"CORPORATE GOVERNANCE actually was quite actively debated in 1951 when I began my career, although there were virtually no examples of mutual fund activism. In my Princeton thesis I did write about the role of mutual funds in corporate governance. One of the case examples was Montgomery Ward and how certain funds, including the Wellington Fund, were protesting the management of the company under Sewell Avery; its CEO. Remember that famous picture in Life magazine of a couple of soldiers carrying him out of his office as he was sitting in his chair? Whatever he had done to get himself in trouble with the government, it likely had something to do with corporate governance. That is the first time I heard the phrase "If you don't like the management, sell the stock."
The board of the Wellington Fund was probably typical of that time and the way things were done. It was a local board. There were some friends and even relatives of the chairman on the board. There was at least one stockbroker on the board, because management wanted that director to sell the funds. There were no women on the board. There were no women in business at all that I can recall, except for secretaries. That was the era, so you can't find fault with anybody. You can't be outside of your era.
I remember the board meetings well. It's kind of a strange job being a fund director -- you don't know exactly what you are supposed to do because there is no operating company to oversee. So the directors would meet every month to listen to the portfolio changes for the previous month -- we sold this number of shares of this stock for this amount because of the earnings outlook, and on and on. If a director got impatient with the discussion, he would say, "What's management want? What's management want?" Then after a nice lunch one of the directors would say, "Isn't it time to end the meeting?" A very different kind of environment.
When I got into a position to bring directors into the Vanguard Group, I was never particularly interested in putting my friends on the board. Fundamentally, it just didn't seem to be a good idea. We had one of the early nominating committees in the fund business.
In recruiting board members, let me first say what I did not look for. I did not look for an area of business specialty. I did not look for someone, for example, out of the technology business. We had our own technology group. A director is not going to be able to tell them what to do -- and if he...