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John Thain, Bank of America’s former president of global banking and global wealth investment management and the ex-CEO of Merrill Lynch, resigned last week. Though there were many reasons, one of the key ones was Bank of America CEO Kenneth Lewis' purported unhappiness with the fact that, during the merger with Bank of America, it was a transition team that reported Merrill’s fourth-quarter losses, not Thain.
Oh, and Thain asking for a $10 mn bonus in the face of financial tremors didn’t help much. Then there was that untimely December vacation in Vail, Colorado, where he worked amid the ski slopes while the bank struggled under major financial losses. Should the former NYSE CEO still be interested, he’ll have some time freed up to take another trip the bank warned him against, to Davos, Switzerland, which hosts the World Economic Forum now through February 1.
If he does show up, it will certainly be a whirlwind of ‘this could’ve worked in hindsight’ moments for Thain, where he’ll receive all sorts of ill-timed bonuses that could even include tips on how to save beleaguered banks.
By Janine Armin
Associate editor
Corporate Secretary
Even though the holidays are a time for giving, Bernard Madoff’s sons did not appreciate the approximately $1 million worth of jewelry he sent to their Florida homes. Instead, the rebellious offspring notified their lawyers. And Madoff, architect of the elaborate ‘Ponzi scheme’ defrauding investors out of a possible $50 billion, was promptly accused of trying to make off with assets the SEC had only just frozen.
You’re probably thinking, where’s the drama in that? But the nepotism goes deep in this one. David Kotz, the SEC's inspector general, is investigating a possible lack of regulatory oversight at Madoff Securities in connection with the fact that Madoff's niece, a compliance officer at the firm, married a former SEC examinations official.
Later this week the Securities Investor Protection Corp and the SEC will discuss the process for reimbursing Madoff’s customers. So regardless of Madoff family feuds, investors will at least be a little closer to getting their money back.
By Janine Armin
Associate editor
Corporate Secretary
While former UBS executives are forgoing compensation, and Goldman Sachs, among other companies, aren’t issuing bonuses, Merrill’s chief and ex-NYSE CEO John Thain is asking for more money: a bonus in the amount of $10 million. Surprisingly, the devastated securities firm is none too pleased. Yet they did reconvene yesterday to reconsider his request. Maybe Thain is thinking, what’s $10 million when the firm as a whole has lost $11.67 billion over the last year? And they’re on the cusp of being acquired by Bank of America, which presumably saves the company billions more, in part, thanks to Thain's leadership. Upon arriving at Merrill in 2007, Thain received a $15 million cash bonus and a pay package in the range of $50 to $120 million over several years. Since Thain only makes $750,000 right now, his request for a bonus, by Wall Street standards, is reasonable. But what is reason in a recession? By Janine Armin
Associate editor
Corporate Secretary
It’s a childish thing to posit, but it’s also justified. Earlier this year the SEC became momentarily devoid of Democrats, following the departure of Roel Campos and Annette Nazareth from the five-strong Commission. Walter Ricciardi also bowed out as deputy director of the division of enforcement to become partner at Paul, Weiss, Rifkind, Wharton & Garrison. This month has seen its ranks thin yet again: John White, director of division of corporation finance, will leave at year-end, and Brian Cartwright, general counsel, is looking to return to the private sector. The good thing about having worked at the SEC: it’s pretty easy to score a great position no matter what the markets are doing. And when the markets are down, a little SEC insight could be just what firms will be looking to catch. Corporate Secretary
Microsoft is upping the ante on good corporate conduct, recently introducing bonuses for outside legal counsel who commit to diversifying their firms. Get the full story in the November issue of Corporate Secretary.
Just this month the computer company made another Good Samaritan move, garnering the interest of the world’s most coveted socially conscious actress, Angelina Jolie. Together, they formed Kids in Need of Defense (KIND), a national children’s advocacy initiative to provide free legal counsel to immigrant children in the US caught without caregivers.
Not that anyone cares, but 25 law firms and corporate law departments also helped create KIND.
By Janine Armin
Corporate Secretary
Congressman Vito Fossella’s reputation for advocating good corporate governance was tarnished when it was revealed, through a drunken driving arrest, that he had had an extra-marital affair, which led to having an extra child.
