In this podcast, I discuss a recent article that appeared in Yale Alumni Magazine recommending six ways to give shareholders greater rights. Some of these suggestions are great, but others (such as term limits for independent directors) I wouldn’t recommend.
[Audio clip: view full post to listen]

Conventional wisdom is that new CEOs need to boost earnings per share in two years or they’re out. However recent findings from Booz & Company’s latest CEO Turnover report seem to suggest otherwise. Dismissals are happening, but they’re more often caused by board infighting rather than poor CEO performance. Using ten years of data they had collected, researchers Per-Ola Karlsson, Gary L. Neilson, and Juan Carlos Webster found:
For all CEOs, the likelihood of being dismissed for poor performance in a given year is only 2.1 percent. Given this data, it is not surprising that the correlation between stock performance and dismissal is generally not significant. Indeed, the very worst-performing chief executives – those in the bottom decile, whose companies’ two-year stock price had fallen by 25 percent in absolute terms and whose companies had under­performed their regional industry peers by 45 percent – [...]

This article in VentureBeat highlights an all too common scenario: CEOs dreading board meetings and not getting anything out of them. The author, Nick Sturiale, provides some useful rules for building trust with boards and running effective meetings. One is to use the board to help solve problems:
The best boards develop a common insight around the key dynamics driving the company’s business. Common understanding is achieved by providing a holistic view set of snapshots/test results on how the company is faring and not cherry-picking the easiest results to measure.
Having everyone share the same vision is key.

Earlier this month Carl Icahn started a blog  to discuss issues facing boards. Icahn has strong opinions and he doesn’t mince words:
“It is the board’s responsibility to hold a CEO accountable, and remove the CEO if he or she is not producing results. But exacting such a measure requires effort and strategic consideration, and boards are often too lazy and/or passive to rock the boat, especially since the company will continue to pay and pamper and even indemnify them under almost any circumstances. Board members receive expensive tickets to important sporting events, the theatre, and are also treated to use of the company’s fleet. Worst of all, the board itself is not made accountable because corporate board elections are generally a joke.”
Is it the board’s responsibility to hold a CEO accountable? I’d say in many cases it comes down to the [...]