VEA Vice Chair Nell Minow is quoted in this story about a CEO charged with criminal assault and his insider-stacked board’s insistence that it doesn’t matter.
Barely 24 hours after his release, Sonic’s board — more than a quarter of which is made up of Smith family members, including the CEO’s father and 93-year-old founder O. Bruton Smith — said it believed he was innocent and pledged its “steadfast” support. David Smith was absent from Sonic’s October earnings call, without explanation, and since then the company has been mum on his arrest. Smith declined to comment, as did O. Bruton Smith, who is chairman of the board.
A company spokesperson declined to comment on what action, if any, it has taken on the matter.
Given the seriousness of the charges, corporate governance experts say Sonic should put the CEO on paid leave and convene a committee of independent board directors to retain counsel and investigate, even though the matter is connected to private behavior outside work. Law firms or management consultants can perform such an investigation, which could likely run concurrently with a police probe, they said. “People are innocent until proven guilty, but the board should be looking into this and not making blanket statements about the innocence of the CEO,” said Nell Minow, vice chair of ValueEdge Advisors, a shareholder-advisory firm. “When there is such a powerful conflict of interest in terms of self-protection, it’s absolutely essential that people who are not related to the CEO oversee the investigation.”Sonic Automotive CEO Smith Charged With Assault, Board Structure Draws Criticism – Bloomberg