“Here’s a conversation you’ll never hear” says Frederick E. Rowe, president of Investors for Director Accountability, a nonprofit shareholder advocacy group: “Yes, I get paid $475,000 a year. I play golf with the C.E.O.; he’s a personal friend. I go to interesting places for board meetings, I am around interesting people, and I would never say one word that would jeopardize my position on the board.” And you won’t hear it unless you’re in the clubhouse with the CEO and the director. The White House and the SEC are making noise about change, but Wall Street lobbyists are watering the drinks. Less has probably changed since the recent Wall Street meltdown than after the Enron and mutual fund scandals in 2002-2004. (More)
Although their liabilities, governance, oversight responsibilities and their workload increased since the 2002-2004 scandals, many critics say directors are still little more than window dressing, lacking real independence, controlled indirectly by the fund company’s owners, managers and insiders who have no fiduciary obligations to the real owners, that is, to the investors who entrust funds with $10 trillion of their hard-earned money.
Nevertheless, fund owners still indirectly control the selection of directors, monitor access to inside information, and can, therefore, directly or indirectly manipulate decisions in favor of management and owners rather then the shareholders whose money they manage. They’re not quite rubber-stamping puppets, but quite close. And why not, directors average $250,000 annually for part-time work, a small price to look the other way and vote for the insiders. Their workload and responsibilities have increased in recent years, but they’re slowly reverting to “business as usual.” (More)