Corporate Governance & AIG's New Director Requirement: Is It Enough?

Yesterday, CNBC reported that AIG is now requiring its directors to own at a minimum of $100,000 of the company's stock.

On one hand, it's good to see a company move in this direction, as I have written a prior post on this topic.

However, one has to wonder, do these men and women even notice $100K? If you'd like to see who is on the AIG board, go here. While a few of the board members are from nonprofits, several of them clearly have significant wealth, which makes the minimum stock ownership, frankly, a joke.

Isn't something like owning stock equal to 2-5% of one's net worth more compelling? Were I a shareholder, to tell me that a multi-millionaire director has $100,000 of AIG stock in her or his own name would mean nothing to me.

So, to tell me that Richard Holbrooke, Stephen Hammerman, or Virginia Rometty each have less than 2% of their net worth in AIG, on whose board they sit, is to tell me that they really have little personal stake in the result of their efforts on that board.

I believe it's changes like this, by AIG, that make a joke out of the concept of improving corporate governance.