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Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

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Where to Draw the Line

Relevant here is the oft-heard saying, “Be careful what you wish for,” which has great merit in this context. Shareholder activists should be extremely careful about what they wish for and are working to achieve. When we look at why corporate America has been and continues to be successful, we see that the kinds of changes some activists seek would be counterproductive.

Experience shows that companies grow and prosper under outstanding management leadership, with a similarly outstanding board of directors providing excellent advice, counsel, and direction while also carrying out its monitoring role. True, some boards haven't done a great job, especially when they had to deal with new laws and regulations that resulted in a significant focus on their compliance and monitoring duties. But boards are positioned to deal with the challenges facing a company, and most have carried out their responsibilities effectively.

In my view, we must be cautious before allowing shareholders to make decisions without the information or ability to make informed judgments. Companies and shareholders prosper when boards do the jobs they are charged with doing, and retain the power and ability to do them well. This occurs when a board is comprised of the right people, with the right backgrounds and chemistry to work collegially together and with management to drive growth and return. They use their knowledge, leadership skills, experience, and business judgment to ensure the company ...

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