The governance revolution what every board member needs to know, NOW

Deborah Hicks Midanek The Governance Revolution ISBN 978-1-5474-1644-8 e-ISBN (PDF) 978-1-5474-0027-0 e-ISBN (EPUB) 978-1-5474-0038-6 Library of Congress Control Number: 2018949267 Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available on the Internet at http://dnb.dnb.de © 2018 Deborah Hicks Midanek Published by Walter de Gruyter Inc., Boston/Berlin www.degruyter.com Dedication This book is dedicated to just a few of the many extraordinary people I am privileged to know and have worked with: – Coley Bailey, my beloved husband, whose belief that I can anything makes me get up every morning and try – Adolph A Berle, professor of law at Columbia University, member of FDR Brains Trust and significant architect of the New Deal; author with Gardiner Means of the enduring and still influential 1932 book The Modern Corporation and Private Property, and patient teacher of the little girl across the street who needed to know how to spit watermelon pits farther than anyone else – Alexandra Reed Lajoux, PhD, chief knowledge officer emerita of the National Association of Corporate Directors and a constant friend since she first published my work in Directors Monthly Her unwavering support and keen insight made this book possible – Ira Millstein of Weil Gotshal, senior statesman attorney and governance leading light who helped me get the board of his client restructured to favor the independent directors whom I recruited and led in resolving the bankruptcy of the infamous firm He acted with courage and integrity, always – Claude D Montgomery, now a partner at Dentons LLP and visionary attorney who answered my plea for legal counsel to the court appointed Equity Security Holders Committee in the Drexel Burnham Lambert Group, Inc Chapter 11 when no one else would His remarkable vision, skill, and audacity helped me as committee chair chart a path through complex, ambiguous issues and achieve an extraordinary result for all parties, including the unsung equity holders, the firm’s former employees And that same penetrating vision and intrepid boldness have assisted me time and again in my later service as independent board member for various companies To all of you and many more, my eternal gratitude Praise for the Governance Revolution The Governance Revolution is a must-read for any current or aspiring corporate director Deborah Hicks Midanek has created an eminently readable, incredibly pragmatic, and extremely valuable playbook for corporate directors This is the one book every director should read to gain a better understanding of the current corporate governance revolution! ̶ Harvey Pitt, CEO, Kalorama Partners, LLC; Former Chairman, United States Securities & Exchange Commission Moving our corporations toward sustainable business practice requires that boards of directors stand and deliver This powerful book is ideal for every director and member of senior leadership who wants to make a difference ̶ Halla Tómasdóttir, CEO, The B Team This is truly brilliant Frankly I opened it with a sense of obligation to skim, but that did not last I read the whole thing word for word The scope is breathtaking It is well researched, exhaustive and deeply thoughtful Frankly I was expecting a modest “how to” and instead got a definitive history Congratulations! ̶ Robert J Rosenberg, retired partner and co-chair of Insolvency Practice Group at Latham & Watkins LLP; frequent independent director I’m still reading the book and I have to say WOW Most of us take some facts and surround them each by 1000+ words You take a fact and add two more to make a sentence I’ve rarely seen such an information packed book I’ve been a non-executive director and trustee of various companies/charities but this is opening my eyes to all the things that directors forget or get steered away from ̶ Stefan Drew, Author, Futurist, Director, Marketing