Commentary: Political Players: Who Needs Them On The Board?By
When corporations asked Vernon E. Jordan Jr. to join their boards, it wasn't to get his business expertise. Jordan, formerly president of the National Urban League, is a senior partner at the Washington law firm of Akin, Gump, Strauss, Hauer & Feld. His forte is not corporate finance or corporate management. But Jordan is a man without peer in his specialty: making connections in Washington--even to the White House--and working behind the scenes to make things happen, all very discreetly.
Now, though, it may be time to question the value of such a power broker on a company board. As the Clinton sex scandal exploded, news media everywhere blared the names of two companies of which Jordan is a director: American Express Co. and Revlon Inc. At Jordan's urging, both had been asked to find a job for Monica S. Lewinsky, the President's alleged sex partner. Indeed, a government official familiar with Independent Counsel Kenneth W. Starr's case says it was the link to Revlon--where Jordan had also helped find work for former Clinton Justice Dept. official Webster Hubbell--that persuaded Starr to look into how Jordan might be using connections to help get some friends of Bill quietly out of the way.
NO-SHOW. For sure, Jordan is far from the only Washington insider to sit on corporate boards. Movers and shakers, from Gerald Ford to Joseph A. Califano, dot the corporate landscape. But it may be wise to rethink the value of these marquee names. Shareholders don't want uninvolved directors or conflicts of interest. If companies need doors opened in Washington, they can hire lobbyists that employ the ex-officials. All board seats can then be reserved for directors who can really help management.
By today's standards of corporate governance, the 62-year old Jordan is both overextended and conflicted. He sits on 10 corporate boards, from Dow Jones to Xerox to Union Carbide, which meet a total of 140 times a year--even though guidelines by the National Association of Corporate Directors recommend that no fully employed individual hold more than three directorships. And Jordan's law firm has been retained by virtually all these companies, raising questions about his ability to be an independent, challenging director. The American Bar Assn., in a draft report last August, recommended that lawyers be discouraged from sitting on client boards to avoid conflicts.
Also, Jordan is often absent from board meetings. For four straight years, from 1993 to 1996, he missed more than a quarter of his board sessions at Bankers Trust New York Corp. At Dow Jones & Co., he missed 40% of the meetings in 1996 and more than 30% in 1993 and 1994. Jordan's executive assistant says he is "unavailable to comment."
So far, the Lewinsky embarrassment doesn't seem to have hurt Jordan's relations with his boards. Indeed, at American Express, CEO Harvey Golub--who says Jordan's attendance has been very good--remains effusive. "If we were fielding a team of directors from scratch, Vernon would be near the top of my list," he says. "He consistently displays uncommon common sense and great wisdom." A spokesman for Revlon Chairman Ronald O. Perelman says the scandal hasn't changed Perelman's view of Jordan.
"CELEBRITY." Privately, Jordan's fellow directors give him mixed reviews. Some praise his contributions, noting he is "very faithful and well-informed on the issues." One describes him as "a real bulldog" on minority hiring. Others say he's among the least engaged directors. "He often comes late and leaves early or doesn't attend at all," says one critic. Shareholder-rights advocates agree. "He plainly doesn't have the time or the energy to do the job well," says Robert Monks, one activist. "He's a celebrity director, and they tend to pollute the work of a good board."
Jordan, who began joining boards in the early 1970s, may be part of a dying breed. Then, it was fashionable for prominent people like him to collect board seats. And there were few expectations that they would be active and informed. Today, that kind of director is an anachronism.
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