the Morgenson story
