Tuesday, June 9, 2009

My 'Gisele' Governance Indicator

May of 2009 — oh my, what a month in governance. Just take a glance at some of the headline stories this past month:

• Bank of America was good for a trifecta: Ken Lewis stripped of chairman's title; regulators urged a board revamp; and the lead director quit.
• SEC said it is considering changes to exec comp disclosure rules.
• The Target proxy battle came to head.
• Justice Department announced it will be cracking down on corporate bribery.
• GM hired a search firm to find new directors.
• AIG announced new board members, and that CEO Ed Liddy would be stepping down.
• Board ties at Apple and Google came under scrutiny.
• The Federal Reserve Bank of New York's governance under attack, with Fed Chairman Steve Friedman also serving as a director of Goldman Sachs raising conflict of interest questions.
• Senator Charles Schumer introduced his governance legislation in Congress.
• Three directors at Pulte Home failed to receive a majority vote.
• CalSTRS, the second-largest pension fund in the U.S., wrote to 300 companies which it has shares in to adopt 'say on pay.'
• And the SEC, in a 3 to 2 vote, put out a proposal for adoption of proxy access.

Could this be some kind of a peak in governance activity? Think "Gisele" for an answer.

Remember when supermodel Gisele Bundchen (pictured) got a lot of ink for wanting only to be paid in euros and not dollars? Granted, the dollar was skidding terribly at the time. Well, I thought to myself, that's probably a "ringing of the bell" for the low in the dollar. Sure enough, and shortly enough, the dollar rebounded.

We may have another Gisele-type indicator of a turn in the trend. Something that also happened in May not on the list above was that the New Yorker devoted a full-page to critiquing the performance of boards (granted, the issue was dated June 1 but released the week prior).

This may be a soft "bell ring." I'd feel a lot more comfortable in calling a peak in governance under fire if it was Sports Illustrated or Vogue or "Saturday Night Live" doing a take down on board performance. But when I see the New Yorker piling on, my thoughts drift to my Gisele indicator.

My prediction: It's all up from here for the remainder of the year for restoring the integrity of the corporate governance system.