Commentary by David F. Larcker, James Irvin Miller Professor of Accounting & Director, Stanford GSB Corporate Governance Research Program; and Brian Tayan, Stanford GSB Case Writer, MBA ’03.
Source: SunTrust Banks, Form PRE DEF 14A, Filed February 23, 2010
Recent SEC rules require that companies disclose the qualifications of their directors. Specifically, companies are required to explain “the particular experience, qualifications, attributes or skills that led the company’s board to conclude that the person should serve as a director of the company.”
A recent filing by SunTrust Banks reveals a remarkable pattern. According to the company:
“Mr. Correll’s long and varied business career, including service as Chairman and CEO of a large, publicly-traded company, well qualifies him to serve on our Board.”
“Mr. Hughes’ long and varied business career, including service as Chairman and CEO of a large, publicly-traded company, well qualifies him to serve on our Board.”
“Mr. Ivester’s long and varied business career, including service as Chairman and CEO of a large, publicly-traded company, well qualifies him to serve on our Board.”
“Mr. Minor’s long and varied business career, including service as Chairman and CEO of a large, publicly-traded company, well qualifies him to serve on our Board.”
“Mr. Lanier’s long and varied business career, including service as Chairman and CEO of a large, publicly-traded company, and his service as a lead director of another public company, well qualifies him to serve on our Board.”
“Mr. Beall’s executive and management experience well qualify him to serve on our Board.”
“Mr. Crowe’s executive and management experience well qualify him to serve on our Board.”
“Mr. Prince’s extensive management and executive experience well qualifies him to serve on our Board.”
This shows how a company can comply with the letter rather than the spirit of regulations. Perhaps the company should have simplified matters by stating simply that “our directors are qualified because we say they are.”