Approximately 9 percent of net corporate profits went to the top five executives in major corporations in the ten years up to 2004 according to Harvard professor Lucian Bebchuk—twice what it was in the mid 1990s. All this was approved by boards.
Between 1980 and 2006 there were only thirteen cases in which outside directors had to settle shareholder lawsuits with their own money.
After "retiring" from Merrill Lynch as chairman and CEO in the wake of a $2.3 billion quarterly loss and and $8.4 billion writedown on failed investments, Stanley O'Neal left with a $161.5 million payout approved by the board. Within three months, O'Neal joined the board of Alcoa where he became a member of the audit committee, charged with overseeing the aluminum company's risk management and financial disclosure.
During August and September 2007, as Merrill Lynch was losing over $100 million a day, CEO and chairman Stanley O'Neal played at least twenty rounds of golf and lowered his handicap from 10.2 to 9.1.
Merrill Lynch's board audit committee chair told shareholders that the 40-fold increase in risky securities on the companies books over an 18-month period "did not come to the board's attention until late in the process."
Boards effectively nominate and re-nominate themselves. It is extremely difficult for outsiders to influence this process. One cannot vote "against" a director after he or she is nominated. One can only "withhold" votes. Thus, in theory, one vote for a director will outweigh a million withhold-votes. Almost every election has as many candidates as there are open positions.
Losses to shareholders from failed company leadership:
"I get good support from the board. We say, 'Here's what we're going to do and here's the time frame,' and they say, 'Let us know how it comes out.'"
The CEO, management, and directors can count the votes for directors or changes in company rules during the weeks that ballots are cast. No one else has this privilege. Thus, if a pro-shareholder measure is doing well, management can spend shareholder money to bring in additional votes to defeat it.
The Lehman Brothers' board's risk committee met only twice each year in the two years before the company's bankruptcy.
Directors are not obligated to obey shareholders' votes on most issues even if 100 percent of shareholders support a measure, if the company's bylaws permit it. It can be very difficult for shareholders to change bylaws.
The AIG civil case took five years just to get to the stage of not being summarily dismissed and involved over 114 attorneys from forty-three different firms, costing tens of millions, nearly all paid by shareholders (80 percent of whom are now US taxpayers).
Only 15.2% of large company directors are women.
The average CEO in 2007 was paid $275 for every dollar that was paid to a typical worker
American CEOs now earn 2.25 times the average for CEOs in other wealthy countries.
The SEC's Office of Risk Reduction had only one employee in 2007 and its enforcement division staff had been reduced by 146 people.
Hollinger International's shareholders paid:
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Between 1980 and 2006 there were only thirteen cases in which outside directors had to settle shareholder lawsuits with their own money.
After "retiring" from Merrill Lynch as chairman and CEO in the wake of a $2.3 billion quarterly loss and and $8.4 billion writedown on failed investments, Stanley O'Neal left with a $161.5 million payout approved by the board. Within three months, O'Neal joined the board of Alcoa where he became a member of the audit committee, charged with overseeing the aluminum company's risk management and financial disclosure.
During August and September 2007, as Merrill Lynch was losing over $100 million a day, CEO and chairman Stanley O'Neal played at least twenty rounds of golf and lowered his handicap from 10.2 to 9.1.
Merrill Lynch's board audit committee chair told shareholders that the 40-fold increase in risky securities on the companies books over an 18-month period "did not come to the board's attention until late in the process."
Boards effectively nominate and re-nominate themselves. It is extremely difficult for outsiders to influence this process. One cannot vote "against" a director after he or she is nominated. One can only "withhold" votes. Thus, in theory, one vote for a director will outweigh a million withhold-votes. Almost every election has as many candidates as there are open positions.
Losses to shareholders from failed company leadership:
- Merrill Lynch–over $60 billion
- General Motors–over $52 billion
- Lehman Brothers–over $45 billion
- Fannie Mae–over $90 billion
- Bear Stearns–over $20 billion
- Citigroup—over $200 billion
- Countrywide—over $22 billion
"I get good support from the board. We say, 'Here's what we're going to do and here's the time frame,' and they say, 'Let us know how it comes out.'"
― Former General Motors CEO and chairman Richard WagonerThe CEO, management, and directors can count the votes for directors or changes in company rules during the weeks that ballots are cast. No one else has this privilege. Thus, if a pro-shareholder measure is doing well, management can spend shareholder money to bring in additional votes to defeat it.
The Lehman Brothers' board's risk committee met only twice each year in the two years before the company's bankruptcy.
Directors are not obligated to obey shareholders' votes on most issues even if 100 percent of shareholders support a measure, if the company's bylaws permit it. It can be very difficult for shareholders to change bylaws.
The AIG civil case took five years just to get to the stage of not being summarily dismissed and involved over 114 attorneys from forty-three different firms, costing tens of millions, nearly all paid by shareholders (80 percent of whom are now US taxpayers).
Only 15.2% of large company directors are women.
The average CEO in 2007 was paid $275 for every dollar that was paid to a typical worker
—more than a twelve-fold increase in the ratio since 1973, according to the Economic Policy Institute.American CEOs now earn 2.25 times the average for CEOs in other wealthy countries.
The SEC's Office of Risk Reduction had only one employee in 2007 and its enforcement division staff had been reduced by 146 people.
Hollinger International's shareholders paid:
- $1.4 million for the CEO's personal residence staff,
- $90,000 to refurbish a Rolls Royce,
- $42,870 for the CEO's wife's birthday party (because some company directors attended),
- $24,950 for "summer drinks,"
- $24,480 for three dinners for Hollinger director Henry Kissinger and his wife,
- $8.9 million for a collection of Franklin Roosevelt memorabilia,
- $6.5 million for charitable donations that helped maintain the CEO and his wife's social standing and were made in their names rather than the company's.
Do you know of an outrage you'd like to share? Write to us.
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It's hard to imagine a more important or perfectly timed book than Money for Nothing. Kurt Andersen |