The Would-Be Governor From Goldman Sachs

Meg Whitman, ex-CEO of eBay, the successful San Jose online auction company, is running to be elected governor of California. Onlookers universally credit her with leading eBay from a small Internet tech business, founded in 1995, and which she joined in 1998, to a $36 billion dollar online auction and Internet company, from which she resigned in 2008. Along the way, Ms. Whitman accumulated a few barnacles, to which understandably Ms. Whitman has not brought attention and now she says she did nothing wrong.

In 2002-04, Meg Whitman was the poster child for a fraudulent practice known as "spinning." She received preferential allocations of scarce IPO shares in technology and other hot stock issuances, very likely to shoot up in price after the offering, assuring that profit making for stock recipients would be identical to shooting fish in a barrel. New York investment bankers, particularly those at Goldman Sachs, hopeful of receiving eBay's future investment banking business, controlled those hot issues and made the allocations to Whitman. Ms. Whitman has denied any knowledge of the wrongdoing although Goldman bankers funneled shares to her accounts in over 100 instances. After being sued, Ms. Whitman disgorged several million dollars, tacitly admitting that any opportunity in being awarded favorable treatment by investment banks belonged to the corporation (eBay), not to the CEO.

Favorable allocations for the corporate bigwigs with whom bankers wish to curry favor means that what the corporations represent to be "public," namely stock offerings, are not truly public, at least all the way across the board. There also are age-old equity issues. Is Whitman's spinning episode emblematic of yet another instance in which the rich get richer while the little guy goes hand-to-mouth?

Meg Whitman has also been a trophy director, serving on 6 or more large corporation boards of directors at once (Proctor & Gamble, eBay, Dreamworks, GAP, SKG, and Goldman Sachs (until she resigned ), as well as Princeton University). In these Sarbanes-Oxley Act days, governance experts frown on any individual serving on more than 2, perhaps 3, major boards. The inference is that Ms. Whitman allowed herself to be used as a token. A further inference is that she has crowded out other deserving candidates, including other deserving women, for director positions.

In their quests to be CEOs or achieve other high stations, aspiring women corporate executives sidestep from one corporation to another, or from one sector (say, fashion or retailing) to another (food and beverage, or telecommunications). Successful women may do so more than once or in a career. Sidestepping is an ingredient of most successful career progressions. Meg Whitman, however, wins the sidestepping competition hands down, so much that she might be termed a "job jockey." Before she came to eBay, she held positions, among others, at Proctor & Gamble, Bain Consulting, Walt Disney Company, Stride Rite Shoes, Florists' Electronic Delivery (FED), and Hasbro Toys.

What does this portend for California voters? The spinning episode, and especially her continued silence about it, may indicate a moral blind spot, possibly a coverup, and a close connection with Goldman Sachs. We may not expect our political candidates to be squeaky clean but 100 allocations over several years? Trophy director status (7 major boards at one time) often comes with arrogance and megalomania. The voters may not want those qualities in their governor. Along related lines, Ms. Whitman's seeming willingness to be trotted out as a token woman may trouble onlookers. Voters generally want movers and shakers, not symbols and figureheads (think of Warren Harding). Her bonds with Goldman Sachs raise questions, which she should talk about as well. Only her myriad job switches seem capable of an explanation (partial). Meg Whitman was following her husband, a successful neurosurgeon who transferred to several geographical locales and flickered between academic medicine and private practice.

So Meg Whitman may not quite be the "golden girl" her backers describe. California voters might be getting something quite different than they thought they had voted for, if she is elected.

Douglas M. Branson is the Condon Falknor Professor of Law at the University of Washington, the W. Edward Sell Chair in Law at the University of Pittsburgh, and author of The Last Male Bastion - Gender and the CEO Suite at America's Public Companies (Routledge 2010).