Monday, January 18, 2010

Boards of Directors on Wall Street

"IT sounds like good work if you can get it, and thousands of people in corporate America do. On average, they attend 8 to 12 meetings annually. Although they are supposed to have fiduciary obligations, they often appear simply to warm their assigned seats, and to raise their hands when their leader calls for a vote. For that, they can receive as much as $640,000 a year.

Who are these people? Company directors, who are typically handpicked from other companies, banks, academia and, in some cases, social directories.

But underworked, overpaid corporate boards are doing serious harm to the shareholders of public companies and the economy as a whole, according to “Money for Nothing: How the Failure of Corporate Boards Is Ruining American Business and Costing Us Trillions” (Free Press, $27), by John Gillespie and David Zweig"...

This sounds like a book I wish I had written for one of the first thoughts I had when the bubble burst taking down Wall Street firms and sucking billions out of taxpayers money was this: "The most guilty parties were the boards of directors to whom the CEO had to report to. Yet through the years of bubble creation and then bubble bursting, not one beep came from the boards admitting their own negligence.

One should remember the boards in theory represent the interest of the shareholders "out there". In fact, they knowingly and shamefully decided to remain in the good graces of the management who pay them, cuddle them with many corporate freebies.

The quote came from the New York Times Sunday Business section here.

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