Board Members of L.A.’s Top Companies Get Around
SPECIAL REPORT – Banking & Finance: Boards Under Fire What Do They Know?
By CONOR DOUGHERTY
Staff Reporter
It almost sounds like the setup to a bad joke: When might an actor, college professor, a priest, two former sports stars and the widow of a dead rock star sit in the same room?
That group, along with a host of corporate executives, all have seats on the boards of L.A.’s 20 largest public companies, as ranked by market capitalization.
Directors of L.A.’s largest companies hold an average of three board seats. How many is too many? That depends on who you ask, although shareholder gadflies suggest that too many directors are serving on too many boards.
“They don’t have enough time to do their job,” said Nell Minow editor of the Corporate Library, an information service about corporations and directors.
Directors of L.A. companies with the heaviest loads include former football great Willie Davis (Metro-Goldwyn-Mayer), Raymond Troubh (Health Net) and former Sen. George J. Mitchell (Disney).
All three happen to have seats on boards of troubled companies.
Mitchell, with 13 directorships, is on the board of Xerox Corp, accused by the Securities and Exchange Commission of misleading investors by manipulating earnings and enriching top executives.
Troubh has 12 seats, including one on the board of Enron Corp., which he joined in November, one month before the beleaguered energy trading company filed for Chapter 11 bankruptcy protection.
Davis serves on 11 boards, including Kmart Corp., which filed for Chapter 11 bankruptcy protection on Jan. 22. Last week the troubled retailer announced it was delaying its annual financial results and, due to questions concerning its accounting practices, warned of a significantly wider loss than the $244 million it reported for the fiscal year ended Jan. 31, 2001.
Staying focused
Despite the criticism, Davis said that sitting on numerous corporate boards is not as hard as it sounds.
“I’m one of those guys who has been written about several times, and invariably the words used are ‘stretched’ and over ‘committed,'” said Davis, president and chief executive of All-Pro Broadcasting Inc. “In truth, it’s not as awesome as it sounds. I can absolutely tell you that I prepare myself for every board meeting, and if I reach the point where I don’t feel comfortable, I’ll step down.”
Minow is in the process of compiling a new rating system that aims to evaluate corporate boards and ultimately individual directors. She was reluctant to give out individual ratings, but did offer comments about a few local boards.
On the positive side, Mattel Inc. received her “most improved player award,” mostly due to board changes brought under Chief Executive Robert Eckert.
Just before Eckert joined Mattel as chairman and chief executive in 2000, two directors joined the board: Eugene Beard, retired vice chairman of finance and operations at the Interpublic Group of Cos., and Ralph Whitworth, a principal at Relational Investors LLC in San Diego. Whitworth is known for shaking up corporate boards and in past positions had pushed for performance-based executive and board compensation measures.
Since Eckert’s arrival, Mattel has added two new directors: G. Craig Sullivan, chairman and chief executive of Clorox Co. (and a director of Levi Strauss & Co.) and Kathy Brittain White, executive vice president of e-business and chief information officer of Cardinal Health.
Mattel also has revised its compensation policy so that departing executives will be paid the severance specified in pre-approved employment contracts. The move came after former chief executive Jill Barad left the company with a $40 million “golden handshake” that prompted a shareholder lawsuit.
Meanwhile, the board of Walt Disney Co. long criticized for its lack of independent directors was characterized by Minow as “one of the worst boards in America,” primarily because directors have not been able to link Chief Executive Michael Eisner’s pay to his performance.
She also criticized past decisions Disney’s board has made in appointing independent directors. “Outside directors should control the nomination process,” she said. “So the CEO doesn’t put his kid’s teacher on the board.”
Big name clout
Corporate executives dominate the top local boards, but other connections can help gain a seat.
The most celebrity-packed board is probably Metro-Goldwyn-Mayer Inc., which along with Davis, a Hall of Famer who played for the Green Bay Packers, counts Priscilla Presley and Francis Ford Coppola among its members.
And while Disney has Sidney Poitier, entertainment companies don’t have a corner on the celebrity market. Countrywide Credit Industries has basketball Hall-of-Famer Oscar Robertson. Another Countrywide director is Henry Cisneros, former Secretary of Housing and Urban Development.
The political world is well represented. In addition to Mitchell, former Secretary of State Warren Christopher sits on the board of Edison International and former California Gov. George Deukmejian is on Health Net’s board.
Some chief executives do double duty, serving as directors of their companies as well as other local corporations. Northrop Grumman Corp.’s chairman and chief executive, Kent Kresa, is a member of the board of manufacturing firm Avery Dennison Corp. Kevin Sharer, chairman of Amgen Inc., is also on the board of Unocal Corp.
Edison International’s chief executive, John E. Bryson, also sits on Disney’s board.
Other high profile CEOs hold board seats by virtue of investment. Barry Diller, for instance, is co-chairman of the board of Ticketmaster. His USA Networks Inc. owns 53 percent of the company.
