Details

The Governance Revolution

What Every Board Member Needs to Know, NOW!
ISSN 1. Aufl.

von: Deborah Hicks Midanek
44,95 €
Verlag:	De Gruyter
Format:	EPUB
Veröffentl.:	24.09.2018
ISBN/EAN:	9781547400386
Sprache:	englisch
Anzahl Seiten:	316

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Beschreibungen

Titelbeschreibung

Boards of directors are sitting ducks. Shareholders complain and even attack, management manipulates, and individual board members have little power, able to act only as part of the board as a whole. Governance issues are front and center, yet there is often little understanding, even among board members, of the key role that they play. 
 Written in an accessible and human voice, The Governance Revolution: What Every Board Member Needs to Know, NOW! provides information and context essential to anyone seeking to understand how corporations and their stewards—the board of directors—can and should function in the volatile world we inhabit. 
 Deborah Hicks Midanek offers useful insight into what board members of corporations actually do, the current standards for board members and why they exist. She includes a timely discussion of how clarity of purpose can improve board and director effectiveness. Informed by her long experience serving public, private, and family owned corporate boards as well as those of charitable, and government organizations, she provides essential context regarding the evolution of board practice as well as candid discussion of the issues involved in the relentless effort to improve corporate governance processes. Focused mainly on the dominant public corporation, she also explores the special challenges of serving private and family owned as well as nonprofit and public agency boards. 
 Written by a seasoned board member, and liberally laced with stories and cases illustrating the tricky issues directors wrestle with, this book is the essential common-sense companion for anyone working with a board, serving on a board, or wanting to do so. Directors, aspiring directors, investors, and students of corporate behavior will benefit from this highly readable description of the cloistered boardroom. 
 For Roger Trapp's article in Forbes featuring a discussion of this title click here 
 <a href="https://www.forbes.com/sites/rogertrapp/2018/10/22/independent-directors-nehttps://www.forbes.com/sites/rogertrapp/2018/10/22/independent-directors-need-to-stand-up-to-activists/#7060008826b0ed-to-stand-up-to-activists/#7060008826b0">https://www.forbes.com/sites/rogertrapp/2018/10/22/independent-directors-nehttps://www.forbes.com/sites/rogertrapp/2018/10/22/independent-directors-need-to-stand-up-to-activists/#7060008826b0ed-to-stand-up-to-activists/#7060008826b0</a> 
 
 For a Roundtable discussion in Financier Worldwide Magazine featuring Deborah Hicks Midanek please click here 
 <a href="https://www.financierworldwide.com/roundtable-risks-facing-directors-officers-aug18#.W1BqQdVKiUk">https://www.financierworldwide.com/roundtable-risks-facing-directors-officers-aug18#.W1BqQdVKiUk</a> 
 Click here for a review in Financial Analysts Journal 
 <a href="https://www.cfapubs.org/doi/abs/10.2469/br.v13.n1.10">https://www.cfapubs.org/doi/abs/10.2469/br.v13.n1.10</a> 
 Click here for an excerpt on Corporate Board Member: 
 <a href="https://boardmember.com/what-is-the-governance-revolution/">https://boardmember.com/what-is-the-governance-revolution/</a>

