Beating Up On Boards

Being on the board of large publicly held company once was nice and easy. The pay was generous, the responsibilities few, and good old-fashioned cronyism was rampant.

No longer. Like the CEOs who, technically, serve at their will, board members are increasingly being scrutinized for their performance. There’s some literature on this; nothing I’ve just said is new. Here’s what is new.

First, the regularity with which boards’ wings are being clipped. Hardly a week now goes by without one or another story about the rights and responsibilities of board members being impinged on. In recent days there was this, from a story in the Wall Street Journal:

American businesses increasingly are bowing to investors’ demands for greater boardroom clout… Proxy access, embraced by 117 U.S. companies during 2015, gives shareholders more power to oust directors and influence corporate strategy by letting them list competing board candidates on ballots for annual meetings.

And, in recent days there was this, from another story in the Wall Street Journal:

As directors face increased investor scrutiny and heavier workloads, four board seats now look like a lot. More companies are putting in place rules that limit how many other seats their directors can hold. Only 5 % of directors at S&P 500 companies held four or more board spots in 2015, down from about 27% in 2005…. Directors at public companies now spend an average of 248 hours a year for each board served, up from 191 hours in 2005.

The other thing that’s new is the degree to which Wall Street particularly and Big Business generally have become whipping boys in the 2016 presidential campaign. Democrats Hillary Clinton and Bernie Sanders are stepping all over each other to prove they can attack faster and harder.

But there is an irony here. For in their zeal to appear “progressive,” Clinton and Sanders ignore the fact that things have changed.  To be sure, members of the corporate elite remain enormously rich. But their wealth disguises the fact that their power has been sharply reduced.

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