The Governance Revolution

Book description

This series aims to increase dialogue between and within the private and public sectors on the leading environmental, social, and governance issues of our time. Exploring and testing the very purpose of corporations and governments, the series features practical solutions to complex challenges.

Table of contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Contents
  6. Part I: The System and How It Came To Be
    1. Chapter 1: How Our Governance System Began
      1. The First Limited Liability Corporation
        1. Amsterdam Stock Exchange Established to List VOC Securities
        2. VOC Completes Initial Public Offering, Possibly World’s First
        3. The Governance of VOC Establishes the Model
        4. The Lords Seventeen Governance Structure Drawn from Guild System
        5. VOC Confronts a Large Activist Shareholder
        6. . . . And a Bear Syndicate
      2. The Corporate Form Advances and Spreads—And with It, the Board
        1. Corporations Arrived in the New World
        2. And Bubbles Burst
    2. Chapter 2: The Emergence of the Corporation in United States
      1. New York Pioneers Simple Incorporation Procedure
        1. Boston Manufacturing Company is First Private Corporation in United States
        2. Corporations Gain Power Under State Control
        3. Economic Opportunity Expands; Farmers and Artisans Suffer Disruption
        4. Corporate Control is Concentrated
      2. How J.D. Rockefeller Went from Rags to Riches
        1. The Government Fights Back, Kind Of
      3. Early Days of the New York Stock Exchange
      4. Teddy Busts the Trusts
        1. Government Power Takes on Commercial Power: Teddy v J.P.
      5. Unintended Consequences Lead to More Antitrust Laws
    3. Chapter 3: Post–World War I Developments
      1. The Stock Market Crashes
        1. The Great Depression and FDR’s New Deal
        2. Safety Net for Banks Created
        3. Regulation of Securities and Securities Markets Takes Root
      2. Safety Net Extended to Citizens as Social Security is Born
        1. Frustration Sets in as Unemployment Persists
      3. Government and Business Mobilize for World War II
        1. Roosevelt and Business Create Formidable Alliance
        2. Solidarity Works Miracles
        3. Wartime Success Reaches Far Beyond Battlefields
    4. Chapter 4: The Glow Following World War II
      1. The 1950s Board Role
      2. Stock Market Investing is Patriotic Duty
        1. The Nifty Fifty Catches On
      3. Investor Relations Become a Corporate Function
    5. Chapter 5: Shifting Dynamics from 1970 to 2000
      1. Agency Theory is Born
      2. The Stock Market Corrects
      3. Outrage over the Wreck of Penn Central Fuels New Focus on Board Role
      4. Broad Corruption Revealed Leads to Focus on Governance Per Se
        1. The Board as Overseer Takes Root as Independent Directors Become Desirable
        2. The Definition of Independence Proves Elusive; We Know It When We See It
      5. The 1980s Board Role: The Board Becomes Important
        1. Mighty Institutional Investors Weigh In
        2. The Courts Recognize Independent Judgment of the Board as Mission Critical
      6. Economic Uncertainty and Social Unrest Reduce American Confidence
        1. Market Crashes on Black Monday
        2. Changing Market Forces Become Visible
        3. NYSE Establishes Safeguards
      7. The 1990s Board: Independence Criteria Tighten as Equity Linked Compensation Grows
        1. True Independence Grows in Value
        2. Equity Linked Compensation Creates Moral Hazard
        3. Independence of Mind Needs Help from Independence of Process
      8. Revolving CEOs
    6. Chapter 6: Post 2000 Intensification of Focus on the Board
      1. Corruption Eruption Leads to Sarbanes Oxley and Growing Focus on Board
        1. The Functioning of the Board of Directors Gains Attention
      2. Sarbanes-Oxley Act
  7. Part II: The Players and Capital Market Forces
    1. Chapter 7: The Rise of Independent/Disinterested Directors
      1. Considering Independent Director Effectiveness
        1. Dueling Definitions
        2. New York Stock Exchange Listing Requirements Stress Independence of Directors
        3. Independent Directors Fill a Structural and Legal Need
    2. Chapter 8: The Rise of Institutional Investors
      1. Mutual Fund Development
      2. Comments from Mutual Fund Leader John C. Bogle
      3. The Growth of Passive Investing
        1. The Defined Benefit Pension Plan Grows
        2. Employee Retirement Income Security Act of 1974 (ERISA) Strengthens Pension Rules
