Where We Need to Evolve
Certainly most systems can be improved, which is likely the case with regard to the sharing of power between shareholders, the board, and management. Just where the line should be drawn is subject to honest debate.
We've seen how gains by shareholder activists can become intoxicating—the more they succeed in gaining power and basking in the limelight, the more active they become. But we haven't seen that more power in the hands of shareholders translates into better performance and greater share value. I'm convinced that the current system of board collegiality, with the right people providing the best advice, counsel, and direction to the CEO and his or her management team, provides corporate America with the greatest likelihood of continued success. We can argue exactly how those directors are chosen. But until we find a better system than the current one, we shouldn't have change for the sake of change, or in order to empower shareholders who aren't positioned to make the right choices.
1. Ira Millstein, Holly Gregory, et al., “Rethinking Board and Shareholder Engagement in 2008,” a Weil, Gotshal & Manges LLP Memorandum, January 2008.