They Rule

Wow what the heck is that Dax? Is that the layoff plan? Nope. The above is a screenshot generated of the website theyrule.net

An important issue in corporate governance is the concept of interlocking boards. Interlocking boards means a director on one company’s board may also sit on the board of another.

In the above example, I’ve mapped SBC Communications (now AT&T). SBC has directors that are also on the board of Anhauser-Busch. Anhauser-Busch has directors that are on the board of Coca-Cola which in turn has directors also that are members of SBC’s board. In a way they are all connected. So what does this mean? For one they lose their independence and ability to regulate eachother. A member of SBC’s board may vote for a measure supported by another individual that is on Anhauser-Busch’s board for example. It could be that Anhauser-Busch needs something that the board is voting on. Or it could be a vote to increase the pay of the SBC president’s pay. The SBC president may be on the board of another company that will determine my pay at that company.

The independence is lost and the results become biased.

Check out the site. I already knew about some of the linkages at SBC, but you’ll be able to click on a company from their database and expand their directors, contracts, etc. If the company is big you’re almost certain to find some linkages.

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