Firm did not reveal Romney gifts to board
PACs got $230k from Marriotts while he held job
WASHINGTON — It was in 2009, nearly a year after dropping his presidential bid, that Mitt Romney accepted a position as an independent member of the Marriott hotel company’s board of directors. Such members are supposed to oversee a chief executive’s management on behalf of shareholders and not have connections to the executives who could affect their judgment.
During his two years in the job, Romney’s political action committees collected a total of $225,000 from the wife and brother of J.W. Marriott Jr., the chief executive and chairman of the board of
Marriott officials said neither Romney nor the chief executive disclosed the contributions to shareholders or other board members because the company’s legal counsel had determined that Romney’s independent status had not been compromised.
But two specialists in corporate governance said in interviews that while Romney did not appear to have a legal obligation to inform other board members or shareholders about the contributions, he could have followed the spirit of the law by doing so.
“It’s quite clear his independence was questionable,’’ said Suffolk University Law School professor Joseph Franco, former assistant general counsel at the Securities and Exchange Commission.
“As an investor, I’d want to know,’’ said Charles M. Elson, director of the Center for Corporate Governance at the University of Delaware.
There is no evidence that the contributions influenced decisions Romney made on the hotel company’s board. During his tenure, from January 2009 until January this year, the company’s stock price doubled to $41.50.
A spokeswoman for Romney, Andrea Saul, would not answer questions about disclosure of the contributions but said he quit the board in January because he didn’t want his political activities to conflict with his board duties.
Romney announced his presidential exploratory committee on April 11. Saul added that none of the money given to his political action committees “can be used for the presidential campaign or to advocate in any way for Mitt Romney’s election.’’
The Globe reported earlier this month that Romney spent most of the committees’ money on overhead for his political operation during the presidential off-season, including on political consultants, salaries for his staff, and travel expenses for Romney, all of which can be helpful in laying the groundwork for a presidential bid. The newspaper also reported that the Marriott family members were the largest contributors to the committee.
Romney has been questioned before about a similar matter. When Romney was running for governor of Massachusetts in 2002, the Globe reported that he had accepted political contributions from executives at Staples and Marriott at the same time he served on the firm’s boards in the 1990s. At the time, Romney said he “followed the rules of the road as we understood them at that time’’ and didn’t accept such contributions during his run for governor. He didn’t serve on any more corporate boards until rejoining Marriott’s board in 2009.
The New York Stock Exchange, which sets rules governing publicly traded companies, requires that a majority of board members be independent and tasks board members with deciding whether their colleagues are independent. Individual board members are responsible for disclosing any potential conflicts to their colleagues.
The stock exchange’s regulations covering the independent status of board members of publicly traded companies say they can’t have a “material relationship’’ with the company. The regulations do not specifically address political contributions from immediate family members of the chief executive.
In Marriott’s case, the board said in its 2010 proxy statement that it determined Romney was independent. In its 2011 proxy statement, issued after Romney had received the bulk of the Marriott family contributions last fall, the board said it had previously found Romney to be independent and that he had resigned as of Jan. 12, 2011.
The Marriott board member who chairs the committee responsible for deciding whether Romney was independent, Lawrence W. Kellner, declined to comment and referred questions to the company’s spokesman. The other members either could not be reached or did not respond to requests for comment.
Marriott spokesman Thomas O. Marder said the board members were not told about the contributions because they fell within regulations.
“When we became aware of the contributions, out of an abundance of caution the company’s legal counsel performed an analysis to confirm that the contributions did not affect Governor Romney’s status as an independent director,’’ Marder said. He declined to provide a copy of the analysis.
Romney has longstanding ties to the Marriott family. His father, George, was a close friend of J.W. Marriott Jr.’s father, the hotel chain’s founder, J. Willard Marriott, and gave Romney his first name in honor of the hotel magnate — Romney’s full name is Willard Mitt Romney.
After Romney’s failed presidential bid in 2008, J.W. Marriott Jr. recommended Romney for the board post. The company board voted to expand its ranks from 10 to 11 and appoint Romney to the new slot. At the same time, the board created a new committee, the finance committee, and made Romney its chairman.
The finance committee was charged with reviewing the company’s budget and actual performance compared with that budget. It also was responsible for providing guidance on proposed mergers and acquisitions.
In compensation for his two years of service on the board, Romney collected roughly $400,000 in fees, stock, and perks. He attended at least six of the company’s eight board meetings. His committee held nine meetings during his tenure, although it’s unclear if those meetings were held at the same time as the regular board meetings.
At the same time, Romney was active in politics through his political action committees. He traveled the country and spoke on behalf of candidates and raised funds for his political operation, collecting $10.7 million for his Free and Strong America PAC and its state affiliates. The chief executive’s brother, Richard, gave Romney’s committees $105,000. His wife, Donna G. Marriott, gave $120,000.
The company declined to detail what Romney did while he was on the board, saying any specific advice or counsel he provided is proprietary information, but said in general that Romney “knew our company very well and was extremely valuable to the board for his keen focus on capital deployment, strong strategic thinking, and business acumen and leadership.’’