Actionable Information

Performance Secrets of Effective Boards

Wednesday, September 8, 2010

Director Elections in 2011: Yours to Lose

The 2011 Proxy Season may prove to be very challenging, but it is in the board's power to win or lose it. You have the power, the funding, the operating information and strategic planning that no outsider, shareholder or shareholder group can match. Other than black swan catastrophic failure, the election is yours to lose.

This is not to suggest that money and effort will not be required. Corporate Governance is BIG BUSINESS with strong special interest groups and shareholders vested in the need for ongoing controversy to attract media attention and maintain full employment. Issuers do not get a "pass" by compromising or settling because controversy must continue or the corporate governance business dies. Now, as a result of Dodd Frank and the SEC, the business of corporate governance has gone viral, spreading to companies of all sizes (other than the micro caps for now). This is not about justice but about power. Management and boards who do not thoughtfully exercise their power will watch it transfer to special interest shareholders at the expense of shareholders as a group.

The dynamics of this evolving equity politics require boards to refocus on board basics:
  • TSR -- Maintain and increase long term shareholder value

  • Through OR -- Operating Results -- and IR -- enhanced Investor Relations and

  • BICS -- Best Interests of the Corporation and Shareholders as a group.

And on three shareholder relations principles:

  • KISS -- Keep It Simple Stupid,

  • CAT -- Compensation Aligned with TSR and

  • C2C -- Close to the Constituents.

The biggest challenge is to titrate just the right amount of additional funds, time, energy and effort to pro-actively deal with the new challenges and requirements. Visit our website HERE for our latest slide show on Questions Directors Should Ask Themselves and Management to be Prepared for 2011 as well as other materials forming a complete board primer on Dodd Frank and Winning the 2011 Proxy Season.

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