Magician Enterprises, Ltd A thorough and thought-provoking consideration of the role of the board in modern business, and why we ought to be talking more about it With mix of research, legal insight and personal example, Midanek demonstrates not only how boards ought to function, but how more thoughtful approaches to governance can and should restore business to a more sustainable and trusted force in society I wish I’d had this book in business school! ̶ Michele Miller, Author & Television Writer, The Underwriting Ms Midanek combines historical research, personal experience, and current debates in a compelling read Her book provides context for many of today’s discussions about the role of corporations and who’s in charge ̶ Gwen Finegan, Board Member and Strategic Advisor to Health Care Systems This book has opened my eyes to many important concepts, and confirmed my beliefs about others While much of the material may not be new, I think it is both new and important to see these ideas written down Never have these principles been so important for people to understand While the ideas can be complex, they are explained in human terms I like this book! ̶ Chantha Nguon, Executive Director, Stung Treng Women’s Development Center, Cambodia Drawing on her encyclopedic knowledge of business history and decades of practical experience inside corporate boardrooms, Deborah brilliantly illuminates and breathes life into dry and dusty concepts like fiduciary duties, maximizing shareholder value, and exercising reasoned business judgment Deborah encourages corporate directors to flex their collective corporate governance muscles to enthusiastically participate in building robust businesses that serve and reward every constituency today and lay foundations of opportunity for future generations.” ̶ Peter A Chapman, Publisher, Beard Group, Inc This book is a must-read not only for current and prospective directors but for anyone who wants to understand the concept of corporations and the way in which they are and should be managed Bravo to this author who dives into the real heart of how we arrived at corporate America as it exists today and the right path to righting our ship! She has gone in depth to the complexities of the relationships between shareholders, management and directors and has explained it so that a general readership can understand This book is enlightening, provocative and fun! ̶ John L Cook Esq., Cofounder & Partner (Ret.), Cook, Barkett, Ponder & Wolz, L.C The author is an anthropologist who brings back great stories of that weird tribe of corporate directors; she describes boardroom cultures, often dysfunctional, and shows us how to move and improve them She is a social psychologist, alert to examples of conformity pressures, groupthink, and emergent leadership in board meetings She is an economist, bringing the interests of creditors, stockholders, and customers into board deliberations Her voice is personable and inviting; the experience and examples in this book can encourage seminar discussions across the social sciences ̶ Clark R McCauley, Jr., Research Professor of Psychology, Bryn Mawr College; Founding Editor Emeritus, Dynamics of Asymmetric Conflict; Co-Director, Solomon Asch Center for Study of Ethnopolitical Conflict Ms Midanek’s book has not only helped me as the CEO understand how better to use my board, but it will be required reading for all members of the board and senior management Board members who can challenge, collaboratively, are the best board members a CEO can have; they promote useful discussion, new ideas, and are generally more supportive of the process A board member who believes he or she is the smartest person in the room, however, will spew the most irrelevant anecdote, be the worst listener, and the least productive This book provides useful perspective to help all of them to work better as a group in service to the company.” ̶ Darren