Chelsea Clinton IAC board controversyCorporate-governance watchdogs are always on the lookout for flimsy boards, and they're on the case regarding a new appointee at IAC/ InterActiveCorp (IACI), a company that runs sites including Match.com, Ask.com, and Dictionary.com.

IAC has added a well-known Clinton to its board of directors: No, not either of those Clintons. They've appointed Chelsea Clinton, daughter of former President Bill and current Secretary of State Hillary.

No doubt Chelsea is smart. IAC Chairman and CEO Barry Diller said as much, pointing out that Chelsea adds a much-needed youthful, diverse viewpoint to the board. "Experience ... can be of no great value, while diversity, youth, character, and exceptional brain power [have] a good chance to create a fine contributing board member," Diller said.

On the surface, it's a good sentiment. U.S. boards do have big problems to address these days, including lack of diversity and lockstep views. They tend to be populated by men from similar backgrounds who exhibit similar mindsets and have very similar goals. It's very hard for a bunch of "yes men" to stand up against management and for shareholders, after all.

Still, youth doesn't trump experience in corporate boardrooms.

Good for Publicity, Questionable for Shareholders

This new appointment is a big -- and possibly bad -- deal for IAC shareholders.

Boards of directors are charged with protecting shareholder interests, whether many investors realize it or not. These days, plenty of corporate problems -- such as out-of-control CEO pay -- can be correlated with dysfunctional or flimsy boards that have nothing near an independent spirit that's willing to challenge management teams.

Now 31, Chelsea Clinton was in her teens during the dot-com bubble and only about 20 years old when it burst, for example. That was a make-or-break time for companies like IAC, but she was probably still pretty preoccupied simply with the process of growing up.

GMI's Nell Minow commented on Clinton's appointment on PBS's Nightly Business Report, arguing that the best directors have decades of achievement to speak for them. She also pointed out that IAC's Diller has a tendency to populate his board with "cronies," which is just one reason The Corporate Library gives that company a near-failing "D" grade for its corporate governance.

In addition, Diller supported both of Clinton's parents' campaigns, which gives shareholders no reason to believe this is the kind of independent director that helps make a robust boardroom. In fact, she sounds a bit dependent on her parents' careers at this point.

Name-dropping "important" or "known" appointees instead of adding truly experienced directors indicates weak corporate governance and madly waving red flags for shareholders. Hopefully, investors will become increasingly aware of the quality of the boards at the companies they own and vote their proxies wisely when it comes time for director elections.

Motley Fool analyst Alyce Lomax owns no shares of IAC/InterActiveCorp.


Increase your money and finance knowledge from home

Add a Comment

*0 / 3000 Character Maximum

9 Comments

Filter by:
danzillo4

Clinton has more "world wide operations" than GOD...Clinton has more "shady" contributors than "Al ACpone" did...
Clintons collect and use more taxpayers money than any other politrickster ever has or will..

October 03 2011 at 6:45 AM Report abuse -1 rate up rate down Reply
savemycountry911

Anything coming out of Bill and Hillary can't be good.

September 29 2011 at 9:47 PM Report abuse -1 rate up rate down Reply
janswizz

Isn't cronyism great?

September 29 2011 at 10:07 AM Report abuse rate up rate down Reply
cpo1514

No surprise here, heck even Vernon Jordan (Willies great friend) got Monica Lewenski a job in NYC in a high profile position for keeping her mouth shut....

September 29 2011 at 9:24 AM Report abuse rate up rate down Reply
ilm9p

Pretty blue eyes and blond hair goes a long way in support of an otherwise lackluster resume. That and flashing some thigh at a male interviewer will guarantee a job regardless of qualifications.

September 29 2011 at 7:22 AM Report abuse +2 rate up rate down Reply
1 reply to ilm9p's comment
poll100

Being a rhodes scholar looks pretty good on a resume.

September 29 2011 at 10:36 AM Report abuse +1 rate up rate down Reply
Setanta

well now,he supported both clintonZ and now chelseee's working for him,so somehow HE thinks there's something in this for his corp. LOL !

September 28 2011 at 11:06 PM Report abuse +4 rate up rate down Reply
marine1942

Dillard--now where have we heard that name before ?
Is her appointment like Al Gore being on Apple's board ? Well, he did invent the internet..

September 28 2011 at 9:02 PM Report abuse +3 rate up rate down Reply
Alessandro Machi

This is why females don't become president. They are supposed to have as much if not more experience than men, yet according to your article's perspective they can't take an important position to gain valuable experience because they are too young.

September 28 2011 at 7:37 PM Report abuse -1 rate up rate down Reply
1 reply to Alessandro Machi's comment
cpo1514

Andy And your post has exactly what to do with qualifications....

September 29 2011 at 9:26 AM Report abuse +1 rate up rate down Reply
alinosof

Back in 2008, the media told us that experience does not matter, one just needs to be very smart and inspirational. So we elected a legislator with no executive experience to run the most powerful country on Earth. Chelsea Clinton is already a member of the boards of the Clinton Foundation, the School of American Ballet, Common Sense Media and the Weill Cornell Medical College. It is more than enough experience for someone so young. All in all, it is a very good choice.

September 28 2011 at 6:41 PM Report abuse -2 rate up rate down Reply
Sue and Dave

payback for mommy and daddy for something Mr. Diller did for them politcally...you really think it's because she's a smart young woman?

September 28 2011 at 6:31 PM Report abuse +9 rate up rate down Reply