Besides the possibility of serving a little jail time for the DUI, things are looking up for Fossella. The National Association of Manufacturers gave him the Award for Manufacturing Legislative Excellence, which honors voters who have supported manufacturing in America.
Perhaps the renewed respect will help him regain his authority in the world of business ethics, even if he falls a little short of that sentiment when it comes to romance and driving.
By Janine Armin
 If any company could find the corporate governance mainstays America has come to know and love a bit challenging – like internal monitoring programs – it’s Siemens. The German engineering company has had one severe round with its shadow since German authorities uncovered a massive bribery scandal two years ago. The scale of the problem was in part attributed to its far-ranging operations.
To right the ship, last year Siemens hired Peter Solmssen as general counsel, putting him in the unenviable position of instilling ethical values among the company’s 400,000 employees. Tackling the global problem head-on, Solmssen headed to its facilities in Mexico, and did exactly what anybody charged with such a gargantuan task should: he told employees about ethics.
His new job could not be more different from his past role at GE, a company renowned for its compliance and deft leadership.
But it could help Solmssen reinforce Siemens’ conviction to end corruption, important as the Justice Department nears the end of its investigation. And, according to the New York Times, Siemens’ compliance department is indeed on the up and up, heralding the virtues of the three Ps of corporate governance: procedures, processes and people.
By Janine Armin
Corporate Secretary
Corpgov.net's publisher James McRitchie often puts up fascinating posts that hit on controversial issues in corporate governance. He even put up a post referring to one of my posts that referred to one of his. That potentially overboard back-and-forth earned a soft spot with me. But that’s not why I’m writing about him now.
It’s just that I’m a bit shocked by one of his latest news updates. I had no idea how much investors wanted to pick the auditors of companies in which they invest.
As McRitchie explains, most companies submit auditor choice to a non-binding shareholder vote. 'Most' isn’t enough for CalSTRS, which he notes ‘has petitioned the SEC to make such votes mandatory.’ He takes it further suggesting shareholders should be able to choose the auditor at the get-go, a concept he borrowed from Mark Latham, founder of the Corporate Monitoring Project.
That way, the popularity contest wouldn’t be just among management.
By Janine Armin
Corporate Secretary
The New York Post isn’t known for its rigorous coverage of corporate governance processes. But it does do a great job when it comes to corporate governance gossip.
On Wednesday, a tiny squib revealed NBC correspondent Andrea Mitchell, wife of former Federal Reserve chief Alan Greenspan, met conflict for covering the market plunge. The Post went on to speculate whether David Gregory, host of MSNBC’s Race for the White House, will come under similar suspicion should he cover anything to do with his wife Beth Wilkinson’s former workplace, Fannie Mae, now under investigation by the FBI.
Wilkinson recently left her position as general counsel, executive vice president and corporate secretary.
Makes you wonder. Maybe all this talk of ethics and compliance will move out of the boardroom and into the bedroom.
By Janine Armin
Corporate Secretary
 The world of corporate governance dimmed a little today when SEC deputy director Walter Ricciardi announced that he will retire to become partner at Paul Weiss Rifkind Wharton & Garrison LLP.
During his stint as enforcement heavyweight, Ricciardi headed up a number of media-blitzed cases including ‘the $9.7 million settlement by broker-dealer Jefferies & Co for improperly providing millions of dollars of lavish gifts, extravagant travel and entertainment to win mutual fund trading business’ and the ‘$8 million settlement with Fidelity Investments for the improper acceptance of travel, entertainment and other gifts paid for by outside brokers courting its trading business and allowing such gifts to influence the selection of brokers’ (this one’s juicy).
In addition to his aptitude for sussing out cases, Ricciardi bolstered the enforcement program initiating the enforcement management plan, which requires deputy involvement when deciding on opening and continuing an investigation; revising closing practices; forming enforcement-wide working groups on issues such as hedge funds and options backdating; and supervising the development of an investigation tracking and case management system.
His efforts have not gone unnoticed by the SEC, which is giving him the Stanley Sporkin Award for ‘exceptionally tenacious and insightful contributions’ to the enforcement of federal securities laws.
And his efforts will certainly be missed by the corporate world, which benefited from his forthcoming attitude in discussing the SEC’s enforcement strategies.
Let’s just hope the next person in charge shares Ricciardi’s affinity for openness.
By Janine Armin
Associate editor
Corporate Secretary
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