Latimer, Chief Executive Officer, Stonegate Capital Holdings By tracing how corporations and their boards have evolved, Ms Midanek provides a unique historical perspective on the role of corporations in society going back to the trading companies in the Netherlands and Britain in the 17th century This well-written history is a valuable read for business and law students and teachers as well as for today’s officers and directors and their advisors ̶ Lewis H Lazarus, Partner, Morris James “All directors want to help the companies they serve to flourish,” writes Deborah Hicks Midanek in her valuable book Drawing on her store of boardroom experience, this specialist in how boards of directors think and act tackles the big questions such as “Who owns the company?” ̶ James Kristie, Editor-in-Chief and Associate Publisher, Directors & Boards, Retired The Governance Revolution is a must read for board members and risk and legal professionals advising boards Deborah Midanek makes the case for a new look at the purpose of corporations and the need for long term perspectives…something sorely missing today This book will help you in your board service ̶ Catherine Allen, Chairman and CEO, The Santa Fe Group; a multi-board director and 2018 NACD Directorship Honoree The release of this publication could not be more timely or on point Directors face more challenges and exposure than they ever have This book is extremely informative and a tremendous resource tool for directors especially those that are independent Kudos to Ms Midanek for having the insight and tenacity to write this book ̶ Trey Monsour, Esq., Shareholder, Polsinelli, PC About De|G PRESS Five Stars as a Rule De|G PRESS, the startup born out of one of the world’s most venerable publishers, De Gruyter, promises to bring you an unbiased, valuable, and meticulously edited work on important topics in the fields of business, information technology, computing, engineering, and mathematics By selecting the finest authors to present, without bias, information necessary for their chosen topic for professionals, in the depth you would hope for, we wish to satisfy your needs and earn our five-star ranking In keeping with these principles, the books you read from De|G PRESS will be practical, efficient and, if we have done our job right, yield many returns on their price We invite businesses to order our books in bulk in print or electronic form as a best solution to meeting the learning needs of your organization, or parts of your organization, in a most cost-effective manner There is no better way to learn about a subject in depth than from a book that is efficient, clear, well organized, and information rich A great book can provide life-changing knowledge We hope that with De|G PRESS books you will find that to be the case About the Author Deborah Hicks Midanek is an independent director, a pioneer in the corporate restructuring industry, a veteran of Wall Street trading floors, and a serial entrepreneur Widely respected for her turnaround skills, she has diagnosed and remedied problems for over 60 corporations and facilitated the growth of nearly 30 other ventures, including her own She has been described by the late Fletcher Byrom, chief executive officer of a Fortune 25 company, as a “pure thinker”—quickly gaining a deep understanding of complex problems and demonstrating an extraordinary ability to assimilate conflicting desires and craft lasting solutions Deborah has been directly involved in much of the extraordinary innovation that has taken place on Wall Street over the last few decades, and in handling the consequences of its excess With solid knowledge of capital markets from all points of view and a long record of success in building and rebuilding companies from the bottom up, Deborah focuses on defining transitions as positive processes Deborah has served as chairman, lead director, and director as well as committee chair (audit, compensation, governance, special independent) for 23 public and private companies In her first role as a director, she organized the shareholders of beleaguered Drexel Burnham Lambert Group to achieve recognition by the bankruptcy court and restructured the incumbent board to favor independent directors, whom she recruited and led Deborah founded advisory firm Solon Group in 2005 and continues to lead it today She is a 2011 NACD Board Leadership Fellow, and also a Certified Turnaround Professional, based on career achievement She has served as chief executive officer of several companies, built and sold her own institutional investment management firm and grew a retail no load mutual fund complex to $1 billion in assets in record time She joined Drexel to start its interest rate swap (derivatives) function and then led the firm’s structured finance department Deborah earned her MBA from the Wharton School and an AB from Bryn Mawr College A frequent writer and speaker on governance, resilience, and leadership, she is deeply involved in promoting entrepreneurship A New Yorker now living in Mississippi, she is in the middle of a downtown turnaround, renovating and repurposing the twenty-two 19th century commercial row buildings she has acquired Index A Accounting rules 1, 2, 3, ACFE, Ackman, Bill Actively evaluate board performance Activist director 1, Activist hedge funds 1, 2, Activists 1, 2, 3, 4, 5, 6, 7, 8, – short-term financial 1, Advisors 1, 2, 3, 4, 5, 6, 7, 8, Agency theory 1, 2, Agendas 1, 2, 3, 4, 5, 6, Agents 1, 2, 3, 4, 5, 6, 7, Aggressive activism 1, 2, 3, AIG (American International Group) Allergan Allergan’s board American International Group (AIG) American Research and Development Corporation (ARDC) America’s corporate boards 1, Annual meetings 1, 2, Antidote 1, 2, 3, ARDC (American Research and Development Corporation.) Asset gathering 1, Assets 1, 2, 3, 4, 5, 6, 7, 8, Assumptions 1, 2, 3, 4, 5, 6, 7, 8, Audit 1, 2, 3, 4, 5, Audit committee director shareholding Audit committee members 1, Audit committees 1, 2, 3, 4, 5, 6, 7, 8, Auditors 1, 2, 3, 4, 5, Authority 1, 2, 3, 4, 5, 6, 7, 8, B Bankruptcy 1, 2, 3, 4, 5, Bankruptcy code Banks 1, 2, 3, 4, 5, 6, 7, 8, – commercial 1, 2, 3, Banks and insurance companies 1, Berle, Adolf A 1, Berkshire Hathaway Best interests 1, 2, 3, 4, 5, 6, 7, 8, Bewindhebbers 1, Blackrock 1, 2, 3, 4, 5, Board 1, 2, 3, 4, 5, 6, 7, 8, – advising – company’s 1, 2, – corporation’s – effective 1, 2, 3, 4, 5, – first 1, – monitoring 1, 2, – oversight Board agenda 1, 2, Board and management structure and process Board audit committees Board cedes control 1, Board committee 1, 2, 3, 4, Board committee members 1, Board composition 1, 2, Board directors Board diversity 1, Board effectiveness 1, Board leaders 1, Board leadership 1, 2, 3, Board level 1, Board meetings 1, 2, 3, 4, 5, 6, 7, Board members 1, 2, 3, 4, 5, 6, 7, 8, – individual 1, Board of directors compensation Board process 1, 2, Board refreshment 1, Board role 1, 2, 3, 4, 5, 6, 7, Board room 1, 2, 3, Board seats 1, Board service 1, 2, 3, 4, Board structures 1, 2, Board work 1, 2, 3, 4, 5, 6, Boardroom 1, 2, 3, 4, 5, 6, 7, 8, Bogle, John C., 1, Bond issues Bonds 1, 2, 3, 4, 5, 6, 7, 8, Borrowers 1, 2, Breadth of experience in director recruitment 1, Buffett, Warren Business 1, 2, 3, 4, 5, 6, 7, 8, – corporation’s 1, Business corporation Business judgment 1, 2, Business mobilize for World War II, 1, Business roundtable 1, 2, 3, Business strategies, long-term 1, Business success 1, Buyers 1, 2, 3, 4, 5, 6, 7, 8, C Campaigns 1, 2, 3, Candidates, internal Capital 1, 2, 3, 4, 5, 6, 7, 8, – venture 1, 2, Capital markets 1, 2, 3, 4, 5, 6, 7, 8, Capital structure 1, 2, Care, duty of Cases 1, 2, 3, 4, 5, 6, 7, 8, Cash flow forecast Cash flows 1, 2, 3, 4, CDOs 1, Central banks 1, CEO (Chief Executive Officer) 1, 2, 3, 4, 5, 6, 7, 8, CEO, incumbent 1, 2, CEOs and boards of directors Chair 