From The New Yorker:
When Citigroup and Bank of America held their annual meetings last month, shareholders were in an understandably surly mood. Even as the companies’ C.E.O.s apologized for past failures and vowed to do better, shareholders blasted the executives for their incompetence, and talked about the need for dramatic change. Yet, after all the venting and repenting was done, something weird happened: every member of each bank’s board of directors was reëlected to office. This may seem odd, but it was all too predictable. In the apportioning of blame for the financial crisis, corporate boards of directors have remained remarkably unscathed, even though they effectively approved the strategies that immolated so many companies.
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This doesn’t mean that we should go back to the bad old days of boards made up of cronies and old white guys. But changing the way boards look matters less than changing the way they act. Directors are still part-time employees—the typical board meets just eight times a year—so it’s hard for them to devote enough time to make a meaningful difference. And they’re paid both too much and, paradoxically, not enough: too much in the sense that a directorship is often a cushy gig, which no one wants to endanger by challenging the boss; not enough in that their compensation isn’t sufficient for them to be hurt if the company flounders. Directors still rely heavily on the C.E.O. for information, and do little independent digging.
The proposed solution?:
Investors need to be able to play a much bigger role in determining who ends up on boards, nominating candidates themselves, instead of choosing among the C.E.O.’s picks.
What about the workers?
