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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: JHP who wrote (36787)	11/18/1998 5:42:00 PM
From: Knighty Tin	Respond to of 132070

JHP. It depends. Some boards are strong and some are yes men for the CEO. I have worked at both. Most of the time, they show up for the fees, the prestige or the parties. Or, they have a reciprocal arrangement where I serve on your board and you serve on mine. Where you see a lot of strength is when another firm owns a stake and has board representation. But, since the board can be sued and Officers and Directors insurance can be inadequate in today's lawsuit environment, you see even the weakest boards getting tough after the horse has left the barn and the co. gets in trouble. My experience in mutual funds is that they are usually a rubber stamp. Now, this was definitely not the case at the American Capital funds. I had a board that included a lot of former board members from the predescessor American General Capital Funds. And, I had board members from the old Enterprise Funds. That was the group that Fred Carr ran and that got sued out of existence for using letter stock. (letter stock is unregistered and cannot be sold in the market until it is registered, which may be never. There is nothing bad about it, but the pricing is questionable. Enterprise was buying letter stock from small cos. at a haircut of 20-50% and then pricing it the same as the shares sold on the market. Needless to say, they had good performance until somebody caught on. <G> American General Funds bought out the Enterprise Funds and inherited a board that was very suspicious and cantankerous.) We (actually, they, as it the deal was made years before I joined them) also bought out the old Mutual Funding group of funds, which was the great fund and insurance scandal of the 1970s. Those board members were also a shell-shocked bunch. Needless to say, a brash guy who used options and futures in a fund that eventually represented 60% of the company's assets scared the bejeezus out of them. I actually got along great with the board, but they were not a rubber stamp by any means. So, it can vary. I would say most boards are a scam to pretend that mgt. has some oversight. But many execute tremendous power within the co. MB