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Why was Hunter Biden paid big bucks by Burisma?

By Curt Anderson
January 21, 2020 10:02 pm
Category: Business
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For the same reason Nike pays LeBron James millions instead of paying you.

Did Hunter Biden capitalize on his famous last name?
Famous names and celebrities open doors and provide a certain level of visibility. They give corporations credibility and open doors. In places like Ukraine, having the son of a famous American politician on their corporate board impresses investors. Yes, Hunter Biden, capitalized on his famous last name---exactly as Trump's sons and daughter do with their last name. Indonesian developer Hary Tanoesoedibjo, for example, would not be doing business with Donald Trump, Jr. if there wasn't the family connection.

Hunter Biden was more than a famous name.
In conservative circles, a lot has been made of the fact that Hunter Biden didn't have an education in geology or prior work experience in the energy sector. Hunter Biden graduated from Georgetown University with a bachelor's degree in history. After attending Georgetown University Law Center for one year, he transferred to Yale Law School, graduating in 1996. Even without having a famous name, Yale Law School graduates do well financially. Biden would have been able to explain our laws and the American legal system to the Ukrainians.

Famous names on corporate boards boost stock prices
A 2011 study that looked at the impact of more than 700 celebrity directors found that they raise a company's visibility among consumers, investors and even analysts.

Dr. Stephen Ferris is dean for Ball State's Miller College of Business and co-author of a 2011 study which reported, "For a sample of over 700 celebrity appointments to corporate boards of directors over the period 1985–2006, we find positive excess market returns at the time of their announcement. The 1-, 2-, and 3-year long-run performance of the appointing firms provide corroborating evidence of the value of these appointments."

"When Gateway Computers announced the appointment of Elizabeth Dole to its board of directors, its stock price jumped 13.66% that day. The Disney Company's stock price went up 4.24% when actor Sidney Poitier was announced as a director", the study reported.

"For a sample of over 700 celebrity appointments to corporate boards of directors over the period 1985–2006, we find positive excess market returns at the time of their announcement. The 1-, 2-, and 3-year long-run performance of the appointing firms provide corroborating evidence of the value of these appointments. We conclude that the appointment of celebrities as directors increase a firm's visibility in a fashion consistent with Merton's investor recognition hypothesis."

Robert Merton noticed that investors gravitate toward companies with which they have some familiarity. Famous people can transfer their name recognition to the companies on whose boards they sit. For similar reasons, companies pay athletes, actors and other celebrities millions to endorse their products and services. While most people can only dream of the salary that Hunter Biden made being on the board of Burisma, he probably more than earned his keep by boosting their stock price. The fact that Burisma has and had a questionable reputation, made Hunter Biden a valuable asset. In a Ukraine and elsewhere in old Soviet bloc the Biden name is impressive and has a positive reputation.

If you have a famous name, you can profit handsomely. No experience necessary
Here is a list of some famous names and the corporate boards on which they sat. You'll notice that these celebrities have little or no particular expertise related to the business of the companies on whose board they sit.
For example, do you think Revlon has Henry Kissinger on its board because of his knowledge of cosmetics or the beauty business? What does baseball player Garry Maddox know about banking? When was the last time anybody Deepak Chopra wearing a suit, much less one from Men's Wearhouse?
Some of these names aren't really famous in their own right, but they worked with, were married to or otherwise connected to a very famous person.