1, 2, 3, 4, 5, Chairman 1, 2, 3, 4, 5, 6, 7, 8, – independent Charter 1, 2, 3, 4, 5, 6, Chief Executive Officer See CEO Chief Information Security Officer (CISO) CIRCA (Council for Investor Rights and Corporate Accountability) 1, 2, 3, CISO (Chief Information Security Officer) Civil Service Retirement System (CSRS) Civil War 1, 2, 3, 4, Clayton Act Clients 1, 2, 3, 4, 5, 6, 7, 8, CMO, Collateral 1, 2, 3, Collegiality 1, 2, Colonies 1, 2, Commercial banks and investment banks 1, 2, Commercial power Committee appointments 1, Committee charters 1, Committee members 1, 2, 3, 4, Committees 1, 2, 3, 4, 5, 6, 7, 8, – designated – special 1, 2, 3, – special investigation – special litigation – special negotiation Companies 1, 2, 3, 4, 5, 6, 7, 8, – large 1, 2, – largest 1, 2, – listed 1, 2, 3, 4, 5, – troubled 1, Company boards, public 1, 2, Compensation 1, 2, 3, 4, 5, 6, 7, 8, – excessive 1, 2, Compensation committee 1, 2, 3, 4, Compliance 1, 2, 3, 4, 5, 6, 7, 8, Compliance program 1, 2, CConcentrated share ownership Conduct 1, 2, 3, 4, 5, 6, 7, 8, Conference board 1, Confidentiality 1, Conflicts 1, 2, 3, 4, 5, 6, 7, 8, Confusion 1, 2, 3, 4, 5, 6, 7, Congress 1, 2, 3, 4, 5, 6, 7, Consultants 1, 2, 3, 4, 5, 6, 7, 8, Contracts 1, 2, 3, 4, 5, – derivative 1, – swap Contributions 1, 2, Control 1, 2, 3, 4, 5, 6, 7, 8, Controller Core business Corporate boards 1, 2, 3, 4, Corporate culture 1, 2, Corporate form 1, 2, 3, 4, 5, 6, Corporate form advances 1, Corporate governance 1, 2, 3, 4, 5, 6, 7, 8, Corporate raiders 1, Corporate wrongdoing 1, Corporation project 1, Corporation work Corporations 1, 2, 3, 4, 5, 6, 7, 8, – large 1, 2, – largest 1, 2, – listed 1, – major – modern 1, 2, 3, 4, – traded 1, 2, Corporation’s success 1, Costs 1, 2, 3, 4, 5, 6, 7, 8, Council for Investor Rights and Corporate Accountability See CIRCA Counsel 1, 2, 3, 4, 5, 6, 7, 8, Counter party 1, 2, Courage and breadth of experience in director recruitment 1, Court decisions 1, Courts 1, 2, 3, 4, 5, 6, 7, 8, Creditors 1, 2, 3, 4, Crises 1, 2, 3, 4, 5, 6, 7, CSRS (Civil Service Retirement System) Culture 1, 2, 3, 4, 5, 6, 7, 8, Customers 1, 2, 3, 4, 5, 6, 7, 8, Cybersecurity 1, D Damage 1, 2, 3, 4, 5, 6, 7, 8, DC (defined contribution) 1, DC plans Dealers 1, 2, 3, Debt 1, 2, 3, 4, 5, 6, Debtor 1, DEC (Digital Equipment Corporation) Decisions 1, 2, 3, 4, 5, 6, 7, 8, Defendants 1, Defined contribution (DC) 1, Delaware General Corporation Law (DGCL) Delaware Supreme Court 1, 2, 3, 4, 5, Depression 1, 2, 3, Derivatives 1, 2, DGCL (Delaware General Corporation Law) Director candidates 1, Director compensation 1, Director independence 1, 2, 3, 4, 5, Director liability Director ownership interest Director recruitment 1, Director role, first Director shareholding Directors 1, 2, 3, 4, 5, 6, 7, 8, – affiliated 1, – affiliated non-managerial – corporate 1, 2, – disinterested 1, 2, 3, 4, – fellow 1, – help 1, – individual 1, 2, 3, 4, 5, 6, – insulate – non-executive 1, – qualified 1, Director’s roles 1, Disclosure 1, 2, 3, 4, 5, 6, 7, 8, – corporation’s 1, Dissent 1, 2, Distressed companies Distressed situations 1, 2, 3, 4, 5, Diversity 1, 2, 3, 4, Doctrine, responsible corporate officer Dollar reserves Dollars 1, 2, 3, 4, 5, 6, 7, 8, Drexel Drucker, Peter 1, Duties 1, 2, 3, 4, 5, 6, 7, 8, – patriotic E Earnings 1, 2, 3, 4, 5, 6, 7, 8, Earnings per share (EPS) Ears 1, 2, East India Company See EIC Economic co-operation 1, 2, Economic growth 1, 2, 3, Economy 1, 2, 3, 4, 5, 6, 7, 8, Effective boards of directors exercise EIC (East India Company) 1, Electric power Emergence 1, 2, 3, 4, 5, 6, 7, Emergencies 1, 2, 3, 4, Employee Retirement Income Security Act 1, Employee stock ownership plans (ESOPs) Employees 1, 2, 3, 4, 5, 6, 7, 8, Employer contributions Employers 1, 2, 3, Employment 1, 2, 3, 4, 5, 6, 7, England 1, 2, Enron 1, 2, 3, 4, 5, 6, 7, Enron Board of Directors Enron Corporation 1, Enron shareholders Enron’s stock price