Friday, December 8, 2006
Think you’re busy to the point your schedule resembles a forced march? You probably have nothing on Vincent Tese.
The cable TV pioneer sits on 11 boards of directors, six of publicly traded companies, including Bethpage-based Cablevision Systems Corp. and financial giant Bear Stearns. Tese, a Cuomo administration official and former commissioner of the Port Authority of New York and New Jersey, also sits on three private company boards. Throw in his work for two not-for-profit entities, New York University and New York Presbyterian Hospital, and you’d think Tese, 63, might be a tad overextended.
But no, says Tese, noting that his time commitment to the boards fills only 25 percent of his schedule.
This, even though Tese would be a very busy man if he attended all the meetings of the boards he sits on – 159 in total for the six publicly traded firms Tese was on in 2005, according to a Long Island Business News analysis of Securities and Exchange Commission filings.
Busy or not, the pay was sweet. Tese, who also heads his own firm, Wireless Cable International, pulled down $739,500 in total compensation last year from the six public companies. There is no information available on what he’s paid by Custodial Trust Co., Magfusion Inc. and Xanboo Inc., the private companies.
Tese is not alone in serving on multiple boards, or, in the industry jargon, “overboarding.”
The class of excess
Other board members of the Island’s biggest 10 public companies who fall under the overboard category include: Lewis Ranieri, non-executive chairman of CA Inc.; Roger King of Melville-based Arrow Electronics; Douglas Crocker II of Reckson Associates Realty Corp.; and Louis Sullivan of Melville-based Henry Schein. Each person served on five boards apiece in 2005, and all were well compensated. Except for Tese, all refused to comment for this story.
Ranieri’s total paycheck approaches the money Tese received, netting $707,000 in 2005 for his board work. The former Salomon Brothers bond market wunderkind, who now runs Ranieri & Co., a private investment and management consulting firm in Uniondale, sits on the boards of two local firms: software maker CA Inc. and Uniondale-based Reckson Associates.
In 2005, Ranieri was responsible for attending a total of 88 board and committee meetings. There’s no information available on how much he makes or what committees he’s on with Roots Market Inc., a private company.
Sullivan, dean emeritus of Morehouse School of Medicine in Atlanta, sits on the boards of five publicly traded companies, including Henry Schein Inc., the Melville-based medical and dental supply firm. For his board work, Sullivan made $495,000 in 2005.
Roger King, founder of Oriental Data Systems, has been on the board of Arrow Electronics since 1995. He made a total of $185,000 for his work with the Melville firm and Orient Overseas (International) Limited. Crocker, a retired apartment REIT executive, sits on a total of five boards, including Uniondale’s Reckson Associates Realty Corp. His compensation in 2005 was $327,850.
Kevin M. Sheehan, distinguished visiting professor in the Adelphi School of Business, doesn’t think those payouts are out of whack with shareholders’ interests. He noted that the men mentioned were engaged in work that is “not far from a full-time job and their compensation is what they were probably making in their prior roles.”
Enough time to do the job right?
Compensation aside, overboarding begs some questions: what kind of focus can an individual bring to the serious work of a corporate board? And when does sitting on a corporate board stop being a position of wise counsel, a human vehicle of financial checks and balances representing stockholders, and become a full-time and extremely well-paid job? Can individuals devote the necessary time and energy to do a creditable job?
The questions gain added relevance if you consider that Tese, for example, is on the audit and executive compensation committees, where the most important work is done, of Cablevision, Bear Stearns, and Gabelli Asset Management, which is also Cablevision’s biggest shareholder aside from the controlling Dolan family.
Tese said the nine corporate boards he serves on receive his full attention. “A lot depends on what you do for a living,” he said. “If you have a full-time job you can’t devote the time, but I don’t have a full-time job.” Wireless Cable International is a company that “holds wireless licenses and is not an operating company,” Tese said.
He also noted that International Shareholder Services, a respected corporate governance advisory organization, encourages board members to sit on no more than six boards to ensure meaningful work.
But the Corporate Library, a watchdog organization that rates board directors’ performances, cautions against serving on more than three corporate boards and recommends limiting participation on only two for active CEOs.
“With the amount of workload that directors are having to take on, it’s very, very difficult for a director to do the job properly,” Paul Hodgson, a senior research associate with the Corporate Library, said.
Sheehan draws the line at serving on three boards. “Beyond that, you’re probably pushing yourself, especially with the committee meetings,” he said. “It’s a lot of work.”
Not as easy as it used to be
The show-up-and-cash-checks atmosphere of board participation is a thing of the past, most observers agree, due to a combination of legislation, shareholders who have found their voices and the media probing into the workings of corporate boards.
Shirley Westcott, managing director of policy with Proxy Governance Inc., a shareholder advisory firm, said her organization raises flags on participation on more than six boards but also tries to make a nuanced judgment. “We take a look at how expansive the commitment is,” she said, adding that an individual is judged on the number of meetings attended, committees chaired and if the person is on multiple audit and compensation committees.
Westcott refused to pass judgment on individuals, but in May Proxy Governance urged shareholders to withhold their votes for Tese because of his role on the compensation committee of Gamco Investors, the parent company of Gabelli Asset Management.
Mario Gabelli, the company’s chief executive, took home $55.5 million in 2005 even though assets fell 7 percent and Gamco’s stock took a 10 percent dive. Proxy Governance’s analysis found that Mario Gabelli’s pay was 4,607 percent above the median of CEOs of peer companies, Westcott said.
Tese said his work for the boards is rewarding but he never forgets that his role “is a duty to the shareholders.”
