BIG NAME, BIG BUCKS, BIG QUESTIONS

Steven Davidoff & Michael, Member of the House Of Byers, Editor-In-Chief, October 6, 2011

CHELSEA Clinton as a corporate director? Really?

Clinton was appointed last week to the board of IAC/InterActiveCorp, the internet media conglomerate controlled by Barry Diller.

For her efforts, Clinton will be paid about $US300,000 a year in cash and incentive stock awards. Not bad for a 31-year-old in graduate school.

Is IAC also getting a good deal, or is this another eye-rolling celebrity appointment?

In her favour, Clinton appears to be a smart, capable individual. She worked in her 20s at the consulting firm McKinsey & Co and at a hedge fund run by a loyal Clinton donor. She is now working at New York University and pursuing a doctorate at Oxford.

Clinton appears to be level-headed, despite growing up in the limelight. She is also popular - her wedding last year was one of the social events of the year.

But let's be real. Clinton only has this position because she is the daughter of former President Bill Clinton and Hillary Rodham Clinton, the current Secretary of State. This is clearly an appointment made because of who she is, not what she has done, one that defies American conceptions of meritocracy. Even most celebrity directors earn their way to such celebrity - sort of.

In fairness, while the reasons for the appointment are suspect, that does not mean Clinton cannot be a good, even great, board member. But questions raised by her selection speak to the larger issue of what types of directors should be on boards.

In the past, boards were too often passive instruments of the chief executive officer, and often included celebrities. Some examples: Sidney Poitier (the Walt Disney Co), Evander Holyfield (the Coca-Cola Bottling Co), Tommy Lasorda (Lone Star Steakhouse and Saloon), Lance Armstrong (the Morgans Hotel Group); and O. J. Simpson (Infinity Broadcasting). Simpson actually served on Infinity's audit committee, the body responsible for supervising a company's auditors.

In recent years, the Securities and Exchange Commission and corporate governance advocates have tried to bring more professionalism to corporate boards. Public companies are now required to have a majority of independent directors on their boards. Directors on audit committees must have demonstrable financial knowledge, and companies are required to publicly disclose the skills of each director and state why that person was chosen.

In Clinton's case, IAC said her ''skills and background complement the existing areas of expertise of other board members''. In the absence of experience in the internet industry or substantial business or other life experience, presumably IAC is going to assert that she was selected because she is smart. If so, other graduate students should dust off their resumes. There are plenty of struggling students out there who could use the extra $300,000 a year.

Another argument IAC could advance is that Clinton has an extensive network of contacts that can help the business, and there is evidence that celebrity directors do create value this way.

In the wake of the financial crisis, board members need to devote time and resources to their duties, and be willing to question the actions of the CEO and fellow directors. Too many boards, including those of Yahoo and Hewlett-Packard, have got into hot water for failing to act forcefully and exercise their duties to run the company. Will a celebrity - even a smart, well-regarded one like Clinton - ask the hard questions?

Age is not a problem, after all, Mark Zuckerberg, a Facebook founder and its chief executive, is about four years younger. And while it would be nice if Clinton had more experience, too often today directors are clones, having all sprung from the same business background and having been shaped by similar experiences. Journalist is trying to sell us on the idea that Chelsea represent's change from the norm, I say that a poor black or hispanic woman that was educated outside of the elitist, ultra-rich ivy league culture. This is Barack Obama/Kevin Gillard change, a cosmetic, ephemeral change designed to make you feel that change is occurring/has occurred while everything actually remains the same.

The real question is whether Clinton can act independently and provide value to the IAC board. While there are many doubts on that score - and while Clinton clearly did not earn this position - she can still demonstrate that she is up to the task. Go for it, Chelsea. Nice to see that this article is being independent & not taking sides. Is the New York Times sucking up to Chelsea, Hilary? or the current mobsters that are running the American corporation/country-The Democrats?

NEW YORK TIMES

This story was found at: http://www.theage.com.au/business/big-name-big-bucks-big-questions-20111005-1l9k4.html