Directors Who Got a "C" for Board-Meeting Attendance
from
May/June 2007
by Mike Scott
The board members identified on these pages are all truants, or have been in the recent past. According to the 2006 proxies filed by their companies, they failed to show up at 25% or more of their board meetings the previous year—in person, by video hookup, or even over the phone. In high school or college, such poor attendance would get you a C.
Some 405 directors qualify for this grade, says the Corporate Library, a governance watchdog, which searched its database of 3,200 public companies to identify them. The data—based on the most recent proxies available, including a few from 2005—exclude attendance at committee meetings, though company proxies must also disclose that.
At least six directors were truants from more than one board. Among them was Ronald W. Burkle, managing partner at Yucaipa Cos., a Los Angeles outfit that invests in supermarkets and grocery stores. He missed at least 25% of the board meetings at both Occidental Petroleum and KB Home, which does residential construction.
Corporate Board Member
asked the companies identified below to comment on their directors’ truancy. Some cited illness or scheduling conflicts. Others declined comment.
In at least one case, truancy seemed only fair. For Carlos Ghosn, a director of Alcoa, 2005 was the year in which he doubled up on the number of day jobs he holds. He started with one, as the Tokyo-based CEO of Nissan Motor, which by itself is enough to keep anybody busy. In May of that year he also became CEO of Renault, a French automaker that has a big Nissan stake. The two hats gave Ghosn a hefty commute that saw him spending 10 days a month in Paris, 10 days in Tokyo, and the remaining time visiting various other places around the world, including Nashville. That schedule notwithstanding, he clearly hit his stride last year, when, says an Alcoa spokesperson, his attendance—in person, by phone, or by videoconference—was back to better than 75%. In March Ghosn gave up his North American responsibilities at Nissan, however, which could well reduce his in-person board attendance at Alcoa.
It may seem that 405 truants out of some 22,500 directors in the Corporate Library database is a negligible number. Indeed, it’s down significantly over the past 10 years, says Patrick McGurn, vice president of Institutional Shareholder Services, a proxy advisory firm. Nell Minow, editor of the Corporate Library, suggests that directors are better able to honor their commitments because many are reducing the number of boards they serve on. McGurn sees other motivations. “There is increased liability for directors personally,” he says, “and a great deal of negative media attention.”
Reformers and investors look carefully at boardmeeting attendance. “We have been making recommendations to withhold votes against directors with high truancy rates,” says McGurn. Directors who attracted “withhold” recommendations at last year’s annual meetings included Stanford University fellow Michael A. Armacost, 69, who was up for reelection at insurer AFLAC; Diane C. Creel, 58, chair and CEO of Ecovation Inc., a company that sells wastewater-management systems, who was running for reelection at Goodrich Corp.; and William B. Turner Jr., 58, president of metal manufacturer and real estate company W.C. Bradley, who was seeking reelection at Synovus Financial. Armacost and Turner won reelection with majorities that drowned the number of withheld votes. Not so Creel. She was reelected, but got just 55.9 million votes against 54.2 million withheld.
Directors with that many unhappy shareholders should beware. One big current corporate governance issue is the reformers’ push for majority voting. Several companies have already adopted rules that require directors who capture less than 50% of the votes to step down. In the future, absenteeism could well cost a board member his or her seat. So be there.
Here's a sampling of directors who played truant, the companies where they missed 25% or more of their board meetings, and what (if anything) each company had to say about their absence.
RONALD W. BURKLE
,
54
Co-Founder and Managing Partner, Yucaipa Cos., Los Angeles
KB Home , Occidental Petroleum He missed meetings at both companies; neither responded to requests for comment. A Burkle spokesperson said, “He had personal issues he was dealing with. If you look at his attendance over a 10-year period, he has stellar attendance.”
H. LAURANCE FULLER
,
68
Retired Co-Chairman, BP Amoco PLC, London
Motorola “We view his 71% attendance rate as a unique anomaly. In fact, his attendance rate has typically been above 90%. The company views Mr. Fuller as an excellent director and does not believe this attendance anomaly is a reflection of a lack of commitment.” —Company spokesperson
CARLOS GHOSN
,
53
CEO, Nissan Motor Co., Tokyo; CEO, Renault SA, Paris
Alcoa “Mr. Ghosn advised the board that his attendance in 2005 would likely not meet the 75% standard [because he was also taking on the Renault job]. The directors determined that Mr. Ghosn’s continued participation on the board was extremely beneficial and that a lower attendance rate would be accommodated.” —Alcoa’s 2006 proxy
MARTHA R. INGRAM
,
71
Chairman, Ingram Industries Inc., Nashville
Weyerhaeuser “While Martha did not attend all the meetings, she participated fully on the board and put in additional time on board work.” —Company spokesperson
ANDREA JUNG
,
48
Chairman and CEO, Avon Products, New York City
General Electric “Andrea Jung missed three board meetings out of 12: two teleconferences that were scheduled without advance notice, which caused a conflict with her prior schedule, and one in-person meeting, due to illness. The absence of any individual board member at a particular meeting does not disrupt the function of the board. That is the benefit of having such an experienced and strong board.” —Company spokesperson
WILLIAM G. JURGENSEN
,
54
CEO, Nationwide Financial Services, Columbus, Ohio
ConAgra Foods The company did not respond to requests for comment. Jurgensen could not be reached.
FREDERICK A. KREHBIEL
,
65
Co-Chairman, Molex Inc., Lisle, Illinois
Tellabs “There were schedule conflicts between Tellabs and Molex. Fred was available to the chairman and other directors as needed.” —Company spokesperson
C. K. PRAHALAD
,
64
Professor of Corporate Strategy, University of Michigan, Ann Arbor
NCR Corp. “Dr. Prahalad is a longstanding and dedicated board member who has made outstanding contributions to the company and its board. His absences did not affect the board’s ability to obtain any required votes.” —Company spokesperson
JOHN R. STAFFORD
,
68
Retired Chairman and CEO, Wyeth, Madison, New Jersey
Honeywell International “Mr. Stafford devoted significant time to participating in sessions with other committee members and management in preparation for managementdevelopment and compensation committee meetings.” —Company spokesperson
JOHN R. THOMPSON JR.
,
65
Coach Emeritus, Georgetown University, Washington, D.C.
Nike The company did not respond to requests for comment. Thompson could not be reached.
JONATHAN P. WARD
,
52
Managing Director of Investment Banking, Lazard Frères & Co.
Sara Lee “Jon Ward missed two committee meetings and one board meeting in June 2006 that occurred during a two-day period. He had informed his fellow directors that he would miss those meetings in advance.” —Company spokesperson
JOHN W. THOMPSON
,
57
Chairman and CEO, Symantec Corp., Cupertino, CA
Seagate Technology The company did not respond to requests for comment. Thompson could not be reached.
