If not for some unnamed hero's vague recollections of something called the Jones Act—leading to an otherwise unexplained new interest in improving corporate governance—Cap'n Lloyd's Pleasure Cruisersmight still be in drydock.
In case you aren’t an aficionado of the rules of the high seas, the nearly 100-year-old Jones Act specifies that companies can’t operate a shipping vessel if non-American citizens account for half of the directors assembled to conduct business.
Therefore, the Jones Act created an unusual navigational problem for the New York company. The retirement of director Stephen Friedman left Goldman’s board of directors with 12 members. And three of them are foreign nationals: Mark Tucker, Lakshmi Mittal and Claes Dahlback.
That meant that if just six directors showed up for a board meeting and three of them were Tucker, Mittal and Dahlback, Goldman could be afoul of the Jones Act….
The company simply increased the number of directors needed for a “quorum” to seven from six. The move was disclosed in a securities filing Tuesday.
Voila! It is now mathematically impossible for smooth rides across the Hudson River on the Jersey and York to be threatened by the Jones Act.
“It’s not a bad thing to have a higher quorum number. It’s harder to get things done because you need more people there,” said Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance, named after a senior partner and one-time chairman of Goldman. “I would call it a shareholder-friendly move.”
Goldman Sails Around Maritime Law [WSJ MoneyBeat blog]