The concept of corporate governance implies consistent and effective laws, methods, and metrics for governing our nation's public companies. The sad fact is that there is no such thing. It's a myth. Here's why:
People talk about the fiduciary responsibility of boards of directors. What that means, in plain speak, is that boards are supposed to:
1) Hire and fire the CEO and appoint other corporate officers 2) Compensate the CEO and other corporate officers 3) Oversee corporate strategy 4) Represent shareholders in the transparent and effective governance of the company
As an ex-officer of several public companies and as a consultant, I've been involved with lots of boards, executive staffs, investment banks, VCs, corporate attorneys, and the like. At least in my experience, boards don't operate the way they're supposed to.
Let's take the last point first. Shareholders are offered a slate of directors and a handful of issues to rubberstamp. That means they have two choices: accept or reject.
Now, let me ask you this. If your spouse or doctor says, "Here's my recommendation, take it or leave it," what do you do? That's right, you take it. Is it the best thing for you? Who the heck knows? You had a gun to your head so you nodded up and down.… Read more