        3. The Defined Benefit Pension Plan Declines
      4. Retirement Assets Shift into Mutual Funds
      5. Public Sector Pension Plans
      6. The Growing Pension Crisis
      7. Investing by Public and Private Plan Fiduciaries
      8. Shifting Patterns of Share Ownership in United States
      9. The Perils and Possibilities of Concentrated Share Ownership
      10. The Rise of Proxy Advisor Power
        1. Proxy Advisors Helped Interpret High Volume of Information
        2. Responsible Voting of Proxies in Best Interests of Clients Required
        3. Proxy Advisors Take Heed: Physician, Heal Thyself
    3. Chapter 9: The Impact of The Great Inflation
      1. The Seeds of the Great Inflation Are Sown by the Fateful Phillips Curve
      2. Our Economy Fights Another War, on Several Fronts
        1. Employment v. Inflation
      3. Federal Reserve Chairman Volcker Toughs It Out
        1. Impact of Prolonged Inflation on Capital Market Innovation
      4. Securitization Solves a Genuine Problem, and Turns the World Upside Down
      5. Not Your Daddy’s Trading Floor
      6. Interest Rate Arbitrage Comes of Age with the Swap Market
    4. Chapter 10: Mortgage Backed Securities and Structured Products Conundrums
      1. Using Securitization Techniques, the Sky Was the Limit—Or Maybe Not
      2. The Mortgage Derivative Market Implodes
        1. Hark, Securitization of Sub Prime Mortgages Begins
        2. Earnings as Defined by Generally Accepted Accounting Principles May Not Create Cash
        3. Sub Prime Industry Almost Died in 1998
        4. Public Policy Starts the Subprime Cycle Again
      3. Repeal of Glass Steagall Act Allows Commercial Banks and Investment Banks to Compete
        1. And We Pushed Ourselves into the Abyss
        2. Low Interest Rates Fuel Frenzies in Multiple Arenas
        3. Collateralized Debt Obligations Explode, In More Ways Than One
        4. The Abyss Itself
        5. Multiple Financial Institutions Fail
        6. And WaMu, Too, Bites the Dust
    5. Chapter 11: The Aftermath of the Abyss
    6. Chapter 12: The Rise of Leveraged Buyouts, High Yield Bonds, and Private Equity Investment
      1. No Longer Your Granddaddy’s Way to Buy a Company
        1. The Venture Capital Firm is Born
        2. The Private Equity Fund is Born
        3. The Leveraged Buy Out Arrives
        4. Pension Plans Buy in to Private Equity Investing
        5. The Hostile Takeover Epidemic
      2. The Role of Michael Milken
        1. Milken Flexes His Funding Muscles
        2. Corporate Titans Are Shaken by an Upstart
        3. The Government Fights Back—For Real
        4. Giuliani Plays Hardball with RICO Threat
        5. Milken Pleads, and NOT to Engaging in Insider Trading
        6. And Drexel Fails
        7. And Restructures Its Own Board of Directors
        8. Lasting Impact of Milken and Drexel Burnham
        9. Private Equity Goes Public
    7. Chapter 13: The Rise of Hedge Funds and Emergence of Aggressive Activism
      1. Hedge Funds Remain Largely Opaque and Unregulated
        1. Hedge Funds Emerge as Activists
        2. Traditional Institutional Investors Join the Fray
        3. The Current Impact of Activism
        4. Voting Results on Shareholder Proposals
    8. Chapter 14: The Evolution of the New York Stock Exchange
  8. Part III: The Role of The Board
    1. Chapter 15: Clarifying the Rights and Roles of the Board and the Shareholders
      1. The Board Serves the Corporation as Its Agent
      2. The Powers of the Board
      3. Public Company Ownership
        1. Functional Principles of the Board
        2. Accountability of the Board
        3. Defining Board Success
      4. The Purpose of the Corporation Project
        1. Short Termism Really Is a Problem
    2. Chapter 16: Assessing the Proliferating Policies and Principles
      1. OECD Encourages Adoption of National Codes of Governance
        1. Other Voices Join in
    3. Chapter 17: Considering the Proposed New Paradigm
      1. Summary Roadmap for the New Paradigm
      2. The New Paradigm Attempts a Synthesis of Good Corporate Governance Concepts
        1. Proposed Investor Behavior
      3. New Paradigm Proposes Integrated Long-Term Investment Approach
        1. Proposed Integration of Citizenship Matters into Investment Strategy
        2. Proposed Disclosure of Investor Policies and Preference
      4. And Now Comes CIRCA, Council for Investor Rights and Corporate Accountability
        1. Activist Playbook
        2. Proxy Fights and Shareholder Candidates
