Arnold, Corporate Director

Esther Dyson, longtime IT maven, VC investor, board director, and cosmonaut in training, among the many impressive dimensions of her life, just posed an interesting question to her Facebook network: What should/will Arnold Schwarzenegger's next career be?

Some of the responses were on the level — "executive producer of various movies," "the international 'kick ass' guy on climate change and clean energy," and, citing his "great role" in "Kindergarten Cop," an FBer suggested, "Maybe a next gen of teacher, especially with young kids." Then there was this possibility: "Isn't his ultimate ambition to run for President?"

Of course Esther's query stimulated a few jokesters: "What was his last career? Bankrupting a state?" And this Conan-themed response: "Do we even have to ask? It will be to crush his enemies, to see them driven before him, and to hear the lamentation of their women."

I chimed in, too, with this suggestion: "How about a corporate director? Lots of possibilities — a media company, a defense contractor, even WWE." To which I added, "Then I get to interview him." I was only being somewhat playful, especially with the cite to World Wrestling Entertainment Inc., when I posted this to Esther's FB page.

But, actually, why not consider Arnold for a board seat?

Any other two-term governor of a major state — and remember that California's economy is the largest in the nation and the eighth-largest in the world — would get a serious lookover by board nominating committees and recruiters.

It was then, with a few curious clicks of the mouse, I discovered that there is, of all things, an opening on the board of WWE. Michael B. Solomon, a managing partner of Gladwyne Partners LLC, announced earlier this month (with no reason given) that he was stepping down from the board. The investor had been on the WWE board since 2001.

So, gentlemen and ladies of the WWE board nominating committee, start your engines!

And if Arnold does turn up in our Directors Roster as a newly elected board member somewhere in corporate America, I will indeed endeavor to line up an interview for a Directors & Boards article.

This is a bit of a fun blog post to kick off Thanksgiving week — a week that I hope finds the Directors & Boards audience in a thankful mood for having survived a year that brought us a plethora of new SEC rulings on governance disclosures and a year that also brought us Dodd-Frank. More than a few directors might well feel like asking: Where was The Terminator when we needed him!

The Real Volcker Rule

The Dodd-Frank Bill signed today by President Obama incorporates what most legislators and market participants would admit is a watered-down Volcker Rule — the former Federal Reserve chieftain's proposal on restricting proprietary trading by banks.

Bank CEOs are glad about that, but what they might really be glad about is that another Volcker Rule did not get written into the legislation: a mandate to separate the chairman and CEO positions at banks and financial institutions.

"My favorite idea on corporate governance is that I like the idea of separating the chairman and chief executive officer" Volcker told Directors & Boards lead columnist Hoffer Kaback when being interviewed for a cover story in the journal in 2000. Here is more of what he said:

"Chief executive officers like to be chairmen. There's no question about that. But, most specifically, when a company gets into trouble, and if there's some question about the CEO in terms of his tenure, responsibility, the need for new blood, or whatever, it's just much more difficult to make the change when you don't have an alternate source of leadership on the board other than the chief executive himself.

"A bank gets into trouble. As the bank regulator, you at least raise the question whether part of the trouble isn't the management. Who do you talk to without using a two by four? You look for some leadership in the bank to change policies or change direction, and board members say, 'That's not me. I don't have any responsibility. All I am is a poor board member. Go to the chairman.' Well, the chairman is the problem."

Volcker did not think much of the lead director as an alternate source of board leadership — "in a lot of situations it may be a second-best solution." The best option, one he liked both as a regulator as well as a director — he was at the time of the interview with the James Wolfensohn boutique investment bank and serving on several corporate boards — is separating the top roles.

His firm conclusion: Having "a [nonexecutive] chairman who can set the agenda for the board and stay in close contact with the chief executive, and be simpatico but nonetheless bring independent judgment that doesn't always come out very clearly in a board meeting because of the collegiality involved and the reluctance to speak out, is useful."

Bank chairmen-CEOs may feel they dodged a bullet on the Volcker Rule's intent to separate out their proprietary trading arms. Little do they know what kind of bullet they dodged had a Volcker Rule to separate their titles been embedded into the Dodd-Frank Bill.