is not one to give up. Even after the fund industry veteran (he's 83) advertised his availability as an independent director in a trade publication and was profiled in a Wall Street Journal article
in April, Straus is taking his campaign to break into the independent director business one step further.
Straus' firm -- Straus Communications -- recently launched a service to match aspiring independent director with fund boards seeking directors.
He took out an ad in Barron's
one month ago for the Mutual Fund Directors Resource, and says he had been "absolutely inundated" with responses. Although most of the respondents were older retired or semi-retired people, Straus considers the older bias a plus, not a minus, and, he notes that most of the applicants have significant experience in the fund industry.
"Wisdom and experience are crucial [for independent directors]...some of these scandals may not have happened if guys were 70 or 80, thinking beyond making money."
But the demand side of the equation seems a little lacking. Although many industry watchers suspected that the new SEC rule mandating independent fund board chairman and a supermajority of independent directors on fund boards would boost the demand for directors, it is unclear whether that is the case.
Although Straus has 30 to 40 qualified candidates on board, he has yet to hear from a fund company.
Straus posits that either the funds must already have the quota that they need, or are just not yet hiring. "I'm not seeing anybody taking action," says Straus.
The lack of demand that Straus is seeing begs a few questions: are funds still relying on the "old boy" network for hiring directors? Is there really an increased demand for directors?
Straus theorizes that the big fund groups probably already meet the new requirements, or can switch directors around internally to meet the rules. The smaller fund firms, with just a few funds in their families are likely the ones that need new directors, says Straus.
One factor complicating Straus' job is that the process of hiring directors may differ at fund firms. Vanessa Chang
, an independent director of American Funds'
New Perspective, says that vacancies on her fund board are filled by a nominating committee composed of independent directors. It is the nominating committee's job to propose new directors, says Chang.
, an independent director for AIG SunAmerica
funds says that while the old boy method probably died ten to 15 years ago, personal relationships do matter in the independent director business. He adds that directors are more comfortable recommending people that they already know.
Another issue is the cost of using headhunters, although Eisenstat adds that expense is the "least" important reason against using a recruiting firm.
All in all, using a headhunter is a "last resort," says Eisenstat.
Sounds like Straus has his work cut out for him.
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