Inhaltsverzeichnis

Part I: The System and How It Came To Be  1 
 Chapter 1: How Our Governance System Began  3 
 The First Limited Liability Corporation  3 
 Amsterdam Stock Exchange Established to List VOC Securities  4 
 VOC Completes Initial Public Offering, Possibly World’s First  4 
 The Governance of VOC Establishes the Model  5 
 The Lords Seventeen Governance Structure Drawn from Guild 
 System  5 
 VOC Confronts a Large Activist Shareholder  6 
 . . . And a Bear Syndicate  6 
 The Corporate Form Advances and Spreads—And with It, the Board  7 
 Corporations Arrived in the New World  8 
 And Bubbles Burst  9 
 Chapter 2: The Emergence of the Corporation in United States  11 
 New York Pioneers Simple Incorporation Procedure  11 
 Boston Manufacturing Company is First Private Corporation in United 
 States  12 
 Corporations Gain Power Under State Control  13 
 Economic Opportunity Expands; Farmers and Artisans Suffer 
 Disruption  14 
 Corporate Control is Concentrated  15 
 How J.D. Rockefeller Went from Rags to Riches  15 
 The Government Fights Back, Kind Of  16 
 Early Days of the New York Stock Exchange  17 
 Teddy Busts the Trusts  19 
 Government Power Takes on Commercial Power: Teddy v J.P.  19 
 Unintended Consequences Lead to More Antitrust Laws  20 
 Chapter 3: Post–World War I Developments  23 
 The Stock Market Crashes  23 
 The Great Depression and FDR’s New Deal  23 
 Safety Net for Banks Created  24 
 Regulation of Securities and Securities Markets Takes Root  25 
 Safety Net Extended to Citizens as Social Security is Born  25 
 
 Frustration Sets in as Unemployment Persists  26 
 Government and Business Mobilize for World War II  27 
 Roosevelt and Business Create Formidable Alliance  27 
 Solidarity Works Miracles  28 
 Wartime Success Reaches Far Beyond Battlefields  29 
 Chapter 4: The Glow Following World War II  31 
 The 1950s Board Role  31 
 Stock Market Investing is Patriotic Duty  32 
 The Nifty Fifty Catches On  33 
 Investor Relations Become a Corporate Function  34 
 Chapter 5: Shifting Dynamics from 1970 to 2000  35 
 Agency Theory is Born  35 
 The Stock Market Corrects  36 
 Outrage over the Wreck of Penn Central Fuels New Focus on Board 
 Role  36 
 Broad Corruption Revealed Leads to Focus on Governance Per Se  37 
 The Board as Overseer Takes Root as Independent Directors Become 
 Desirable  38 
 The Definition of Independence Proves Elusive; We Know It When We 
 See It  38 
 The 1980s Board Role: The Board Becomes Important  39 
 Mighty Institutional Investors Weigh In  40 
 The Courts Recognize Independent Judgment of the Board as Mission 
 Critical  41 
 Economic Uncertainty and Social Unrest Reduce American 
 Confidence  42 
 Market Crashes on Black Monday  42 
 Changing Market Forces Become Visible  43 
 NYSE Establishes Safeguards  43 
 The 1990s Board: Independence Criteria Tighten as Equity Linked 
 Compensation Grows  44 
 True Independence Grows in Value  45 
 Equity Linked Compensation Creates Moral Hazard  46 
 Independence of Mind Needs Help from Independence of 
 Process  46 
 Revolving CEOs  47 
 