Enterprise 1, 2, 3, 4, 5, 6, 7, 8, EPS (earnings per share) Equities 1, 2, 3, 4, 5, 6, 7, Equity funds – private 1, 2, 3, ERISA, 1, ESOPs (employee stock ownership plans) ETFs (exchange traded funds) 1, 2, Ethical behavior Ethics 1, 2, – effective Evaluations 1, 2, Exchange 1, 2, 3, 4, 5, 6, 7, 8, Exchange traded funds See ETFs Executive compensation 1, 2, 3, 4, 5, 6, 7, Executives 1, 2, 3, 4, 5, 6, 7, 8, Experience 1, 2, 3, 4, 5, 6, 7, 8, Exposure 1, 2, 3, 4, 5, 6, Extent 1, 2, 3, F Factories 1, 2, Farmers 1, FDIC (Federal Deposit Insurance Corporation) 1, FDR, 1, Federal Deposit Insurance Corporation (FDIC) 1, Federal Employees Retirement System (FERS) Federal law 1, 2, 3, Federal National Mortgage Association See FNMA Federal Reserve 1, 2, Federal Reserve Board Fellow board members 1, FERS (Federal Employees Retirement System) FHLMC, 1, Fiduciaries 1, 2, 3, 4, 5, 6, 7, 8, Fiduciary duties 1, 2, 3, 4, 5, 6, 7, Financial statements 1, 2, 3, 4, Firms 1, 2, 3, 4, 5, 6, 7, – advisory 1, First Limited Liability Corporation 1, First Private Corporation in United States FNMA (Federal National Mortgage Association) 1, 2, 3, Focusing capital 1, Fortunes 1, 2, 3, 4, 5, 6, Fund assets Fund industry, mutual Fund investors Fund management, mutual Fund managers 1, – mutual 1, Fund shareholders 1, Funds 1, 2, 3, 4, 5, 6, 7, 8, – average G General Motors (GM) 1, Giant Corporation 1, Giuliani, Rudy Glass Steagall Act 1, 2, Goals 1, 2, 3, 4, 5, 6, 7, 8, Good corporate governance concepts 1, Governance 1, 2, 3, 4, 5, 6, 7, 8, Governance committee, corporate 1, 2, Governance failures 1, Governance system 1, 2, 3, Governing board 1, Government 1, 2, 3, 4, 5, 6, 7, 8, Government mobilize for World War II, 1, Government power Government-sponsored enterprises (GSEs) Governors 1, Grant 1, Great inflation 1, 2, Growth 1, 2, 3, 4, 5, 6, 7, 8, GSEs (Government-sponsored enterprises) H Harvard Business Review 1, 2, 3, 4, 5, 6, 7, Harvard Business School 1, 2, 3, 4, 5, Hazards 1, Hedge Fund Research (HFR) Hedge funds 1, 2, 3, 4, 5, 6, 7, Hedge funds and emergence of aggressive activism 1, 2, Hedge funds remain largely opaque 1, 2, Heeren, HFR (Hedge Fund Research) High yield bonds 1, 2, 3, 4, 5, HNG (Houston Natural Gas) Homes 1, 2, 3, 4, 5, Hostile bids 1, Hostile takeovers 1, 2, 3, 4, 5, Housing and Urban Development (HUD) Housing market Houston Natural Gas (HNG) I ICGN (International Corporate Governance Network) 1, IIRC (International Integrated Reporting Council) 1, Impact 1, 2, 3, 4, 5, 6, 7, Implementation 1, 2, 3, 4, 5, Income 1, 2, 3, 4, 5, 6, 7, Incorporation 1, 2, 3, Incorporation law Indemnification 1, Independence 1, 2, 3, 4, 5, 6, 7, 8, Independent board members Independent director defendants, named Independent director effectiveness 1, 2, Independent director requirements Independent directors 1, 2, 3, 4, 5, 6, 7, 8, – majority of 1, 2, – role of 1, 2, Independent/disinterested directors 1, 2, Individuals 1, 2, 3, 4, 5, 6, 7, 8, Industry 1, 2, 3, 4, 5, 6, 7, 8, – thrift Inflation 1, 2, 3, 4, 5, – high Information 1, 2, 3, 4, 5, 6, 7, 8, – contradictory Innovation 1, 2, 3, 4, 5, Insider trading 1, Institutional investors 1, 2, 3, 4, 5, 6, 7, 8, – major 1, Institutional Shareholder Services (ISS) 1, Institutions 1, 2, 3, 4, 5, 6, 7, 8, Instruments 1, 2, 3, 4, 5, Insurance companies 1, 2, 3, 4, 5, 6, 7, 8, Integrated long-term investment approach 1, Interest payments Interest rates 1, 2, 3, Internal control 1, 2, 3, International Corporate Governance Network (ICGN) 1, International Finance Corporation International Integrated Reporting Council (IIRC) 1, International Standards of Accounting and Reporting (ISAR) InterNorth Interventions 1, 2, Investigation 1, 2, 3, 4, 5, 6, Investment banks 1, 2, Investment committees 1, Investment funds 1, Investment horizons 1, 2, 3, Investment management 1, Investment management company Investment managers 1, 2, 3, Investment vehicles 1, Investments 1, 2, 