  • Al Gore is on the corporate board of Apple. Arnold Gore Jr. is an American politician and environmentalist who served as the 45th vice president
  • Alexander Haig Jr. the former Secretary of State under President Ronald Reagan and the White House chief of staff under presidents Richard Nixon and Gerald Ford was on the corporate board of America Online, the pioneering web portal and online service provider
  • Beverly Sills was on the corporate board of Time Warner, the multi-media company. Beverly Sills was an American operatic soprano.
  • Colin Powell is an American politician and retired four-star general in the United States Army was named to the corporate board of AOL a one-time Internet giant.
  • Deepak Chopra, MD, author and lecturer was named to the corporate board of Men's Wearhouse.
  • Dick Cheney, the 46th vice president of the United States was named to the corporate board of Halliburton Inc., one of the world's largest oil field service companies. (Like Hunter Biden, Cheney had no prior education or particular experience in the oil industry)
  • Garry Maddox, former professional baseball player was named to the corporate board of The Federal Reserve Bank of Philadelphia
  • Henry Kissinger sat on the corporate boards of Revlon Group, American Express Company, Union Pacific Corporation and to R. H. Macy and Company Henry Kissinger is a former diplomat, Secretary of State and National Security Advisor under the presidential administrations of Richard Nixon and Gerald Ford.
  • Julius Erving II, Hall of Fame basketball player was named to the corporate board of Fusion Telecommunications.
  • Kim Alexis is an American model and actress was named to the corporate board of Drugstore.com
  • Lynn Swann, Hall of Fame wide receiver was named to the corporate board of HJ Heinz, Hershey Entertainment and Resorts, Harrah's Entertainment, Transdel Pharmaceuticals.
  • Martha Stewart held a seat on the board of Drugstore.com Martha Stewart is an American retail businesswoman, writer, television personality, former model, and convicted felon.
  • Michael Jordan was named to the corporate board Oakley Inc. a maker of sunglasses. Michael Jordan is an American former professional basketball player and the principal owner of the Charlotte Hornets of the National Basketball Association.
  • Nancy Lopez Knight, Ladies Professional Golf Association Hall of Famer was named to the corporate board of J.M. Smucker, the maker of jams, toppings and peanut butter.
  • Nancy Reagan was on the corporate board of Revlon Group. Nancy Reagan was an American film actress and the wife of Ronald Reagan, the 40th president of the United States.
  • Neil Armstrong, the American astronaut who was the first person to walk on the Moon sat on the board of USX, a leading American trucking company.
  • Priscilla Presley, actress, author was named to the corporate board of CKX, Inc., an Internet content company.
  • Samuel Skinner was named to the corporate board of Essential.com. Skinner served as U.S. Secretary of Transportation and White House Chief of Staff under President George H. W. Bush.
  • Sidney Poitier was named to the corporate board of Walt Disney Company. Sir Sidney Poitier, KBE is a Bahamian-American actor and film director. He received two nominations for the Academy Award for Best Actor, winning one, the first black actor to win that award.
  • Steve Jobs, the late founder of Apple and industrial designer also sat on the corporate board of Walt Disney Company.

    Cited and related links:

    1. academia.edu
    2. motherjones.com
    3. baltimoresun.com
    The views and claims expressed by contributors are their own and do not necessarily reflect the views and beliefs of SelectSmart.com. Not every statement made here can be assumed to be a fact.
    Comments:

    1. by Curt Anderson on January 22, 2020 1:23 pm
      Business Insider report: Here Are The 11 Politicians Who Sit On The Boards Of Public Companies
      Spoiler alert: Their average annual compensation was $286,264.70.


      businessinsider.com


    2. by Curt Anderson on January 25, 2020 1:01 pm
      Let's go there! The Biden 'scandal' in Ukraine needs a full airing.
      By Eric Zorn, Chicago Tribune (Excerpt, see link below to full commentary)
      In early 2014, a major Ukrainian energy firm, Burisma Holdings, recruited Hunter Biden to serve on its board of directors for a reported $50,000 a month. He was a Yale Law School graduate and former President George W. Bush appointee to the Amtrak board of directors who was ostensibly hired for his expertise in corporate governance. But, let’'s be honest, it was his last name — his blood relation to the then sitting vice president of the United States — that inspired Burisma to bring him on.

      I will pause here to allow you to get over your shock that the children of the famous and powerful cash in on their lineage and that corporations occasionally bedazzle their boards of directors with lightly qualified figureheads.

      Recovered now? Good.

      Hunter's appointment, in which his father played no role, was problematic because Joe Biden was the Obama administration’s point man on Ukraine, where new leadership was attempting to investigate and root out rampant corruption. Among the allegations was that Burisma's co-founder had abused his power as ecology minister under the previous government to get favorable treatment for the company.

      Obama's State Department acknowledged in news stories that Hunter Biden's gig gave rise to an appearance of a conflict of interest for his father, but noted that Hunter was a private citizen.
      chicagotribune.com




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