The Securities and Exchange Commission is considering implementing a series of rules that would call into question the relevant qualifications of certain “celebrity” directors that have found a place on public company boards.
According to Bloomberg, the SEC is looking to require companies to disclose information regarding the specific experiences that qualify a given director. This would include experience as relates to issues such as compensation and accounting rules.
“What the SEC wants to do is prompt companies to make sure they’re appointing directors who can do the job and not just look pretty on a roster,” says Stephen Davis, a senior fellow at the Millstein Center for Corporate Governance and Performance.
Some celebrity directors in the past have included cyclist Lance Armstrong (Morgans Hotel Groups), U.S. military veterans General Tommy Franks and Admiral Joseph Prueher (Bank of America), and former basketball hall-of-famer Oscar Robertson (Countrywide).
“Those kinds of people, celebrities, add little to the boards on which they serve,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “It’s a problem.”