The business section of today's New York Times carries an article by reporter Stephanie Clifford under the headline: "More Dissent Is in Store Over Wal-Mart Scandal." The Times reports:
Some investors also objected to the heavy presence of insider directors on the board: two Waltons, one Walton son-in-law, the chief executive and a former ex-chief executive. After the 2013 meeting, when three independent directors will step down, about 65 percent of the board will be independent.
My goodness, two Waltons and one Walton son-in-law on a 17-member board!
From the New York Times Company's own corporate governance statement:
Based on the foregoing, the Board has affirmatively determined that each of Raul E. Cesan, Robert E. Denham, Joichi Ito, James A. Kohlberg, David E. Liddle, Ellen R. Marram, Brian P. McAndrews, Thomas Middelhoff and Doreen A. Toben has no material relationships with the Company and, therefore, each is independent pursuant to applicable NYSE rules. Of the remaining directors, Michael Golden, Arthur Sulzberger, Jr. and Mark Thompson are executive officers of the Company. Steven B. Green's wife is Mr. Sulzberger, Jr.'s sister and Mr. Golden's cousin. Carolyn D. Greenspon is the daughter of a cousin of Messrs. Sulzberger, Jr. and Golden. Due to their family relation to Messrs. Sulzberger, Jr. and Golden, Mr. Green and Ms. Greenspon are not considered independent.
In other words, the New York Times Company has four family directors — Michael Golden, Arthur Sulzberger Jr., Carolyn Greenspon, and Steven Green — on its own 14-member board, and it's running front-of-the-business section articles that take seriously complaints about the presence of a mere three Walton family members on Walmart's 17 member board. The hypocrisy is staggering. The Times percentage of "independent" directors, nine of 14, is 64 percent, or less than the 65 percent that it is complaining about in the case of Walmart.
One might think that such a circumstance would cause the Times to look askance at the public-pension-fund-driven idea that an "independent director" who is paid fees for attending meetings is somehow better for a company's performance than a director who is from the family that built the company and that owns a large chunk of the company's stock. Instead the Times just parrots it without any skepticism. That would be one thing if the Times were one of the many companies run by management that owns a trivial percentage of the company. But since the Times is actually a family controlled, though publicly traded, company (albeit one that has not performed particularly well for any of its shareholders recently), readers might have hoped for a more intelligent treatment. One place to look for that is Warren Buffett's letter to Berkshire Hathaway shareholders for the year 2004:
Jesus understood the calibration of independence far more clearly than do the protesting institutions. In Matthew 6:21 He observed: "For where your treasure is, there will your heart be also."… In our view, based on our considerable boardroom experience, the least independent directors are likely to be those who receive an important fraction of their annual income from the fees they receive for board service (and who hope as well to be recommended for election to other boards and thereby to boost their income further). Yet these are the very board members most often classed as 'independent.'