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A Traitor to His Class: Robert A.G. Monks and the Battle to Change Corporate America

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A Traitor to His Class, Robert A.G. Monks and the Battle to Change Corporate America, John Wiley & Sons, Inc. by Hilary Rosenberg

Consider a book about a large man who built a small fortune in order to carry out a big idea. This biographical work extends the lessons of Robert Monks' previous books, Power and Accountability (1993) and Corporate Governancej (1995), about the need for reform of American corporate governance and together they constitute the best source for the intellectual origins and history of that movement, a subject (now after twenty years) part of every business school syllabus.

To those who know him, Mr. Monks is a large man, not just in physical power but in the energy of his mind and vision. It must have taken more than rowing in the Harvard and Cambridge eights to generate the qualities needed to put his ideas on the national agenda. The words relentless, persistent, methodical, demanding, resilient, self-questioning, optimistic, risk-taking occur to many of his allies and opponents in the struggle. Experience counts, too. Along the way Mr. Monks is observed in various roles: lawyer, real estate businessman, CEO, venture capitalist, fund manager, director, politician (unsuccessful) and public servant. The battle plan appears to be to surround the problem and attack from every angle. Not every engagement is a victory. Time and again he bounces back.

There are plenty of numbers in the book for the specialist reader. You learn about how to take over a company without putting up any money, rather as a chef uses egg whites to conjure up a soufflé. The essence of the problem is that there are 800,000 pension funds governed by the Department of Labor's ERISA program. They own publicly traded shares to a value of $1.25 trillion or 25% of the U.S. equity market. The power of their ownership, until Mr. Monks and a few others came along, was unrepresented and therefore ignored by American corporations. Left unsaid is that the financial press must have been asleep for a few generations, accepting press handouts from corporations rather than responsibility to report on corporate America.

When you think about it, the idea is a big one. It dawned as an epiphany on Mr. Monks in 1977 when he chanced upon a proxy form of a large paper company which he knew to be polluting a river in Maine with its discharge. Why are corporations not accountable to their shareholding owners, what are the requirements of corporate governance? He becomes the Pensions Administrator at the Department of Labor where he is able to change some rules of the game. He goads major pension funds into recognizing their power and responsibility. He establishes the leading company in the field of proxy management. All the time he is amassing information, advocating his cause in any and every forum, writing the text book, girding for war.

Chance favors the prepared mind, said Louis Pasteur. Mr. Monks was ready to take the battle to corporate America. Sears, Westinghouse, American Express, Eastman Kodak, Stone and Webster and other poorly managed, undervalued companies became the targets. The names have a ring to them, like the names of Napoleon's battles. Mr. Monks called for better financial management, strategic planning and corporate governance. He asked for confidential shareholder voting, the addition of independent directors, the elimination of staggered boards, accountability to shareholders and (usually) the spin off of unprofitable businesses. The aim was to create greater value for shareholding owners through better management. The CEO's and the boardrooms didn't like it. Many of them slammed the door in Mr. Monks' face or kept him waiting for hours as a deliberate insult. Most of them could not survive. It was left for their successors to follow Mr. Monks' recommendations and watch the value of their shares rise. A good feature of the book is that the opposing CEOs were given a chance to have their say. Some of them preferred to keep quiet.

Mr. Monks is better off for it, and so are we. But most of all this book is a tribute to the power of an idea and what it takes to make it work.

George Herrick

Hilary Rosenberg has successfully woven together an engaging biography of a fascinating figure in the corporate world, an intriguing tale of the machinations of big business and government and a necessary primer for corporate shareholders, board members and officers on what rights, responsibilities and duties each has and should expect from the other. Ms. Rosenberg's writing style not only keeps the pages turning for the uninitiated reader but her excellent documentation throughout the volume allows the serious student to use this book as a reference source. A great read for all and a must read for every corporate shareholder, officer and board member.

A minister's son takes on the corporate establishment in this illuminating and exciting story of business, politics, and the power of ideas. Robert Monks says, "I've got this beautiful place, a beautiful wife, more than anyone can ask for. What else should I do with my time but think about big important issues?" He does much more than think -- as he also says, "You were not put on earth to be a spectator." His thoughts about big, important issues like corporate governance and accountability have transformed the behavior of every corporate director, every CEO, and every institutional investor in America. His adventures in breaking up Sears, replacing eight directors and three CEOs at Stone & Webster, and running in a roller coaster senatorial campaign read like a Tom Wolfe novel. Monks confronts CEOs (even picking one up and threatening to throw him through a window), takes out a full-page ad in the Wall Street Journal calling the Sears board "non-performing assets," and runs as an opposition candidate for one seat on the board of Sears. The lively and perceptive writing matches the lively and engaging subject. Must reading for anyone in the corporate world as a manager, director, or shareholder.

Robert Monks is a kind of a modern day "Don Quijote", battling single handed against corporate dirty tricks. This book tells the very interesting story of how the modern corporate governance movement got under way. A very important read.