Mitchell Consult Work Is Criticized
Walt Disney Co.'s new chairman, former U.S. Sen. George J. Mitchell, has praised the company for being at the vanguard of the corporate reform movement -- even if it got there with a shove from shareholders.
"We have established governance as a top priority for one reason," the renowned lawmaker and peacemaker recently told Disney investors and analysts. "It's the right thing to do."
The Burbank-based entertainment conglomerate recently split the jobs of chief executive and chairman and, earlier, ended business relationships between the company and directors. That hit Mitchell's wallet; as a Disney director, he had netted $300,000 in Disney consulting fees.
But the flow continued elsewhere. Regulatory filings show that after Mitchell stopped receiving the fees from Disney, he continued to earn them from other boards on which he sat. And that has prompted some governance experts and investment fund officials to question his sincerity toward reform and sensitivity to appearances.
"You would like there to be consistency," said Christi Wood, senior investment officer for global equities at the California Public Employees' Retirement System. "The fact is, if he really practiced what he preached and believes in good governance, you would think he would not be doing consulting work for companies where he's on the board."
Mitchell, who says his consulting work hasn't compromised his judgment, receives fees from two companies on whose boards he sits -- FedEx Corp. and Staples Inc.
According to proxy documents, FedEx, the overnight mail service, is paying Mitchell $100,000 a year for consulting work while he serves on the board's compensation and governance committees. So far, he is eligible to have received more than $800,000 since joining the board in 1995, according to regulatory filings.
Office supply giant Staples, meanwhile, has a deal to pay Mitchell $75,000 annually in stock for consulting services under an agreement established when he joined the board in 1998. Like several other boards on which Mitchell has served -- including Disney's -- Staples retained Washington law firm Piper Rudnick, where Mitchell is a partner. Disney no longer uses the firm.It isn't uncommon for high-profile public figures to command special payments for lending their expertise and names to corporate boards. But in the wake of scandals at Enron Corp., WorldCom Inc. and elsewhere, the practice has drawn fire from some investors and corporate governance activists. Their concern is that directors may have competing loyalties between the shareholders they are supposed to serve and the executives who put them on the payroll.
