Nell Minow ’74 Lecture—Why Only Corporate Governance Can Save the World

April 3, 2018

Years ago, corporate governance expert Nell Minow ’74 stood up at the annual shareholder meeting of Stone and Webster, a then-faltering construction company, and made a request: “I would like the members of the board to each get up and explain why the stock of this company is a bad investment.”

When executives appeared confused by her request, she elaborated. “Well, none of the board members have more than 100 shares of stock, and they know this company better than anybody else. If they don’t think it’s worth buying the stock, then why should I buy the stock?” One board member attempted to explain, blaming his lack of investment on the red tape of holding foreign assets. “I’m Canadian,” he said. Though neither the executives nor the board addressed Minow’s concern in any substantive way, her point prompted the company to gift each member of the board 1,000 shares of stock.

Once dubbed “the queen of good corporate governance” by BusinessWeek, Minow shared many other examples of corporate governance, including first-hand accounts from her decades-long career. Situating corporate governance in historical context, Minow pointed out that while mapping out Constitutional checks and balances, the Founding Fathers were concerned about the exercise of private power and considered having Congress approve every certificate of incorporation to make sure that the corporation was acting in the public interest.

Today, corporations and top executives frequently make headlines for not acting in the public’s interest (such as Volkswagen getting caught a few years back systematically cheating on emissions tests). Just as frequently, it seems, corporations don’t face long-term consequences for unethical, reckless behavior (such as Volkswagen returning to its status as the top auto seller in the world).

To assess a company’s governance, Minow advised that shareholders examine its incentives and discern whether or not they are aligned with public good. For example, when it comes to CEO compensation, CEOs would like as little variability as possible, while it’s in the shareholders’ interest to have more variability. With more variability, CEO incentives are in accordance with performance.

In theory, the board of directors determines the parameters of CEO pay. However, if the board is not independent—meaning, some of its members have a personal relationship with executives or are employees of the company—this compromises the board’s capacity to act on behalf of shareholders and public interest.

In her remarks, Minow called her experience at Sarah Lawrence “an incalculable resource I draw on constantly.” She and her husband, David Apatoff ’74, both attended the College, and their son Benjamin Apatoff ’06 did, as well. Their niece, Mira Singer, received her MFA from Sarah Lawrence in 2016.

Minow’s Sarah Lawrence education prepared her for her current role in many ways. For one, she said, “Corporate governance, like Sarah Lawrence, is all about making sure the right questions get asked.” As well, Minow, who is also a film critic, received memorable advice from Grace Paley (fiction): “She said, ‘I can tell that you’re fighting being funny, and you are funny, so go with it—it’s a strength of yours.’”

Minow’s sense of humor animated her lecture; not only does it make her an engaging speaker, but her eye for absurdity is the perfect truth-telling device in the field of corporate governance, where truth is often stranger than fiction. For example, Minow summed up why corporate governance matters with the following line: “The former CEO of Volkswagen put his third wife and former nanny on the board.”

Learning about the legal and regulatory framework within which corporations act—and from one of the field’s leading figures—was exciting for students. Cameron Carpenter ’19, who studies economics and psychology and is interested in going into a career in investment banking, said, “This knowledge is vital for me. I came with many questions, but by the time we got to the Q&A, she had answered them all—I very much enjoyed it.”