Vetting A Potential O-Veep

David Sirota has a nice rundown on why Evan Bayh’s Iraq war cheerleading should keep him from the becoming the O-Veep. In the same post, Sirota politely describes moveon.org as a partisan tool and explains why partisan tools can undermine important movements. Peace movements, for example. He goes on to conclude that Evan Bayh as a vice presidential candidate would weaken Obama’s popular anti-war position. I agree.

I’d like to suggest one other movement that could be at risk if Obama selects the passionless DLC veteran as his running mate: affordable healthcare. Why would Bayh be tempted to stand in the way of healthcare reform? Because much of his wealth comes from his wife’s activity as a professional corporate Board sitter:

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.

The intersection of the Bayhs’ professional lives illustrates the touchy ethical situation some couples face when one spouse is employed by the taxpayers to watch out for their interests and the other is duty-bound to work for the financial interests of only a small group of people – the shareholders of the companies they direct. ”

Last year, Susan Bayh served on the boards of six publicly traded and two privately held companies, putting her into a class described as “professional board member.”

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.
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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.

Susan Bayh’s advice on how to direct businesses has been sought especially by pharmaceutical companies. She was a lawyer for Eli Lilly & Co., the Indianapolis-based pharmaceutical company, for five years while her husband was Indiana’s governor. Since 2000, she has served on the boards of eight companies that develop drugs.

One of the Bayh’s main feeding troughs is Indianapolis-based WellPoint, Inc.  WellPoint is the country’s largest health insurer and now covers one in nine Americans. Susan Bayh sits on WellPoint’s Board. So does William Bush, the President’s uncle. The reporter for the Fort Wayne Journal Gazette who wrote the above article (now behind the fee-based firewall) also wrote this one:

Stock options pile up, pay off for Susan Bayh

WASHINGTON – Without billing any clients or cashing a paycheck, Susan Bayh collected $248,700 so far this year in income from one corporation.

By exercising stock options she received for sitting on the board of insurance giant WellPoint Inc. and selling the stock when it was near its highest price of the year, Bayh took advantage of one of the parts of compensation given to the directors of many publicly traded companies.
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In the past four years, Susan Bayh told the SEC:

• In January, Bayh exercised the option to buy 3,333 shares of WellPoint stock at a price of $44.18 per share. She sold all of them for $78 per share, a pre-tax gain of $112,722.

• In May, Bayh exercised options that allowed her to buy 3,334 shares of WellPoint for $44.18 apiece. She immediately sold them for $84.95 or $84.98 per share. The stock traded between $84.15 and $85.45 that day, its highest price all year. Bayh’s pre-tax gain was $135,978.

The price slipped a few days later when WellPoint announced it had fired its finance chief for misconduct unrelated to the company’s business. The health insurer’s stock slid further when the company’s second-quarter report didn’t jazz investors despite an 11 percent profit.

On Friday, WellPoint stock closed at $86.16.

• Last year, she had a pre-tax gain of $796,078 when she exercised options allowing her to buy 20,001 WellPoint shares for prices ranging from $35.85 to $44.18 a share. She sold the stock for $77.08 a share.

• In 2004, Bayh’s pre-tax gain of $400,942 was based on 11,666 shares of WellPoint stock she bought for $71.86 or $71.70 and sold in eight blocks of stock for $106.10 to $106.40.

I don’t think selecting Evan Bayh as the O-Veep would be wise, even if Obama’s intent is strictly partisan, to go after Republican votes in order to take Indiana in the election. The electoral strategy might work, but with the corporatist Bayhs at his side, such a choice could well work against the popular movement for healthcare reform, a movement Paul Krugman mentioned as one of the most important to Democrats:

The draft Democratic Party platform that was sent out last week puts health care reform front and center. “If one thing came through in the platform hearings,” says the document, “it was that Democrats are united around a commitment to provide every American access to affordable, comprehensive health care.”

Can Democrats deliver on that commitment? In principle, it should be easy. In practice, supporters of health care reform, myself included, will be hanging on by their fingernails until legislation is actually passed.
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So I’m nervous. The history of the pursuit of universal health care in America is one of missed chances, of political opportunities frittered away. Let’s hope that this time is different.

Krugman should be nervous, especially If Evan Bayh is selected as the O-Veep choice. What could lead to an incremental partisan gain in electoral politics, could result in a major movement setback.

Fingers crossed.

Posted by poputonian on 08/16/08 at 07:44 PM • Permalink

I’m really hoping the Bayh rumors are just a head-fake too. I will be bitterly disappointed if Obama chooses Bayh.

I’m hoping it’s a head-fake, too. One of the web-sites reporting on the Sylvia Smith articles said they were getting hits from a major New York law firm with close ties to Obama. The law firm got there through a google search on Susan Bayh and was somehow apparently tied to a post about Emmis Communication, where she is on the Board. Seems she’s been in some hot water with a major shareholder who has accused her of failing in her duties as the lead director.