3, 4, 5, 6, 7, 8, – long-term 1, 2, 3, Investor behavior 1, Investor commitments Investor groups 1, Investor relations Investor rights 1, 2, Investor-led International Corporate Governance Network Investors 1, 2, 3, 4, 5, 6, 7, 8, – activist 1, 2, 3, – long-term 1, ISAR (International Standards of Accounting and Reporting) ISS (Institutional Shareholder Services) 1, J Judgment, independent 1, 2, 3, 4, 5, Jurisdictions 1, 2, 3, 4, 5, 6, 7, K Kupers, Roland L Labor 1, 2, Law 1, 2, 3, 4, 5, 6, 7, 8, Leaders 1, 2, 3, 4, 5, 6, 7, 8, Leadership 1, 2, 3, 4, 5, 6, 7, Leadership role Legislatures 1, LeMaire Isaac Lenders 1, 2, 3, 4, 5, 6, Letters 1, 2, 3, Leveraged buyouts 1, 2, 3, 4, 5, Liability 1, 2, 3, 4, 5, 6, – limited 1, 2, 3, 4, 5, Life 1, 2, 3, 4, 5, 6, 7, – perpetual 1, 2, 3, 4, Limited liability companies 1, 2, Listing rules 1, Litigation 1, 2, 3, 4, 5, 6, 7, Loans 1, 2, 3, London 1, 2, Long-term value 1, 2, 3, 4, 5, Losses 1, 2, 3, 4, 5, 6, 7, 8, Lowell, Francis Cabot Loyalty, duty of 1, M Management 1, 2, 3, 4, 5, 6, 7, 8, – active 1, 2, – advising 1, – central – corporate 1, 2, 3, – corporation’s – executive 1, – incumbent 1, – middle 1, – top 1, 2, 3, Management behavior 1, Management companies 1, – thirty-five Management director Management team 1, 2, 3, 4, 5, – senior 1, 2, Managers 1, 2, 3, 4, 5, 6, 7, 8, – corporation’s – largest asset 1, – portfolio 1, 2, 3, Market capitalization 1, Marketing 1, 2, 3, Markets 1, 2, 3, 4, 5, 6, 7, 8, – subprime 1, 2, 3, – swap 1, MBSs Means, Gardiner C 1, Member countries Members 1, 2, 3, 4, 5, 6, 7, 8, Membership 1, 2, Merchants 1, Mergers 1, 2, 3, 4, 5, 6, 7, 8, Milken, Michael 1, Millstein, Ira 1, Mississippi Company 1, Model 1, 2, 3, 4, 5, 6, 7, 8, – advising board – board-centered 1, – corporation’s business Money 1, 2, 3, 4, 5, 6, 7, 8, Monopoly 1, 2, 3, Morgan, JP 1, 2, 3, 4, Mortgage backed securities 1, 2, 3, 4, Mortgage derivative market implodes 1, Mortgage lenders 1, Mortgage loans 1, 2, 3, Mortgages 1, 2, 3, Mutual funds 1, 2, 3, 4, 5, 6, 7, 8, N NASDAQ, 1, 2, 3, National Institute of Standards and Technology (NIST) Natural gas Navigate corporate hazards and distressed situations 1, 2, 3, 4, 5, New Deal 1, 2, New Jersey 1, 2, New Paradigm 1, 2, 3, 4, New York 1, 2, 3, 4, 5, 6, 7, 8, New York pioneers simple incorporation procedure 1, New York Stock Exchange See NYSE Nifty fifty NIST (National Institute of Standards and Technology) Non-management 1, Non-management directors 1, – non-affiliated NYSE (New York Stock Exchange) 1, 2, 3, 4, 5, 6, 7, 8, NYSE Euronext NYSE-listed companies O OECD (Operation and Development) 1, Officers 1, 2, 3, 4, 5, 6, 7, – corporate 1, 2, 3, Onboarding 1, Operation and Development See OECD Organization 1, 2, 3, 4, 5, 6, 7, 8, Organizational guidelines Organizational sentencing guidelines Originators 1, 2, – subprime Outlier Oversee 1, 2, 3, 4, 5, 6, 7, 8, Owners 1, 2, 3, 4, 5, 6, 7, 8, Ownership 1, 2, 3, 4, 5, 6, 7, 8, P, Q Panic 1, Paradigm 1, 2, 3, 4, Parliament 1, 2, Partner 1, 2, 3, 4, 5, 6, Passive investors 1, Passive non-management directors PBGC (Pension Benefit Guaranty Corporation) PCAOB (Public Company Accounting Oversight Board) Penn Central Company on passive non-management directors Pension Benefit Guaranty Corporation (PBGC) Pension funds 1, 2, 3, 4, 5, – corporate Pension plans 1, Pensions 1, 2, 3, Performance 1, 2, 3, 4, 5, 6, 7, 8, – board’s 1, Permanent subcommittee 1, 2, Personal fear 1, 2, Phillips curve 1, Pipelines 1, Pitt, Harvey Plaintiffs 1, 2, Planning processes Plans 1, 2, 3, 4, 5, 6, 7, 8, – corporation’s business Policies 1, 2, 3, 4, 5, 6, 7, 8, – monetary Policymakers 1, 2, Pools 1, 2, 3, 4, Possession, debtor in 1, Post 1, 2, 3, 4, 5, 6, 7, 8, Powers 1, 2, 3, 4, 5, 6, 7, 8, – exclusive President 1, 2, 3, 4, 5, President Roosevelt Prices, real estate Principles 1, 2, 3, 4, 5, 6, 7, 8, Principles of corporate governance 1, 2, 3, 4, 5, 6, Private equity 1, 2, 3, 4, