Million dollar AIG bonuses and CEO grillings on Capitol Hill make the headlines, but one root cause of the breakdown in corporate governance has gotten scant attention, and that’s the board of directors. Though responsible for both executive compensation and enterprise risk, this group has yet to bear the brunt of public outrage.
The AFL-CIO, AFSCME and the Treasurer of the State of Connecticut are now trying to stir some up. On March 31, the trio of investors sent a joint letter to Jill M. Considine, Chester B. Feldberg and Douglas L. Foshee, trustees of the government’s $85 billion stake in the insurer, asking them to withhold support for the AIG director James Orr III at AIG’s upcoming annual meeting. Orr is a long-serving member of AIG’s compensation committee.
“It is incumbent on you to send a very clear message that the decisions made by the committee were wrong and an inexcusable misuse of corporate assets,” they write. They also want the government to disclose its vote publically.
If the AFL-CIO actually succeeds in getting Mr. Orr off the board, it will be a rarity. New York data-tracker Liberum Research reports that director turnover was down 37% in February.
That’s frustrating to investor activist Nell Minow of the Corporate Library. “It’s unbelievable to me that these people are still sitting on these boards,” she says. To Minow, excessive executive compensation is just the symptom, “bad boards are the disease.”
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