Performance reviewer
Nell Minow takes underperforming CEOs and board members to task.
By Meg McSherry Breslin
Photography by Dan Dry
Minow (left) spoke on an Alumni Weekend panel, also featuring the two Public Service Award winners, Roy Prosterman, AB'54, and Ann Goodman (right), AB'72, AM'73, PhD'81.
The evaluation of corporate governance was just starting in 1986 when attorney Nell Minow—pregnant with her second child and looking for a part-time job—entered the field. “I really didn’t care too much what the job was. I just wanted it to be interesting, and I wanted to be on the side with the good guys,” says Minow, JD’77.
Robert A. G. Monks, a lawyer and early player in corporate-governance advising, convinced her that his new firm, Institutional Shareholder Services, a consulting practice for shareholders looking to strengthen corporate boards, was what she was looking for.
The job as general counsel and later partner of the firm became Minow’s first stop in a quarter-century career that has helped change the face of corporate America. Besides working to make executives and directors more accountable to shareholders, she’s written some 200 articles and coauthored three books on securities law, shareholder rights, and the modern corporation, including a leading business-school text on corporate governance. She has testified before Congress and advised on legislation for reforming how corporations are managed.
Consulting isn’t all she’s done to improve executive and board behavior. In 1990 Minow and Monks started Lens, an investment fund where they bought stock in companies and then pushed them to perform better. They worked with shareholders to improve Fortune 500 corporate boards by voting off directors who didn’t follow through with their responsibilities. They also helped replace poor-performing CEOs while helping the shareholders focus on executive accountability. They’ve researched, decoded, and publicly exposed the details of excessive contracts that fail to tie a CEO’s compensation to a company’s performance.
For example, at Lens she handled a 1993 case involving Anthony D’Amato, then CEO of food, beverage, and consumer-products company Borden Inc. D’Amato’s contract called for the company to pay for two personal residences, the taxes on those properties, and 100,000 stock options issued at a price to be set later—on top of his $900,000 salary.
Minow faxed the contract to the New York Times. “It was so ludicrous and over the top that I just figured that by getting the word out, it would be the end of him,” she says. Indeed, the subsequent pressure from investors led to D’Amato’s December 1993 firing, less than a year after he negotiated the contract.
After years of similar victories, Minow and Monks sold Lens in 2000. They spun off their in-house research operation to create their current company, the Corporate Library, which provides investors with a corporate database that includes documents such as company charters and bylaws, CEO employment contracts, and SEC filings. Available by subscription, Corporate Library reports have exposed companies granting millions in options to CEOs even as their firms see record stock-price declines, and paying huge severance packages to executives with very short tenures. Its efforts have generated attention from corporate and government decision makers. Last year Minow was among a small group of experts to advise incoming Treasury Secretary Timothy Geithner on public concerns over executive compensation.
She has no problem with big CEO salaries—as long as those salaries are tied to performance. That link, she argues, had eroded at many financial institutions. “The people who gave out subprime mortgages” got paid based on the quantity of transactions instead of the quality, Minow says. “It’s the same for the people with the derivatives, same with the ratings agencies.” The failure was the same at every point along the continuum. “It’s really up to the shareholders to fix that, and the only way to fix that is to get rid of the directors who do a bad job.”
In addition to her corporate work, Minow has cultivated a second role, as a film critic. She writes reviews of movies for children and teens, most recently for Beliefnet.com as “Movie Mom,” a persona she developed when her children were young. Minow revels in her seemingly disparate jobs, testifying before Congress one day, rushing to review Toy Story 3 the next—roles which really aren’t all that different: “I’m basically a systems analyst of movies, of corporations, of pretty much whatever you put in front of me,” she said in a 2009 Washington Post article.
In corporate governance, Minow has educated business leaders on the importance of accountable directors—a difficult lesson for executives tied to rubber-stamp boards. To take their role more seriously, she advises directors to regularly attend meetings, analyze executive contracts for unnecessary perks, and ask critical questions of the CEO.
She even had to convince her father, Newton Minow, the former chair of the Federal Communications Commission and a senior counsel at the Chicago law firm Sidley & Austin. He ran afoul of his daughter’s efforts in 1989, while she was working with shareholders to strengthen the Aon Corporation’s board. Nell Minow realized one of the directors—her father—had missed far too many board meetings.
“She called me one day and said, ‘Dad, this is going to be one of the hardest conversations I’ve ever had with you,’” recalls Newton Minow. “She said, ‘We advise our clients never to vote for anybody who hasn’t attended 75 percent of the meetings.’ I said, ‘You’ve got to be kidding me. I’m your father!’”
He was voted in regardless that year, but he claims he’s never missed a board meeting since. “And I believe what Nell is doing is correct,” he says. “Boards clearly are better today than what they were.”
Minow’s efforts have been recognized. In 2007 Directorship magazine named her one of the 20 most influential people in corporate governance. This year the University of Chicago Alumni Association awarded Minow—who lives outside of Washington with her husband, David Apatoff, JD’77—its Professional Achievement Award.
But the work isn’t over, Minow says. Her job is about trying to hit a moving target—you fix one problem, another one emerges. “Just as eternal vigilance is the price of democracy, it’s also the price of capitalism,” she says. “You’ve got to be anticipating the next catastrophe rather than working to prevent the last one.”