 Chapter 6: Post 2000 Intensification of Focus on the Board  49 
 Corruption Eruption Leads to Sarbanes Oxley and Growing Focus on 
 Board  50 
 The Functioning of the Board of Directors Gains Attention  52 
 Sarbanes-Oxley Act  54 
 Part II: The Players and Capital Market Forces  59 
 Chapter 7: The Rise of Independent/Disinterested Directors  61 
 Considering Independent Director Effectiveness  61 
 Dueling Definitions  62 
 New York Stock Exchange Listing Requirements Stress Independence of 
 Directors  62 
 Independent Directors Fill a Structural and Legal Need  66 
 Chapter 8: The Rise of Institutional Investors  69 
 Mutual Fund Development  69 
 Comments from Mutual Fund Leader John C. Bogle  71 
 The Growth of Passive Investing  74 
 The Defined Benefit Pension Plan Grows  75 
 Employee Retirement Income Security Act of 1974 (ERISA) Strengthens 
 Pension Rules  76 
 The Defined Benefit Pension Plan Declines  77 
 Retirement Assets Shift into Mutual Funds  78 
 Public Sector Pension Plans  78 
 The Growing Pension Crisis  79 
 Investing by Public and Private Plan Fiduciaries  80 
 Shifting Patterns of Share Ownership in United States  82 
 The Perils and Possibilities of Concentrated Share Ownership  83 
 The Rise of Proxy Advisor Power  84 
 Proxy Advisors Helped Interpret High Volume of Information  85 
 Responsible Voting of Proxies in Best Interests of Clients 
 Required  85 
 Proxy Advisors Take Heed: Physician, Heal Thyself  86 
 Chapter 9: The Impact of The Great Inflation  89 
 The Seeds of the Great Inflation Are Sown by the Fateful Phillips 
 Curve  89 
 Our Economy Fights Another War, on Several Fronts  91 
 Employment v. Inflation  91 
 Federal Reserve Chairman Volcker Toughs It Out  92 
 Impact of Prolonged Inflation on Capital Market Innovation  94 
 Securitization Solves a Genuine Problem, and Turns the World Upside 
 Down  94 
 Not Your Daddy’s Trading Floor  95 
 Interest Rate Arbitrage Comes of Age with the Swap Market  96 
 Chapter 10: Mortgage Backed Securities and Structured Products 
 Conundrums  99 
 Using Securitization Techniques, the Sky Was the Limit—Or Maybe 
 Not  100 
 The Mortgage Derivative Market Implodes  101 
 Hark, Securitization of Sub Prime Mortgages Begins  101 
 Earnings as Defined by Generally Accepted Accounting Principles May 
 Not Create Cash  102 
 Sub Prime Industry Almost Died in 1998  103 
 Public Policy Starts the Subprime Cycle Again  103 
 Repeal of Glass Steagall Act Allows Commercial Banks and Investment 
 Banks to Compete  104 
 And We Pushed Ourselves into the Abyss  105 
 Low Interest Rates Fuel Frenzies in Multiple Arenas  105 
 Collateralized Debt Obligations Explode, In More Ways Than 
 One  106 
 The Abyss Itself  106 
 Multiple Financial Institutions Fail  107 
 And WaMu, Too, Bites the Dust  108 
 Chapter 11: The Aftermath of the Abyss  111 
 Chapter 12: The Rise of Leveraged Buyouts, High Yield Bonds, and Private 
 Equity Investment  113 
 No Longer Your Granddaddy’s Way to Buy a Company  113 
 The Venture Capital Firm is Born  114 
 The Private Equity Fund is Born  114 
 The Leveraged Buy Out Arrives  115 
 Pension Plans Buy in to Private Equity Investing  116 
 The Hostile Takeover Epidemic  117 
 The Role of Michael Milken  117 
 Milken Flexes His Funding Muscles  118 
 
