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Enron's Quiet Outages
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Enron directors were serving on the boards of nearly two dozen other public companies or mutual fund families at the time of Enron's collapse. Gramm resigned almost immediately from the Invesco Funds board, and Jaedicke stepped down from the California Water Service Board.
But efforts in 2002 by organized labor to get former Enron director Frank Savage, a professional money manager, booted off the boards of Lockheed Martin Corp. and Qualcomm Inc. did not immediately bear fruit. Only 28 percent of Lockheed Martin shareholders withheld their votes, and he remains on the board.
"He's a valuable board member and has a long and distinguished association with our company," said Lockheed spokesman Jeff Adams. Savage resigned from the board of Qualcomm in 2004.
Similarly, Enron board member Norman P. Blake Jr., the former chairman of Comdisco Inc., remains on the board of Owens Corning, where he has served as a director since 1992. Company spokesman Jason Saragian said: "Our board reviews our director's independence and effectiveness as a part of good governance practices. Mr. Blake has capably met the requirements."
The union campaigns fell short in part because Enron was the first spectacular corporate collapse and shareholder activists were still feeling their way, said Richard Ferlauto, director of pension and benefit policy for the American Federation of State, County and Municipal Employees. "This was before the use of the withhold vote as a tactic had really been refined. Enron gave the boost to all the reforms that followed," he said.
Over time, many of the former Enron directors have dropped off other boards. Right now, though, six of them sit on the boards of at least eight companies or mutual funds.
Analysts and even one of the Enron board members agreed that the public scrutiny and vilification they endured had positive results. "What the whole episode has done is to bring out corporate policies for a badly needed ventilation for the American people," Walker said.
Columbia University law professor John C. Coffee went further. "Directors are doing better. . . . The audit committee is coming to learn a great deal more," he said. "There is now the fear waking up and finding yourself on the bridge of the Titanic and you've just hit the iceberg. The embarrassment cost has definitely gone up."
Staff researcher Richard Drezen contributed to this report.
