Ira M. Millstein tribute

Stephen M. Davis is a Senior Fellow at the Harvard Law School Program on Corporate Governance and a Co-organizer of the Capital+Constitution project.

“Giant” is the word many would use to describe Ira Millstein as a shaper of modern corporate governance. But the word he preferred for himself was “cricket”, as in the character in the Pinocchio story who sits on a wooden shoulder urging the puppet to behave. In a 2009 email Ira explained “I felt that that [cricket] was always my role with the directors, nagging, but fondly, for them to become people with consciences.”

Ira died at aged 97 on March 13, having devoted his eventful life to guiding corporate directors, CEOs, regulators, lawmakers, and institutional investors toward paths of integrity and accountability. His impact was vast. The New York Times obituary the next day focused mainly on the vital missions he led on behalf of his beloved New York City. But he was an architect of the global capital market as well.

In May 1988, Ira opened a conference at Columbia University inaugurating a new project on institutional investors and corporate governance—the first such venture. He had already advised boards at big companies from his perch at Weil Gotshal & Manges on how to replace cronyism with professional oversight. But Ira had arrived at a powerful insight: the clout of institutional investors was essential to propel market-wide reform. He needed to awaken not just corporate boards, but corporate owners.

Ira started most prominently with General Motors. In 1992, he developed its Board Guidelines on Significant Corporate Governance Issues, “the first known example of corporate governance guidelines to supplement bylaws”, as Peter Gleason of the National Association of Corporate Directors (NACD) put it. Ira would long work through the NACD to promote director professionalism, but his thinking began to reverberate abroad. The GM Guidelines influenced the Cadbury Report and Code, which established national corporate governance standards in the UK. And before long, Ira chaired the OECD’s Business Sector Advisory Group, which laid foundations for the first global principles on corporate governance in 1999. These literally hauled corporate governance from the periphery to the center of international business practice. One year later, he keynoted a World Bank conference I chaired in New Haven that for the first time brought together emerging market corporate governance advocates. Ira continued his mentoring and thought leadership through books—especially the groundbreaking The Recurrent Crisis in Corporate Governance (2003)—outlining how directors should exercise effective oversight of companies.

At the same time, Ira bucked the then-consensus in the corporate community that investors should be passive endorsers of all things corporate management. He envisaged and promoted the rise what we now call investor stewardship, in which shareholders apply skilled oversight to portfolio company boards. He regularly galvanized conferences of the US Council of Institutional Investors (CII) and the International Corporate Governance Network (ICGN) with visionary goals. And his impact was real. The CII observed in a statement on Ira’s passing that a speech he delivered to the group in 1987 helped turn “CalPERS, and the investor corporate governance movement more generally, to focus on performance and board effectiveness.”

I first met Ira at his 1988 conference at Columbia. But his 36-year role as mentor to me took on new dimensions when I joined his start-up Millstein Center for Corporate Governance and Performance at the Yale School of Management (SOM) as executive director. From 2005-2012 he would call or email at all times of day and night as he steered a relentless agenda aimed at driving market change from all directions. Yale’s Chairman’s Forum set a compass for independent board chairs. Our Conference of Fund Leaders did the same for mutual fund boards. Our Systemic Risk Council would prompt new multidisciplinary analysis of global financial threats. Papers on stewardship pointed the way for investor engagement. Another pioneered a code for proxy advisors. Millstein Center conferences in Shanghai, Dubai, and Berlin, as well as at Yale, recruited new corporate executives and investors to corporate governance. And in 2010 we brought Alexey Navalny to the Center as a fellow, allowing him to expand on his ideas for a fairer capital market in Russia.

When after seven years a new dean closed the Center to focus SOM on other priorities, Ira simply opened a related body—the Millstein Center for Global Markets and Corporate Ownership—down the road at Columbia Law School. It has proudly carried on Ira’s work.

Ira had iron principles and ethics. Conflicts of interest and corruption were his special targets. But he also had innate pragmatic smarts that allowed him to navigate impediments. Faced with a hurdle, he would first let loose an outraged cry of “Why not??!!”, but then quickly direct strategies that brought parties behind him. He understood the cultures and tongues of the diverse communities that comprise the business world: he spoke director as fluently as he could speak shareholder. Indeed, one of the most telling tributes to Ira is that groups often at loggerheads, such as directors and shareholders, each considered Ira their special champion. He was charismatic, with an infectious laugh, a sense of mischief, and a fierce will to win. Those around him were happily loyal to him. Moreover, Ira forever stood ready to help younger professionals, especially through the Millstein Centers’ Rising Stars of Corporate Governance awards. He delighted in handing those out.

I last spoke to Ira three weeks before his death when I called to share grief about Alexey Navalny’s passing. Ira was by then struggling in health, but for days after our conversation he emailed draft statements to release. “Add to it appropriately if you’re so disposed, but let’s do it!” That was Ira—he never retired or felt the job done. Ironically, I had had a date to visit him in his Mamaroneck home the week after he died, having been deputized to deliver him the ICGN’s Lifetime Achievement Award.

There is a very Ira-like coda to the Pinocchio story. While he saw himself as the “nag” on the shoulder of directors, Ira wrote in that 2009 email that “this morning I read about a new translation of Carlo Collodi’s original story of Pinochio. In it, the cricket is indeed cajoling Pinocchio, but he comes to an untimely end. Fed up with the cricket’s advice, Pinocchio grabs a wooden mallet and flings it at the cricket, who dies at once, splattered on the wall. Of course, Collodi in the rest of the book shows how right the cricket’s advice was. But even he seems to take delight in having this wearisome pedagogue obliterated with such panache.”

“For me,” Ira concluded, “the image of being splattered on the wall has tempered my enthusiasm for achieving crickethood.”

So perhaps we’ll just leave it at “giant”. Thank you Ira.

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