By Aaron Bernstein
When it comes to good governance, Corporate America can learn a useful lesson from, of all places, the labor movement. For more than a year, the AFL-CIO has been plagued by a stock scandal at Ullico, a labor-owned insurer. The company's former chief executive and more than a dozen of its 28 directors, mostly union leaders, pocketed millions of dollars by selling Ullico stock at the expense of the union pension funds that own most of the company.
What's notable, is that after months of internecine battles, AFL-CIO President John Sweeney and other labor leaders who sat on Ullico's board moved decisively to clean up the mess. They ousted CEO Robert Georgine and put directors on notice that they'll have to pay back the profits they made. That could amount to at least $6 million.
These actions stand as a model for other large companies. It's painfully clear today that corporate boards rarely fulfill their designated role as watchdogs over the CEO. Complacent directors allowed apparently illegal abuses to occur