 Corporate Titans Are Shaken by an Upstart  119 
 The Government Fights Back—For Real  119 
 Giuliani Plays Hardball with RICO Threat  120 
 Milken Pleads, and NOT to Engaging in Insider Trading  121 
 And Drexel Fails  122 
 And Restructures Its Own Board of Directors  122 
 Lasting Impact of Milken and Drexel Burnham  123 
 Private Equity Goes Public  123 
 Chapter 13: The Rise of Hedge Funds and Emergence of Aggressive 
 Activism  125 
 Hedge Funds Remain Largely Opaque and Unregulated  125 
 Hedge Funds Emerge as Activists  126 
 Traditional Institutional Investors Join the Fray  127 
 The Current Impact of Activism  128 
 Voting Results on Shareholder Proposals  129 
 Chapter 14: The Evolution of the New York Stock Exchange  131 
 Part III: The Role of The Board  133 
 Chapter 15: Clarifying the Rights and Roles of the Board and the 
 Shareholders  137 
 The Board Serves the Corporation as Its Agent  138 
 The Powers of the Board  139 
 Public Company Ownership  140 
 Functional Principles of the Board  141 
 Accountability of the Board  143 
 Defining Board Success  143 
 The Purpose of the Corporation Project  145 
 Short Termism Really Is a Problem  146 
 Chapter 16: Assessing the Proliferating Policies and Principles  149 
 OECD Encourages Adoption of National Codes of Governance  150 
 Other Voices Join in  150 
 Chapter 17: Considering the Proposed New Paradigm  153 
 Summary Roadmap for the New Paradigm  153 
 The New Paradigm Attempts a Synthesis of Good Corporate Governance 
 Concepts  155 
 Proposed Investor Behavior  158 
 New Paradigm Proposes Integrated Long-Term Investment Approach  159 
 Proposed Integration of Citizenship Matters into Investment 
 Strategy  159 
 Proposed Disclosure of Investor Policies and Preference  160 
 And Now Comes CIRCA, Council for Investor Rights and Corporate 
 Accountability  161 
 Activist Playbook  162 
 Proxy Fights and Shareholder Candidates  163 
 The Bower and Paine Analysis of Maximizing Shareholder Value as 
 Corporate Goal  163 
 The Dangers of Agency Theory  165 
 Part IV: Doing the Job  169 
 Boards Must Protect Corporation Regardless of Conflicting Agendas  169 
 Chapter 18: Review Issues for Boards to Address Highlighted by NYSE  171 
 Executing the Work of the Board  173 
 Chapter 19: Establish the Appropriate “Tone at the Top”  175 
 Relentless Focus on Ethical Behavior and Discerning the Right Thing to 
 Do  178 
 Training as to What Ethical Behavior Means is Important in Our 
 Changing World  179 
 Ensure Reports on Compliance are Made Directly to the Board 
 Periodically  179 
 Chapter 20: Choose the CEO Wisely and Actively Plan for Succession  181 
 Keep the Emergency Succession Plan Current  181 
 Build a Future View of Company Needs into Longer Term Succession 
 Planning  182 
 Setting Criteria and Developing Possible Candidates  182 
 Work with the Incumbent  183 
 Know Your Senior Management Team  184 
 Chapter 21: Develop a Strong Organizational Framework  187 
 
 Chapter 22: Tailor Board Work to the Company  189 
 Board Leadership  189 
 Committee Structure  190 
 Audit Committee  192 
 Compensation Committee  194 
 Nominating and Corporate Governance Committee  195 
 Other Committees  196 
 Special Committees  196 
 Special Negotiation Committee  196 
 Special Litigation Committee  197 
 Special Investigation Committee  197 
 Board Information  198 
 Information Security  198 
 Collegiality  199 
 Manage Communication Mindfully  199 
 Executive Session  201 
 Meeting with Management  201 
 Setting the Agenda  202 
 Facilitate Candid Communication and Trusting Relationships  202 
 In Crisis the Buck Stops with the Board  203 
 No Time to Resign  204 
 Chapter 23: Focus Intently on Compensation  205 
 Executive Compensation  205 
 Fairly Compensate Directors  205 
 Chapter 24: Seek Wisdom, Courage and Breadth of Experience in Director 
 Recruitment  207 
 Get the Right Mix of Directors in the Boardroom  208 
 Value Tempered Judgment over Technical Expertise  2108 
 Chapter 25: Actively Evaluate Board Performance to Constantly 
 Improve  213 
 Developing the Process  213 
 Chapter 26: Manage Risk Effectively  217 
 Further Comments on the Board and Cybersecurity  220 
 Never Underestimate the Impact of Human Error  221 
 Importance of Plans  221 
 

