I once asked a fellow law school graduate how he did in school. He replied with great enthusiasm, “I graduated in the top 90% of my class!”
A Massey Energy spokesman who announced that its three directors standing for election had won by a landslide reminds me of that retort when I read the announcement. Directors Gabrys, Moore and Phillips won their respective reelections by votes of 55.36%, 55.09% and 57.83& respectively.
A landslide? Surely Massey officials jest.
Rarely do directors lose their seats outright. The director election system in the U.S. is rigged in favor of incumbents: Shareholder arm-twisting (proxy solicitation) is the norm, large institutional investors in companies are incentivized to support management and a substantial majority of individual investors simply don’t vote. Yet despite all of this, these three directors received a substantial vote of no confidence.
When Ken Lewis, Bank of America’s CEO received a no confidence vote when shareholders voted for separating the positions of chairman and CEO, he read the tea leaves and resigned a few months later.
Will a similar fate befall these three directors?
My best guess is that they will remain since, all things considering, these and the other directors at Massey Energy seem to be accountable to no one except the company’s CEO, Brian Blankenship. Though there has been considerable hand wringing about the takeover of several financial institutions of late, intervention in a company that kills its employees, is subject to numerous civil and criminal investigations, operates a core business strategy that poisons the air and water supplies and engages in political influence peddling that undermines basic tenets of our American political process, seems like a no brainer.
I wait with baited breath . . .