SAG’s NED Un-Debate – Vallywood replies to the critics

My post The Dog That Did Not Bark has struck quite a nerve on both sides of the aisle, so to speak, among SAG members.

Just to summarize the state of play for those who are catching up: SAG’s National Board met over the weekend, the first meeting of the board since the election of the new moderate SAG President Ken Howard. Howard was a no-show, but his new majority pushed through, without a widely expected fight with the Membership First opposition group, a two year deal with the interim chief executive of SAG (called the “National Executive Director”), David White.

White had been brought in early this year to handle the final stages of negotiations with the producers, which had been at a stalemate under Membership First’s leadership. The moderates had gained control of the national board in the fall of 2008.

I pointed out in my post that ordinarily a board like SAG’s would want to make sure that it satisfied its fiduciary duty of care when hiring a CEO and would not just hand the job to a candidate favored by one political faction on the board without going through a thorough search process.

But apparently Membership First raised few objections to the moderates’ decision; some even voted for White. One of my critics, Membership First backer Steve Barr, pauses long enough in his tirade against my arguments to indeed confirm that MF is keeping its “powder dry” for future fights.

So what might that future fight be all about?

I suggest that it is likely about the future of trade unionism for actors as the new moderate majority makes good on its promise to push through a merger with AFTRA.

Since that means the disappearance of SAG, it seems reasonable that the die hard Hollywood-based SAG loyalists largely found in Membership First may decide to go their own way. One anonymous commenter responded to my blog that if SAG and AFTRA merge s/he would go “fi-cor” (SAG’s equivalent of so-called “Beck Rights” in other unions). It is interesting that long time Membership First loyalist Seymour Cassel is indicating he may go “fi-cor,” allegedly in response to the disciplinary action from SAG meted out over the weekend by the same moderate controlled National Board.

Meanwhile over on the pro-moderate blog SAG Watch I am being accused of all sorts of crimes. Not really sure whether their insults are more entertaining than those from Mr. Barr but it’s clear I touched a nerve there too.

And like Barr they keep repeating the mantra about White: he is smart, nice and knows how to chair a meeting. I can’t help but recall  The Manchurian Candidate: “Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.”

images-23So why don’t we pass a little time playing solitaire?

It would appear that neither of SAG’s political alliances want a public discussion of just what might be going on beneath the surface. So let me lay my cards on the table.

The moderates want SAG to merge with AFTRA and that means SAG would become one division among several under a new umbrella labor group. Once that deal is done it will be much easier for the new bureaucracy to engineer further mergers, perhaps with Actors Equity now run by a big merger proponent, John Connolly, who used to head up AFTRA.

Then a merger with IATSE could easily follow (IATSE and AFTRA are already in an informal alliance) and finally, in a veritable dream for Rich Trumka and Paul Almeida of the AFL-CIO, everyone could land inside one of the big AFL affiliates like CWA (home already to the old NABET and Newspaper Guild).

Under this scenario one could easily understand the anxiety of Membership First – at best they now have a solid core of 40% support that can sometime swell closer to 55% of the Guild’s members. If you lump the votes of Cassel together with those of Anne-Marie Johnson in the recent presidential election you get the 55% number. If you go back to the last time merger was voted on you get the 40% number. In a newly merged entity MF would shrink to a permanent minority, very likely a conscious goal of the pro-merger elements.

Now I point this out only to suggest that it would be easy to see – Steven Barr protestations notwithstanding – why the Hollywood hard core of MF would start considering some other options and one of those that has always been on the table for them is a new independent union outside the AFL-CIO.

Does this mean I have thrown my (“tinfoil”) hat in with the MF crowd as the SAG Watchers put it so graciously? Have I drunk the “MF Kool-Aid” as one commenter put it?

Loyal readers of Vallywood of course know the answer to that question. MF’s narrow minded militancy did very serious damage to the Guild and any effort to form an independent union by them would likely bring on chaos and weakness to the cause of all actors.

