For an Independent Board
The issue of board independence figures heavily in David Koch’s Statement last week. It’s not his strongest argument.
Mr. Koch argues that leaving Cato’s current board in place and converting the Institute to a normal nonprofit structure with a self-perpetuating board of directors would result in a board “largely subservient to Ed [Crane].” Instead, David and Charles want what they believe Cato does not currently have: “a board independent of management.”
So let’s look at Cato’s board. As of March 1, the non-Koch-affiliated members were:
- K. Tucker Andersen, Director, Above All Advisors
- Edward H. Crane, President, Cato Institute
- Richard J. Dennis, President, Dennis Trading Group
- Ethelmae C. Humphreys, Chairman, Tamko Roofing Products, Inc.
- Robert A. Levy, Chairman, Cato Institute
- Howard S. Rich, Chairman, Americans for Limited Government
- Kathryn Washburn, Nonprofit Advisor
- Jeffrey S. Yass, Managing Director, Susquehanna International Group, LLP
- Fred Young, Former Owner, Young Radiator Company
- Frank Bond, Director Emeritus, Chairman, The Foundation Group LLC
The four members bumped by the Kochs on March 1 and restored last Thursday are:
- William A. Dunn, President, Dunn Capital Management
- John C. Malone, Chairman, Liberty Media Corporation
- Lewis E. Randall, Board Member, E*Trade Financial
- Donald G. Smith, President, Donald Smith & Co., Inc.
To take just two examples from the roster above, Ethelmae Humphreys has always struck me as a pretty independent spirit (there weren’t a whole lot of women running companies and fighting unions in the 1950s, when she ran operations at TAMKO Roofing Products).
And Liberty Media Corp.’s John Malone—once depicted as “Mad Max” on a Wired magazine cover—is no shrinking violet himself.
But, for the sake of argument, let’s assume all of these highly successful entrepreneurs and investors are “subservient to Ed,” given to wilting before the sheer force of his personality.
They are still independent in one sense at least: they don’t depend on Ed Crane for their livelihoods.
In his March 8 public statement, Charles Koch insisted that he and his brother seek to elect “officers and board members [who] would act independently from me or any other individual.”
Does Kevin Gentry, a Vice President at the Charles Koch Foundation, “act independently” of Charles Koch? Does Nancy Pfotenhauer, authorized spokesperson for the Kochs and Koch Industries, just call ‘em like she sees ‘em, without consulting Charles and David Koch?
Nominees to our board that the Kochs were unable to elect on March 1 include: the executive vice president of Koch Industries; a staff lawyer for Koch Industries; a staff lawyer for the Charles Koch Foundation; the president of a Koch-created nonprofit and former vice president of the Charles Koch Foundation; and a former Director of Federal Affairs for Koch Industries.
I suppose it’s possible that Cato board members who work for the Kochs might, on occasion, overcome the limitations of human nature and forget who it is that butters their bread. But if the Kochs were really looking for board members who would “act independently from [Charles] or any other individual,” shouldn’t they have broadened the search?