The attack by Prof Brennan, of the Institute of Corporate Governance at UCD (The Irish Times, May 2nd), on the Irish Bank Officials Association's call at our recent conference for consideration of having worker directors on the boards of Irish banks tells us much of the kind of elitist and self-serving agenda being propagated and taught in some of our universities.
In the face of the stunning corporate scandals in the US, Britain and to a lesser extent in Ireland, undertaken with the complicity a number of professional individuals, companies and especially company directors, is it not remarkable that a lecturer in corporate governance, of all things, should choose to highlight and criticise a suggestion of giving the key stakeholders in any firm, the employees, a say in the running of their business?
It is my contention that if more worker directors or employee-nominated directors were on the boards of these companies, there would not have been the level of scandals that we have seen from the fraudulent accounting at Enron, Tyco, Worldcom and other such companies. There would not be such outrageous pay and share options and golden parachutes for underperforming chief executives and other executives.
The boards of most companies have non-executive directors who are supposed to oversee the performance of the executive directors. There is a major international debate taking place on this area and I would have thought that academics in corporate governance might be better served at pouring their invective on these puppets than on the idea of worker directors.
However, it appears there is an agenda to keep the boardroom safe from the prying eyes and legitimate questions of the real stakeholders, not those with a few thousand shares in the company, but employees with a lifetime commitment to work and loyalty.
Prof Brennan states: "I believe the conflicts of interest for a worker director are so systemic as to completely undermine their ability to carry out their duties as directors." This is an amazing and inconsiderate insult to the excellent work that numerous worker directors undertake in some of the largest and most successful companies in Ireland such as the ESB, Aer Lingus, Aer Rianta, An Post, Coillte, etc. Indeed some of the most successful companies in the world, including Daimler Chrysler, Siemens and all large German companies, have worker representatives on their main boards. Prof Brennan admits that "worker directors are widespread across Europe", so does this imply, worker directors are okay for Europe but not for Ireland?
These views are totally out of sync with modern thinking on transparency, participation and partnership. Partnership has worked remarkably well for the Irish economy over the last 14 years and is beginning to work at enterprise level. In line with this partnership approach, consideration should be given to workers or their nominated representatives on the board of companies, at the very least to keep an eye on the small elite of non-executive directors who run most companies.
I would suggest if there were more employee-nominated or committed directors on the boards of private and publicly quoted companies here and in the US, we would not have had the accounting scandals, we would not have had the scandals of exorbitant CEO pay and benefits and the outrageous share options, and we would not have had the hundreds of thousands of job losses that ensued when corporate greed was exposed.
The overbearing focus on shareholder value in the 1990s has led to even a greater emphasis on short-termism.
It was this myopic focus that bred the scandals as the CEOs and the CFOs boosted their share options with the ready acquiescence of so many so- called independent non-executive directors. These are the areas to which academics in corporate governance should be directing their attention.
The call for worker directors is timely and relevant to developments at national and European level. Worker directors are needed now more than any time in corporate Ireland and indeed I would go further to argue that they are a necessity if the true meaning of partnership at enterprise level is to be achieved.
Larry Broderick is general secretary of the IBOA
