Mutual fund executives participating in a forum at the Investment Company Institutes General Membership Meeting in Washington protested a proposal by the Security and Exchange Commission to seat independent chairmen on fund boards, Reuters reports.
Robert Dow, a managing partner at Lord Abbett & Co who is also chairman of the companys board, condemned the idea as a setback for asset management companies. ICI President Matt Fink said mandating an independent chairman undermines the authority of the other independent directors. And Dawn-Marie Driscoll, an independent director for the Scudder Funds, said that independent chairmen were unnecessary since boards already have lead independent directors. "Why the mandate rather than the right choice?" commented John Brennan, chairman and CEO of Vanguard.
The Securities and Exchange Commission has said independent board chairmen are better suited to advocate shareholders interests than management officials. Paul Roye, director of the SECs investment management division, said at the ICI conference that the Commission hopes independent chairmen will give boards more authority to confront management on sensitive issues such as investment fees.
But mutual fund companies have since employed a variety of approaches to attack the Commissions logic. Fidelity Investments earlier this year produced a study citing statistics that painted a rosy picture of corporate governance meted out by board chairmen who are affiliated with management.