During my investment career I have always been perplexed by the make-up of most firm’s Board of Directors, from my coverage of U.S. stocks to global Stocks, from small cap to mega cap companies, from the buy side to the sell side. I have seen it all, and I have almost universally been disappointed. I have seen a medical doctor sit on the board of one the largest railroads in the U.S., management from top customers sitting on compensation committees, and active Fortune 100 CEO’s that also held three board of director positions. But like most investors, I have just noted the poor board make-up, and included it in the mosaic of information I use to make investment decision, because in reality most board memberships are poorly filled and there was little as investor I could do about it. Unfortunately, I did not think about it much, I did not ask why boards were so poorly filled.
Structure & Organization
Articles by our readers about structure & organization. Do you want to contribute to this category too? Please subscribe to be an author.
“Thinking the Twenty-First Century: Ideas for the New Political Economy” is a multi-disciplinary analysis of human thinking and change in the 21st Century. Malcolm McIntosh in this revolutionary book envisages a commercial world with the community as its central stakeholder and discusses the global evolution of humans as a species. Capitalizing on the 2012 UN report entitled “Resilient People, Resilient Planet: A Future Worth Choosing” that suggested a new political economy, he cogently introduces five transitional, nascent, ineluctable, and necessary system changes that are forming the evolution of humanity though a new global political economy for sustainable development (UN, 2012). Professor McIntosh wrote his magnum opus based on the ideas of a multidisciplinary pool of great thinkers and polymaths of the past centuries such as Charles Darwin, Peter Drucker, James Lovelock, Rachel Carson, Peter Higgs, Karl Marx, William Shakespeare, etc. to present a new model for political economy in the 21st century.
The chairman’s presentation at Diligent’s (DIL –NZX) 2013 AGM (June 23rd) included the following brief statement under the heading Strengthened Internal Controls: “The Board is currently undertaking a review of corporate governance matters with the assistance of an outside consultant, including with respect to the desired skill sets for the Board, share administration and other internal processes related to corporate governance.”
The structure of organisational leadership is conceived as being two dimensional. That is, there are two teams, the board and an executive, operating independently of one another, yet residing within the same organisation.
For clarity, my definition of the term ‘executive’ refers to the CEO and senior functional managers, e.g. chief financial officer, operations manager, marketing manager, etc., who have regular contact, formal or informal, with the board and/or individual directors.
At this time of year it is important for the board and senior management team to reflect on what has transpired in the past 12 months – have expectations that were articulated in the strategic plan been achieved and if not or so, what were the drivers of these results? The more we understand what created a particular outcome, the better equipped we will be to plan for and meet the challenges of the new year. What can be said with relative confidence is that our business, no matter what size or in what sector, will continue to be impacted upon by many external forces and the board and leadership team will need to adopt best practice in its governance and operational management approach to ensure short term viability and long term sustainability.
Quite often during a Board life, looking at the way to improve it’s composition, one member profile, in place, or to be recruited, is studied.
The process recommended by Governance & Structures is to start from the company’s already defined strategy and from the existing and foreseen board structure.
Corporate governance has emerged as a decisive business issue. Less corpora te governance research is undertaken in civil law countries like Germany. I n this thesis, the role of institutional investors in Germany is studied with the aim of providing an answer to the following research question: What role do independent institutional investors play in the corporate governance of listed German companies? This study follows an inductive qualitative research approach. The research model is based on six variables – board oversight, board nomination, identifying weaknesses, making recommendations, introducing changes in corporate strategy and exercising institutional power – to determine the role of institutional investors and to provide answers.
The basic model of commercial aviation is a thin tube of highly pressurised metal being propelled at 600 miles per hour by inflammable fuel at 35,000 feet in all weathers at temperatures of -57 degrees. So have you ever wondered how aviation got to be one of the safest forms of transport, despite being inherently full of such potentially catastrophic risks?
Do B Companies’ boards of directors have their own characteristics?
By definition, B Corps have a three-dimensional DNA, being concerned not only with economic results, but also with social and environmental matters. Traditional boards of directors assume a fiduciary duty that is related with loyalty and care: loyalty, by treating every shareholder in equal conditions; and care, by safeguarding their economic interests. Therefore, the success of a traditional company is measured by the economic value provided its shareholders or owners.
January 14, 2016
2-3 p.m. (ET)
Get key insights on current developments on regulatory forces impacting the boardroom and a look ahead at how companies are beginning to prepare for CEO pay ratio disclosure and an update on the proposed clawback listing standards rule, the pay versus performance disclosure rule, and the hedging disclosure rule. Hear perspectives from leading experts in the field on what board members should be thinking about and the impact of regulatory changes on the 2016 proxy season and beyond.