M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Wednesday, July 1, 2009

SEC Considering New Director Rules

According to Bloomberg, the SEC commissioners will meet today to consider proposing "Armstrong celebrity" director rules.  The webcast of the meeting, set to start at 10AM (ET), is here.  More disclosure about director nominees and their qualifications is probably a good thing - especially as we move toward increased shareholder access to the proxy. 

However, I wonder how big a problem this really is.  The SEC has been gradually tigtening the screws on director nominations and qualifications.  SOX has placed added burdens on directors.  If you're a celebrity, why would you want the hassle?  

At the same time directorships appear to be a tight club -- take a look at the board of Apple if you don't believe me.  If you're not CEO of another large corporation or former VP, then you're probably not going to get on the Apple board, even if you are Lance Armstrong.  This does raise the question however, just how effective a monitor can one be if one is also CEO of a large company, like Avon.  I'm sure Ms. Jung is a very capable CEO, but she's also on the board of GE as well as that of Apple.    I wonder if the SEC might better spend their time thinking about limiting the number of board assignments that full-time CEOs take on.  The new CEO job is supposed to be all encompassing, isn't it?  How does that leave much time to monitor management and provide strategic advice to another company?  Not to mention two or more. It might be worth the SEC giving some consideration to Ron Gilson and Reinier Kraakman's proposal.

-bjmq

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