Investors for Bush

President Bush is in the middle of a vigorous campaign for Social Security reform. New national polls suggest support for his reform plan to be slipping. While my polls have revealed solid majority support among voters under 50 years of age, intensity levels are far greater among voters who oppose Mr. Bush's plan, especially those over 50. A coalition of seniors, unions, and anti-Bush independent committees are bent on defeating the president, who can claim just one Democratic member of Congress among his supporters, and whose Republicans in Congress are at best tepid on the idea of personal accounts.

Why would the president risk his political capital on a plan that appears doomed to failure? I think the answer lies well beyond the politics of any single reform plan. And the president may end up a winner if his call for personal accounts ultimately fails. After all, he has raised a serious issue that needs attention -- the very solvency of Social Security -- which Democrats have never touched. Huge majorities of voters understand that the current system is in trouble. He will, at the very least, get credit for trying to reform the program previously referred to as the "third rail of American politics" -- even if he achieves more modest change than he now proposes.

But there is a much bigger picture. The president's real prize would be a significant realignment in party politics. It has been no secret that Mr. Bush and Karl Rove have their sights set on a political realignment not experienced since FDR built a coalition of urban ethnics, liberal ideologues and Southern conservatives under the Democrats' big tent. Like the New Deal, the president's "ownership society" is a compelling new vision and veritable redefinition of a society less dependent on government largess, of a middle class more independent and more capable of securing financial security on its own.

This stunning realignment is possible by virtue of a new class of American voters -- the self-identified "investor class" -- which is itself a coalition across a broad spectrum of demographic groups. In their compelling book, "The Emerging Democratic Majority," Ruy Texeira and John Judis outlined a short-term path for Democratic Party success. Their study revealed that key demographic groups that traditionally vote Democratic in national and state elections are indeed among the fastest growing demographics in American society: African Americans, Hispanics, women, singles, creatives, Muslims, and South Asians.

Data from my post-election polling in 2004 suggests that the story is more complicated than simply counting bodies and handing them voter registration forms upon achieving adulthood or citizenship. Indeed, understanding politics in the U.S. over the next few years and decades has a lot more to do with grasping how voters actually identify themselves, not the labels we usually place on them by virtue of their birth.

Zogby International's post-election polling reveals fascinating differences between those voters who call themselves members of the "investor class" and those who do not see themselves this way. We see in Table 1, how this response to a single question -- "Do you consider yourself to be a member of the investor class?" -- is a far greater determinant of how they will vote and how they see their world than income, religion, race, marital status, or size of individual portfolio.

On the surface this hardly seems worthy of attention. Of course, well-heeled investors will tend to be more conservative than underachieving non-investors. But a closer look at the profile of this new "investor class" suggests some tectonic shifts in how Americans see themselves and how they behave politically (see Table 2). These are remarkable voting differences. The numbers are no less dramatic when we see their views of the president and the major issues in the campaign.

Self-identified investors comprised 46% of the total vote in 2004, a significantly higher figure than pre-election polls suggested. The group is neither dominated by the wealthy nor do members necessarily aspire to become wealthy. According to a series of polls we did on behalf of PBS's "Wall Street Week with Fortune," this group tells us they simply are saving for a retirement that maintains their current lifestyle and for college for their children. Importantly, their worldview remains middle class, modest, and basically conservative. They are a group I have followed closely since 2000 and will, for obvious reasons, continue to watch.

To the president and Republicans: You may lose the battle over Social Security personal accounts, but ultimately you may very well win the war over party realignment. To the Democrats: Just saying no is not a policy and demographics are not destiny. Ignore the "ownership society" at your own peril.

Mr. Zogby is president and CEO of Zogby International, an independent polling company in Utica, N.Y., and Washington.

Emboldened Boards Tackle Imperial CEOs
March 16, 2005; Page A2

Count them: Franklin Raines, Carly Fiorina, Harry Stonecipher, Michael Eisner, Hank Greenberg. Chief executives of five of the 60 largest companies in America. Each had a very different problem. But all were cut down by their boards of directors.

Clearly, running a big American company isn't what it used to be.

Press reports have attributed this to directors "feeling their oats." That's not quite right. What directors are feeling is more akin to a swift kick in the rear. In AIG's case, that kick came from New York Attorney General Eliot Spitzer. In Disney's case, it came from institutional shareholders. In all five cases, the boards were feeling pressure. And unlike in the past, they responded.

The conviction of former WorldCom CEO Bernie Ebbers on fraud charges was yesterday's big news. But Mr. Ebbers has always been an outlier -- the bad apple in the barrel. Michael Eisner and Hank Greenberg, on the other hand, represent the Imperial American CEO at its very best...and at its worst. It's their demise that suggests something fundamental has changed.

While academics may debate how much any CEO matters, no one who owned Disney stock over the last two decades, or AIG stock over the last four, can have much doubt. Messrs. Eisner and Greenberg, with their powerful personalities, added tremendous value to the companies they ran. They were paid a lot; but they were worth far more to shareholders.

At some point, however, the imperial trappings went to their heads. They began to believe the stories others told about them, to "drink their own bathwater," in the words of Harvard Business School's Rakesh Khurana. They thought they were invulnerable -- and so did we. But like tragic heroes, their hubris finally helped bring them down.

There seems to be a sea change going on here -- a kind of maturation of American corporate governance. The king now has a parliament, which in turn answers to powerful constituents. The challenge for the future is to preserve the best of the nation's individualistic executive tradition, while curbing the worst. Americans still want their CEOs to don wings and fly. But someone needs to make sure they don't get too close to the sun.

A survey being released later this week by the Business Roundtable provides some evidence of the changes taking place. The group asked its members -- including most of the nation's largest companies -- how often their boards meet in "executive session," without company managers present. Seventy-one percent said they now hold executive sessions at every board meeting, up from 68% a year ago and 55% two years ago.

Moreover, 83% of the companies said they now have an independent chairman, a lead director or a presiding director -- up 12 percentage points from just a year ago.

These may seem subtle changes, but anyone familiar with board dynamics can appreciate their importance. Even the most competent and confident director may be reluctant to express doubts in the presence of the CEO.

A disturbing paradox here is that while boards are becoming more powerful, board seats are becoming ever more difficult to fill. Under pressure from their own directors, active CEOs are cutting back their commitments to outside boards, which require twice the time they did just a few years ago. And people with wealth are worried about recent efforts to hold directors personally liable for a company's wrongdoing. Tom Neff, the U.S. chairman of Spencer Stuart, says big companies used to get their first or second choice when searching for an active CEO to fill a board vacancy; now they sometimes settle for ninth or 10th choice.

But others say the pool of potential directors easily could be broadened. Why should only active CEOs be sought for such seats, they ask, when there are plenty of other experienced executives who are willing to serve?

In the end, of course, boards can do only so much. Committees can't run companies. Former CEOs such as Roger Enrico, who chairs the Dreamworks Animation board, worries the pendulum may be swinging too far. "Governance is extraordinarily important," he says. "But business doesn't get built through process. ...It gets built through having a great strategy, having great people, and the ability to execute."

But if a CEO fails to perform (think Fiorina), or violates standards (think Raines, Stonecipher and maybe Greenberg), or fails to adequately plan for succession (think Eisner and Greenberg), there's clearly a role for the board. And increasingly, boards are playing it.

Is the age of the Imperial American CEO over? Send your thoughts to business@wsj.com. And please let us know if you don't want your e-mail to be published.