 Chapter 27: Independently Evaluate the Impact and Execution of 
 Transactions  223 
 Chapter 28: Communicate Clearly, Consistently and Constantly  225 
 Part V: Hazards and Their Navigation  229 
 Chapter 29: Address Individual Hazards and Personal Fear  231 
 Liability Concerns  231 
 Efforts to Insulate Directors  232 
 Directors and Candidates Should Understand the Protections They 
 Have  234 
 Beware the Responsible Corporate Officer Doctrine  234 
 Chapter 30: Navigate Corporate Hazards and Distressed Situations  237 
 Liquidity: What to Do When Cash Runs Low  238 
 Form a Board Committee to Focus Closely on the Emergency  238 
 Is This Really a Role for the Board?  240 
 The Corporation Is Counsel’s Client; The Board Retains Counsel  241 
 The Next Step: Assess Viability  241 
 Bringing in Help  244 
 Assessing Leadership Resources  245 
 Structuring the Leadership Role  245 
 Communicate the Plan, and the Progress  246 
 Just Do It  247 
 Appreciation of the Effort Put in Goes a Long Way  248 
 Yes, Virginia, You Did Sign Up for This  248 
 Becoming the Debtor in Possession  248 
 Chapter 31: Recognize and Rectify Hazards of Board Process  251 
 Continuing Confusion as to Responsibility and Authority  251 
 Group Think  252 
 Faulty Filters  252 
 Corporate Myths  253 
 Conformity Pressure  253 
 The State Dinner  254 
 Bullying  254 
 
 Chapter 32: Know that Steady, Purposeful Work is the Antidote  255 
 Reading the Room  255 
 Preparing  256 
 Owning Your Style  256 
 Finding Your Point of View—and Theirs  256 
 Leading with Your Ears  257 
 Addressing Biases  257 
 Overconfidence  258 
 Confirmation Bias  258 
 Survival Bias  259 
 Attribution Bias  259 
 Building a Championship Team  260 
 Dissent is Not Disloyalty  261 
 Building a Portfolio of Roles  261 
 Chapter 33: Survive Success and Relentlessly Build Resilience  263 
 Conclusion: Own the Role and Build the Future  267 
 Index 269

Rezension

The Governance Revolution is a must-read for any current or aspiring corporate director. Deborah Hicks Midanek has created an eminently readable, incredibly pragmatic, and extremely valuable playbook for corporate directors. This is the one book every director should read to gain a better understanding of the current corporate governance revolution! 
̶̶ Harvey Pitt, CEO, Kalorama Partners, LLC; Former Chairman, United States Securities & Exchange Commission 


Moving our corporations toward sustainable business practice requires that boards of directors stand and deliver. This powerful book is ideal for every director and member of senior leadership who wants to make a difference. 
̶̶ Halla Tomasdottir, CEO, The B Team 


This is truly brilliant. Frankly I opened it with a sense of obligation to skim, but that did not last. I read the whole thing word for word. The scope is breathtaking. It is well researched, exhaustive and deeply thoughtful. Frankly I was expecting a modest "how to" and instead got a definitive history. Congratulations! 
̶̶ Robert J. Rosenberg, retired partner and co-chair of Insolvency Practice Group at Latham & Watkins LLP; frequent independent director 


I’m still reading the book and I have to say WOW. Most of us take some facts and surround them each by 1000+ words. You take a fact and add two more to make a sentence. I’ve rarely seen such an information packed book. I’ve been a non-executive director and trustee of various companies/charities but this is opening my eyes to all the things that directors forget or get steered away from. 
̶̶ Stefan Drew, Author, Futurist, Director, Marketing Magician Enterprises, Ltd 


A thorough and thought-provoking consideration of the role of the board in modern business, and why we ought to be talking more about it. With mix of research, legal insight and personal example, Midanek demonstrates not only how boards ought to function, but how more thoughtful approaches to governance can and should restore business to a more sustainable and trusted force in society. I wish I’d had this book in business school! 

