In the current business climate, unethical practices have become commonplace and independent firms have made it their mission to hold businesses accountable, Yale University School of Management Associate Dean Jeff Sonnenfeld said. But, he said, University Secretary Linda Lorimer has become an accidental and unlikely target of one independent firm’s wrath.
Lorimer currently sits on the board of Sprint Corp., a telecommunications company. Institutional Shareholder Services, a proxy voting firm that advises major investors, recently accused Sprint of overpaying chairman and CEO Gary Forsee. ISS said on April 7 it was unhappy with the compensation committee of Sprint’s board of directors and urged shareholders to withhold their votes for Lorimer, who is not a compensation committee member but is the only Sprint board member seeking re-election this year.
Lorimer said ISS’ recommendation to withhold votes for her re-election was “deeply disappointing.”
“I have worked hard in the last two years to introduce many corporate governance improvements to Sprint,” she said.
ISS issued a press release last week clarifying its purpose in targeting Lorimer’s opportunity for re-election. The firm said its actions were meant to target the compensation issues regarding Forsee’s salary.
“Our withhold recommendation was not meant to solely single out Ms. Lorimer,” ISS said in the alert. “To her credit, Lorimer has played a key role in many of the corporate governance initiatives throughout 2003 and 2004.”
Sonnenfeld said in the business world, clarifications such as these are rare and prove that ISS’ allegations were not accurate. He said ISS’ actions were not supported by any facts and the firm’s allegations targeted the wrong person.
“[ISS] is going to look foolish by making her out to be anything more than a hero,” Sonnenfeld said.
Sprint fired its CEO and president last March for a tax auditing problem before any allegations were made against the company. He said Lorimer, as a member of the Sprint board, has shown “impeccable moral integrity” about controversial issues.
“This is, in fact, not just a board that ought to be celebrated but a particular individual who has been a force for change and somebody Yale should be proud of,” Sonnenfeld said.
Sonnenfeld said he is confident this controversy soon will fade away.
“I’m certain she’ll be reelected and it will be a non-issue,” Sonnenfeld said.
Lorimer has been a member of the board of directors at Sprint since 1993. She was also recently named presiding director of textbook publisher McGraw Hill’s board, University spokeswoman Helaine Klasky said.
University administrators are popular choices for board positions, Lorimer said.
“Many university presidents and seniors officers are chosen to be on corporate boards for two reasons,” Lorimer said. “First, they manage equally complex organizations and can offer a sense of stewardship. Second, their affiliations with universities are viewed as particularly impartial and helpful in protecting the shareholders interests.”
Lorimer also said as a member of corporate boards she gains experience useful for her responsibilities at Yale.
“I find service on a corporate board makes me a better administrator at Yale since I get insight into strategic planning, human resources and general leadership that I can bring home to Yale,” she said.