        3. The Bower and Paine Analysis of Maximizing Shareholder Value as Corporate Goal
        4. The Dangers of Agency Theory
  9. Part IV: Doing the Job
    1. Boards Must Protect Corporation Regardless of Conflicting Agendas
    2. Chapter 18: Review Issues for Boards to Address Highlighted by NYSE
      1. Executing the Work of the Board
    3. Chapter 19: Establish the Appropriate “Tone at the Top”
      1. Relentless Focus on Ethical Behavior and Discerning the Right Thing to Do
        1. Training as to What Ethical Behavior Means is Important in Our Changing World
        2. Ensure Reports on Compliance are Made Directly to the Board Periodically
    4. Chapter 20: Choose the CEO Wisely and Actively Plan for Succession
      1. Keep the Emergency Succession Plan Current
      2. Build a Future View of Company Needs into Longer Term Succession Planning
        1. Setting Criteria and Developing Possible Candidates
        2. Work with the Incumbent
        3. Know Your Senior Management Team
    5. Chapter 21: Develop a Strong Organizational Framework
    6. Chapter 22: Tailor Board Work to the Company
      1. Board Leadership
      2. Committee Structure
      3. Audit Committee
      4. Compensation Committee
      5. Nominating and Corporate Governance Committee
      6. Other Committees
      7. Special Committees
      8. Special Negotiation Committee
      9. Special Litigation Committee
      10. Special Investigation Committee
      11. Board Information
      12. Information Security
      13. Collegiality
      14. Manage Communication Mindfully
      15. Executive Session
      16. Meeting with Management
      17. Setting the Agenda
      18. Facilitate Candid Communication and Trusting Relationships
      19. In Crisis the Buck Stops with the Board
      20. No Time to Resign
    7. Chapter 23: Focus Intently on Compensation
      1. Executive Compensation
      2. Fairly Compensate Directors
    8. Chapter 24: Seek Wisdom, Courage and Breadth of Experience in Director Recruitment
      1. Get the Right Mix of Directors in the Boardroom
      2. Value Tempered Judgment over Technical Expertise
    9. Chapter 25: Actively Evaluate Board Performance to Constantly Improve
      1. Developing the Process
    10. Chapter 26: Manage Risk Effectively
      1. Further Comments on the Board and Cybersecurity
      2. Never Underestimate the Impact of Human Error
      3. Importance of Plans
    11. Chapter 27: Independently Evaluate the Impact and Execution of Transactions
    12. Chapter 28: Communicate Clearly, Consistently and Constantly
  10. Part V: Hazards and Their Navigation
    1. Chapter 29: Address Individual Hazards and Personal Fear
      1. Liability Concerns
      2. Efforts to Insulate Directors
      3. Directors and Candidates Should Understand the Protections They Have
      4. Beware the Responsible Corporate Officer Doctrine
    2. Chapter 30: Navigate Corporate Hazards and Distressed Situations
      1. Liquidity: What to Do When Cash Runs Low
      2. Form a Board Committee to Focus Closely on the Emergency
      3. Is This Really a Role for the Board?
      4. The Corporation Is Counsel’s Client; The Board Retains Counsel
      5. The Next Step: Assess Viability
      6. Bringing in Help
      7. Assessing Leadership Resources
      8. Structuring the Leadership Role
      9. Communicate the Plan, and the Progress
      10. Just Do It
      11. Appreciation of the Effort Put in Goes a Long Way
      12. Yes, Virginia, You Did Sign Up for This
      13. Becoming the Debtor in Possession
    3. Chapter 31: Recognize and Rectify Hazards of Board Process
      1. Continuing Confusion as to Responsibility and Authority
      2. Group Think
      3. Faulty Filters
      4. Corporate Myths
      5. Conformity Pressure
      6. The State Dinner
      7. Bullying
    4. Chapter 32: Know that Steady, Purposeful Work is the Antidote
      1. Reading the Room
      2. Preparing
      3. Owning Your Style
      4. Finding Your Point of View—and Theirs
      5. Leading with Your Ears
      6. Addressing Biases
      7. Overconfidence
      8. Confirmation Bias
      9. Survival Bias
      10. Attribution Bias
      11. Building a Championship Team
      12. Dissent is Not Disloyalty
      13. Building a Portfolio of Roles
    5. Chapter 33: Survive Success and Relentlessly Build Resilience
  11. Conclusion: Own the Role and Build the Future
  12. Index

Product information

  • Title: The Governance Revolution
  • Author(s): Deborah Hicks Midanek
  • Release date: September 2018
  • Publisher(s): De Gruyter
  • ISBN: 9781547400386