Bob Monks speaks on Kozlowski's bid to get out of prison

Bob recently spoke at the University of Delaware on the lessons of the Tyco scandal. Bob (with Nell Minow) has written extensively on the case in the textbook, Corporate Governance. He points to the joint chairman/ceo position and the resulting lack of executive oversight as a major factor in the case. In summarizing the message of his recent speech, Bob writes,


Dennis Kozlowski has filed a writ of Habeas Corpus, requiring the State of New York to justify his continued imprisonment. He has alleged that he has wrongfully been denied access to the formal statements of Tyco directors regarding compensation filed prior to his indictment. I was a director of Tyco for nine years, albeit it some five years previous to the matters in contest, and I have written in my textbook CORPORATE GOVERNANCE, all four editions, my dissatisfaction with the functioning of the Tyco board particularly with reference to compensation. This had to do with faulty procedures and record keeping. Based on my experience, Dennis was entitled to have the statements of the individuals directors presented to the jury. Otherwise, he was denied a fair trial and his Habeas Corpus petition should be granted.

Bob Monks to speak to Shareholder Activism Class at Harvard Law School

Bob will be visiting Harvard next week to speak to Professor Lucian Bebchuk's class. This is a class on shareholder activism and is offered through the Program on Corporate Governance at Harvard Law School. Read Bob's speech.

Minow says Feinberg cuts are appropriate

Have you seen the Nell Minow interview on Bloomberg? She and John Cornell discuss Ken Feinberg's executive compensation plan. See it here.

And, like everyone else, Bob has been following all of the regulatory restructuring and lobby influence in Washington, along with the Financial Crisis Inquiry Commission. The stream of news is never ending but here are just a few things from Bob's recent reading.

Commission Impossible. Eliot Spitzer looks at the Angelides Commission.

Speculation Economy: How Finance Triumped Over Industry. By Lawrence E. Mitchell, 2008.

Wall Street Steps up Political Donations. Corporate influence continues... from the WSJ.

Solving "Too Big to Fail." From the Wall Street Journal today.

Too Big To Save: How to Fix the U.S. Financial System. By Robert Pozen and coming out November 9.

Same old news...

We're working on Bob's archives here and organizing material from over thirty years of his career. All kinds of interesting things are surfacing but this 1992 article from Time magazine really stuck out today since executive pay is very much in the news. Bob commented in the piece saying,

"Pay masks a much bigger problem," says Robert Monks. "The real problem is the lack of accountability. CEOs are today's absolute monarchs and their boards are the House of Lords, and they feel they can thumb their noses at us ...without fear of being held accountable."

And here we are still talking about over-the-top compensation (WSJ article today). The entire Time article is online here.

In the news

A couple of interesting new items out there that mention Bob.

An article in Corporate Board Member by Steven Flax about Shad Roe and efforts to enforce accountability and counter oversize compensation. Bob is mentioned along with other members of Investors for Director Accountability.

Robert Shapiro has a piece about Goldman Sachs on his blog, The Point. In "Who Will Really Pay For Goldman Sachs' $23 Billion in New Bonuses?" he zeroes in on pay issues that are very much in the news these days. He also mention the New Yorker article on pay that features Nell Minow.

And speaking of Nell, she had an article in a recent edition of the Financial Times called, "Impresarios on the board are a bad sign."

Behave Like an Owner

Bob just finished an essay in response to Sir David Walker's report, A Review of Corporate Governance in UK Banks and other Financial Industry Entities (July 16, 2009 read it here). Responding specifically to chapter 5 -- The Role of Institutional Shareholders: Communication and Engagement -- Bob addresses the issues of ownership by both private and institutional shareholders, and offers his views on how to improve owner participation and director accountability. The introduction is below and you can read the entire essay here.



“What is wrong with the British and American system is that far too many shareholders, both institutional and individual, do not behave like owners.” --The Economist, May 5, 1990.



How far have we moved, if at all, from this state described by Rupert Pennant-Rea twenty years ago? The Treasury Committee suggests there has been inadequate progress, if indeed there has been any. The Walker Report addresses the policy considerations underlying institutional responsibility which he styles “stewardship”. The potentially highly influential position of significant holders of stock in listed companies is a major ingredient in the market-base capitalist system. It needs to be accorded an at least implicit social legitimacy. As counterpart to the obligation of the board to the shareholders, this implicit legitimacy can be acquired by at least the larger fund manager through assumption of a reciprocal obligation. This obligation should in particular involve attentiveness to the performance of the investee companies over a long as well as a short term horizon. On this view, those who have significant rights of ownership which enjoy the very material advantage of limited liability should see these as completed by a duty of stewardship. “ (emphasis added) “To Shareholders in a typical public company in America or Britain – call it Anglo-Saxon Inc – a share is now little more than a betting slip. It is bought at what a shareholder thinks are good odds, to provide winnings that he hopes will be large. The notion that he owns part of Anglo-Saxon Inc makes as much sense to him as it would the average gambler to imagine that he owns part of Lucky Lady, running in the 2:30 tomorrow afternoon.”

Bob is back from The Corporate Library's "Future of Corporate Reform" conference in San Diego. The conference featured an interesting list of speakers including Bill Clinton, Ben Stein, and Bebchuk.

Bob opened the conference with a speech that builds on his most recent work. A short excerpt is below but you can read the entire speech.



Since the creation by the Court – not by the Congress, not by the President – of “Corporate Speech” in 1978 (Bellotti) the number of lobbyists and the amount of campaign expenditures have each increased ten times. Justice Powell in Bellotti “invented” something called
“corporate speech” and bestowed on it the first amendment sanctity that the founders of this country recited as emanating from the Almighty. How about fire hydrant speech. Computer speech....[Corporations] are plainly not included in “of the people, by the people and for the people”.

Supreme Court rehears Citizens United v. FEC today

Here's the latest media coverage of the case. More to come....

Do companies have the right to free speech? From The Economist today & quoting from Bob's essay with Peter Murray.

Kai Ryssdal reports on the story for Marketplace radio.

An opinion piece from yesterday's New York Times.

A link to a live chat about the case and a digest of the recent articles on the issue from Common Dreams.