GM had a little difficulty with an undisclosed conflict of interest.Â The company awarded a $600,000 contract to ad agency, Mother New York, for promotion of the centennial celebration of Chevrolets.Â However, Pernilla Ammann is the chief operating officer at Mother New York, and her husband, Dan Ammann is the chief finance officer at GM.Â Because the contract was over $120,000, GM policy requires that GMâ€™s CEO and chief general counsel sign off due to a conflict of interest.Â
Somehow no one noticed until a corporate governance audit of contracts and relationships of contractors with GM employees picked up the Ammann connection. GMâ€™s CEO approved the transaction after-the-fact, and GM filed an 8-K with the SEC to reflect the information.Â The disclosure insists that Mr. Ammann was unaware of the contract.Â
We have no reason to doubt his word.Â But shouldnâ€™t the wife, as COO of a smaller ad firm, have mentioned a $600,000 contract with her husbandâ€™s company to her husband?Â If the disclosure rules donâ€™t work, then surely a little common sense combined with pillow talk would have.Â One gets the ideaÂ that high-power marriages are not particularly full of responses to, â€œHow was your day, dear?â€Â Surely the response would have been, â€œWell, we just landed a $600K contract with your company!â€
Or perhaps Mrs. Ammann could have mentioned her CFO husband to her own company during the bid process? Or maybe then realized the need to mention it to hubby?
A conflict is a conflict is a conflict.Â Conflicts are managed one of two ways:Â (1) Donâ€™t do it; or (2) Disclose it.Â Disclosing after the fact always brings us out of the woodwork with all of our skepticism as high-power company leaders shrug their shoulders and urge us to believe their cherubic faces uttering, â€œWho knew?â€