Edward C. Johnson, III was the CEO of Fidelity mutual funds and also the chair of the Fidelity board. In 2004, the SEC issued a regulation requiring that chairs at mutual funds be independent of management, forcing Johnson to resign as chair. Johnson opposed the SEC action. Here are two arguments he made:
(1) “Mandating an independent chairperson is akin to requiring that every ship have two captains.... If a ship I was sailing on were headed for an iceberg, I’d want one— and only one—captain giving orders. I’d like to know that he’d spent some time at sea and knew what he was doing."
(2) “If a wrong-doer is tempted to try some abuse against fund shareholders, which board chairman would they rather try sneaking it past—an industry veteran with a direct and personal interest in the fund—or a chairman with 40 years experience making carbonated beverages, and who has just flown in for a two-day board meeting?"
Summarize Johnson’s arguments against independent chairs in your own words. Also suggest responses that might be made by a supporter of the SEC regulation.