̶̶ Michele Miller, Author & Television Writer, The Underwriting 


Ms. Midanek combines historical research, personal experience, and current debates in a compelling read. Her book provides context for many of today’s discussions about the role of corporations and who’s in charge. 
̶̶ Gwen Finegan, Board Member and Strategic Advisor to Health Care Systems 


This book has opened my eyes to many important concepts, and confirmed my beliefs about others. While much of the material may not be new, I think it is both new and important to see these ideas written down. Never have these principles been so important for people to understand. While the ideas can be complex, they are explained in human terms. I like this book! 
̶̶ Chantha Nguon, Executive Director, Stung Treng Women’s Development Center, Cambodia 


Drawing on her encyclopedic knowledge of business history and decades of practical experience inside corporate boardrooms, Deborah brilliantly illuminates and breathes life into dry and dusty concepts like fiduciary duties, maximizing shareholder value, and exercising reasoned business judgment. Deborah encourages corporate directors to flex their collective corporate governance muscles to enthusiastically participate in building robust businesses that serve and reward every constituency today and lay foundations of opportunity for future generations. 
̶̶ Peter A. Chapman, Publisher, Beard Group, Inc. 


This book is a must-read not only for current and prospective directors but for anyone who wants to understand the concept of corporations and the way in which they are and should be managed. Bravo to this author who dives into the real heart of how we arrived at corporate America as it exists today and the right path to righting our ship! She has gone in depth to the complexities of the relationships between shareholders, management and directors and has explained it so that a general readership can understand. This book is enlightening, provocative and fun! 
̶̶ John L. Cook Esq., Cofounder & Partner (Ret.), Cook, Barkett, Ponder & Wolz, L.C. 


The author is an anthropologist who brings back great stories of that weird tribe of corporate directors; she describes boardroom cultures, often dysfunctional, and shows us how to move and improve them. She is a social psychologist, alert to examples of conformity pressures, groupthink, and emergent leadership in board meetings. She is an economist, bringing the interests of creditors, stockholders, and customers into board deliberations. Her voice is personable and inviting; the experience and examples in this book can encourage seminar discussions across the social sciences. 
̶̶ Clark R. McCauley, Jr., Research Professor of Psychology, Bryn Mawr College; Founding Editor Emeritus, Dynamics of Asymmetric Conflict; Co-Director, Solomon Asch Center for Study of Ethnopolitical Conflict 


Ms. Midanek’s book has not only helped me as the CEO understand how better to use my board, but it will be required reading for all members of the board and senior management. Board members who can challenge, collaboratively, are the best board members a CEO can have; they promote useful discussion, new ideas, and are generally more supportive of the process. A board member who believes he or she is the smartest person in the room, however, will spew the most irrelevant anecdote, be the worst listener, and the least productive. This book provides useful perspective to help all of them to work better as a group in service to the company. 
̶̶ Darren Latimer, Chief Executive Officer, Stonegate Capital Holdings 


By tracing how corporations and their boards have evolved, Ms. Midanek provides a unique historical perspective on the role of corporations in society going back to the trading companies in the Netherlands and Britain in the 17th century. This well-written history is a valuable read for business and law students and teachers as well as for today’s officers and directors and their advisors. 
̶̶ Lewis H. Lazarus, Partner, Morris James 


"All directors want to help the companies they serve to flourish," writes Deborah Hicks Midanek in her valuable book. Drawing on her store of boardroom experience, this specialist in how boards of directors think and act tackles the big questions such as "Who owns the company?" 
̶̶ James Kristie, Editor-in-Chief and Associate Publisher, Directors & Boards, Retired 



The Governance Revolution is a must read for board members and risk and legal professionals advising boards. Deborah Midanek makes the case for a new look at the purpose of corporations and the need for long term perspectives…something sorely missing today. This book will help you in your board 
service. 
̶̶ Catherine Allen, Chairman and CEO, The Santa Fe Group; a multi-board director and 2018 NACD Directorship Honoree 


The release of this publication could not be more timely or on point. Directors face more challenges and exposure than they ever have. This book is extremely informative and a tremendous resource tool for directors especially those that are independent. Kudos to Ms. Midanek for having the insight and tenacity to write this book. 
̶̶ Trey Monsour, Esq., Shareholder, Polsinelli, PC