By The Trust Advisor, Contributor
Story written by Ronald Orol at The Street
The buyout-shop billionaire would need to extract himself from board positions at a number of companies including ArcelorMittal, the world’s largest steel company, to serve as Trump’s commerce secretary.
Private equity billionaire Wilbur L. Ross Jr. — best known for restructuring failed companies in industries including steel — may be President-elect Donald Trump’s leading candidate for commerce secretary.
Taking the post, however, would require him to step down from a number of public and private company boards and either sell investments or place them into a blind trust, according to governance experts.
Ross, 78, an economic adviser to Trump’s presidential campaign and chairman and chief strategy officer of buyout shop WL Ross Co LLC, a division of Invesco (IVZ) , is said to be considering whether he wants the job and didn’t respond to a request for comment.
Billionaire corporate raider-turned activist investor Carl Icahn seemed to confirm the possibility, though, with a Twitter post: “spoke to a @realDonaldTrump. Steven Mnuchin and Wilbur Ross are being considered for Treasury and Commerce. Both would be great choices.” Mnuchin is an ex-partner at Goldman Sachs (GS) and a close confidant of Trump.
According to data gathered by relationship mapping service BoardEx, a subsidiary of TheStreet, Ross sits on at least five public company boards: ArcelorMittal (MT) , the world largest steel company; the Bank of Cyprus, Exco Resources (XCO) , Sun National Bank (SNBC) and Nexeo Solutions (NXEO) , the company created when WL Ross Holdings Corp. bought Nexeo Solutions Holdings LLC from TPG Capital for $1.64 billion earlier this year, renaming the combined organization. Ross stepped down from a handful of boards when he took on the role of vice chairman at Bank of Cyprus.
“You can’t be the umpire and the pitcher in the same game,” Minow said.
Charles Elson, chief of the University of Delaware’s Center for Corporate Governance, agreed that Ross would need to step down from all public and private boards. Government service is 24 hours a day, seven days a week, “and you can’t be on a for-profit corporate board,” Elson said. “There is nobody with a federal appointment that is on a private company board.”
Right now, carried interest is treated as a capital gain, with a top basic rate of 23.8% as opposed to the top ordinary income rate of 39.6%. Opponents have argued that the tax structure allows the wealthy who manage funds on behalf of other investors to pay a lower rate than many middle-class families.
Posted by: The Trust Advisor