Since leaving Indiana as a first lady, Susan Bayh has become a professional board member, earning more than $1 million a year in director fees for advice she gives to companies that make pharmaceuticals, operate radio stations, sell health insurance policies, offer online banking and distribute ingredients to fast-food restaurants.
In the past four years, Bayh collected more than $1.7 million in pre-tax income when she exercised stock options from two of the corporations. Her actual income from exercising stock options is higher, but the details of one transaction were not publicly reported.
During the same time, her husband, Sen. Evan Bayh, D-Ind., cast more than 3,000 votes, including some on issues of keen interest to the pharmaceutical, broadcast, insurance, food-distribution and finance industries.
Bayh said his wife’s business interests never influence how he votes, the bills he introduces or the positions he takes.
“I can honestly tell you that if my wife did not have a job, none, I can’t think of a single decision I’ve made that would be any different. I look at what’s best for our state and our country and my own conscience,” he said. “My integrity matters more to me than anything, so I always do what’s right for the people who put their trust in me.”
Susan Bayh declined to be interviewed for this story.
Since 2003, Bayh has barred his staff from meeting with representatives of the companies which employ his wife. But is that enough? Ethics experts say no. "Banning lobbyists from Susan Bayh’s companies 'is a very narrow restriction that doesn’t really deal with the problem,' said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington." "The senator might refuse to meet with the four pharmaceutical companies his wife helps direct, Sloan said, but 'he’s not going to say I’m not going to see any pharmaceutical company or someone from PhRMA'."
Sen Bayh's basic defense is that he never discusses business with his wife. Smith writes, "Bayh said he and his wife don’t discuss her business interests, and he rarely talks about legislation the Senate is considering." “The reality is I don’t even know the people who run the vast majority of her companies. I’ve never even spoken to them,” Bayh said. “The reality is, we don’t talk about stuff that she’s involved with.” "Sloan said it’s not plausible to think a lawmaker-board director couple never discuss their jobs, and it’s unrealistic to think Sen. Bayh could recuse himself from any vote that affected the bottom line of businesses in industries his wife receives payment from." Smith cites a number of key votes Bayh has cast which specifically benefited companies which employ Ms. Bayh, including Emmis Communications and Curis Inc., which performs stem cell research.
Smith also questions Ms. Bayh's role essentially as a "professional board member." Smith writes:
For her work attending meetings and serving on board committees of six of the businesses in 2006, Bayh received $94,591 in cash payments and $816,436 in stock or stock options, the companies reported. A conscientious board member would have spent at least 32 weeks of full-time work on the business of serving on six publicly traded boards, according to an organization that trains directors and advocates for responsible boards.
Publicly traded companies must file annual reports with the Securities and Exchange Commission that disclose the compensation paid to board members. Privately held companies file no such publicly available reports.
Senators are required to file annual reports that list – in broad ranges – the financial holdings of themselves and their spouses. According to Sen. Bayh’s report for 2006, his wife’s stock and stock options in the eight companies were valued at $1.3 million to $2.7 million.
Susan Bayh’s income and assets from the boards are a major portion of the Bayh family’s net worth, according to her husband’s report. He said he and his wife have assets worth between $4.3 million and $15.1 million, not counting the couple’s $1 million Washington home, which is in Susan Bayh’s name.
Senators are paid $165,200 a year.
Susan Bayh’s position as a director for eight businesses puts her in the league of “professional directors,” a term used to refer to people who sit on multiple corporate boards and are not otherwise employed.
Whether professional directors benefit shareholders is debated among academics and others who study corporate boards.
“My view,” said Nell Minnow, president of The Corporate Library, which rates board performance, “is you can have just as many conflicts of interest. If you’re a professional director, the last thing you want to do is rock the boat.”
That’s a dangerous quality for a director, she said, because good directors are not reluctant to challenge the company’s CEO.
My reaction to any of the companies which put Bayh on their board of directors is more blunt. It's a joke. As Smith's article notes, the only real job Ms. Bayh has ever had in her professional career was that as an attorney at Eli Lilly for five years. Few question that had she not been married to then-Gov. Bayh's wife, she would have never been hired as an attorney at Eli Lilly because of her scant legal experience.
My only disappointment in Smith's article is her failure to list the work Sen. Bayh performed during the brief two years between being governor and elected as senator. Bayh basically put himself on the auction block to the highest bidder. He quickly got appointed to multiple corporate boards and became a partner at Baker & Daniels, allowing him to earn more than a million dollars during a period of time he was primarily fundraising and campaigning for the Senate seat he now holds. Not bad for a guy who entered politics in Indiana with little more than a used BMW with an out-of-state license plate and a $50,000 condominium.
Evan's father, Birch, represented Indiana in the U.S. Senate for 18 years. At the time of his election, he was one of the youngest members of the U.S. Senate. Prior to that, he was elected a state representive while still in law school at IU and served briefly as Speaker of the Indiana House of Representatives. I recall a long-time lobbyist and political observer telling me that when Birch Bayh and Vance Hartke were Indiana's two senators, the two were often derisively referred to as "Buy and Bought." Birch Bayh was linked to Korean businessman Tongsun Park, who the FBI had determined bribed a number of members of Congress during the 1970s, some of whom went to prison in the scandal referred to as Koreagate. The Senate Ethics Committee found Birch Bayh in neglect of duty for failing to report offers of money from Park, although Bayh always maintained he never actually received any money from Park. It looks like the younger Evan has mastered the art of accepting legalized bribes.