This conclusion is reached with some mixed feelings. Membership First is right about the importance of the role of members in a union and they understandably reacted negatively to moves by NED Bob Pisano (and his general counsel David White) to run SAG more like non-profits such as the Red Cross or National Public Radio, where members are members in name only. But they picked a problematic figure from the football players union to implement their vision and have over the years developed an authoritarian, even paranoid, style that actually discourages membership initiative rather than encourage it.

But what then is my view of the merger idea?

Pretty simple. I have always understood the cost case for merger but I have never understood the revenue case. As a veteran of the world of M&A (mergers and acquisitions) I know that that is a critical question.

Merger partners usually can see how they can save on costs by reducing duplicative overhead (like one NED instead of three? four?) but they have a much harder time predicting the upside – how does a merged SAG/AFTRA do a better job of improving the lives of performers?

No one has made that case as far as I can tell in anything like the detail that would be necessary to convince me that it makes sense. My view is that SAG should build SAG’s power and capability and if some kind of reorganization makes sense they can enter into the process from a position of strength.

The moderate majority, however, has already committed to merger and yet has done nothing to strengthen SAG (other than dump Doug Allen, but that’s not saying much). In fact, in my view – one I expressed in discussions with some of their leadership – they weakened SAG by not making any attempt to increase SAG leverage in the last bargaining round. They found themselves, predictably, forced into two significant concessions in order to preserve the probably over-valued idea of 2011 contract expiration dates simultaneous with the other guilds.

One of the concessions is early “good faith” bargaining set to begin in October 2010 – something that SAG alone was forced to agree to and which obviously limits the potential impact of the June 2011 simultaneous expiration date!

Oh, and then the moderates used the pressure of that early negotiations to argue that the Guild had no time to exercise its fiduciary duty of care in the traditional way and had to quickly hire the lawyer who got them that great deal – David White. Since the moderates have controlled the national SAG board for a year, however, they could have started that search process at any time.

MF could have raised similar concerns but decided, as Mr. Barr notes, to keep its “powder dry.” Indeed, and so SAG has the the kind of NED that both sides need in the run-up to the real battle to come.

It is less clear how that helps rebuild the power and relevance of SAG itself.

3 thoughts on “SAG’s NED Un-Debate – Vallywood replies to the critics”

  1. Cooke, Pisano, Allen? They were not on staff, right?

    In any case the point of my post – which seems to have been missed – is that standard practice for all corporations whose directors want to make sure that they have a valid defense in case a duty of care violation is alleged regarding the selection of a CEO would be to do a search, to interview several candidates, perform background checks, etc.

    The concern here is that the selection looks political…as it has in the past, perhaps, but when directors even appear to act for reasons other than the overall interest of the organization it can spell trouble. The carrying out of an ordinary search process is a protective device, a safe harbor, for directors.

    Just because the organization has made the same mistake in the past – not engaged in searches, etc., would not provide a defense in this case.

    MF could have raised that objection and apparently did not or did not do so other than half heartedly.

    Presumably the directors of SAG all have indemnification provisions backed up by D&O insurance as I suggested elsewhere, but one would have to make sure that those do not have any carve-outs. In any case, a lawsuit seems a reasonably slight possibility, one would think. Of course SAG is being sued now by AR and AMJ but I don’t think they have sued the directors personally so they would not be on the hook.

  2. Whatever Ms Aubry means by “a proper search” I don’t know.

    There have been EXACTLY TWO “searches” to fill the office of the NED in all of SAG history – and those “searches” didn’t seem to turn out very well, and in many peoples’ opinions both were “a huge mistake.”

    Save for Greg Hessinger, all the other NEDs in the 75 years of SAG have been chosen from those previously on staff – as was David White.

  3. Although I know and like David White, personally, having worked closely with him in the past, I believe the board may have made a huge mistake by not going through a proper search.

    Your reference to the “Manchurian Candidate” I find very interesting.


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