June 9, 2011
A Good Gig If You Can Get It.
Over at DealBook, Steven Davidoff declares that while there is much wailing and gnashing of teeth about "excessive" regulation--when it comes to director and officer liability, "the truth is that they have about the same chance of being held liable for their poor management of a public firm as they have of being struck by lightning." Davidoff goes on to note that, "[e]ven if there is liability or a settlement, it is almost always covered by insurance of directors and officers."
Add to the limited risk of personal liability the fact that it is at times seemingly impossible to get oneself fired as a director (See the WSJ here: "A surprising number of embattled CEOs, forced out for poor performance or legal problems, find a warm reception from outside corporate boards on which they sit."), as well as what at least some see as very limited board accountability to shareholders, and it should not come as a surprise that some see a corporate management culture where "CEOs and Boards Enrich Themselves While Bankrupting America." (The WSJ story reports that, "The median direct compensation for directors at the top 200 companies on the Standard & Poor's 500 is $228,058." Given that most of these directors in fact run other companies, as well as sit on other boards, the hourly rate here is probably pretty good.)