VEA Vice Chair Nell Minow is quoted in an expose from The Street about “independent” director, Enrique “Rick” Hernandez Jr., whose board duties include chairing the risk committee at Wells Fargo until he is replaced next month following a serious “no” vote of 47 percent against him at the last annual meeting. His security business is hired by the companies on whose boards he serves, including MacDonald’s and Chevron. The individual payments are low enough as a percentage of revenue that they do not require disclosure, though the cumulative amount is considerable. It is meaningful enough — and pervasive enough — that failure to do so raises serious questions. “I’m stunned to hear about this,” Nell Minow, vice chair of consultant ValueEdge Advisors, which counsels big investors on corporate governance, said in a telephone interview. “That’s the kind of thing that used to go on all the time, but it’s generally frowned on now as invalidating the independence of the director.”
The issue is not limited to publicly traded companies.
Inter-Con also got security business from Children’s Hospital Los Angeles, the non-profit organization where he served as a trustee from 1990 to 2009, including seven years as vice chairman. His wife, Megan, has served on the board since 2010.
The Street says that payments from the charity have amounted to more than $15 million.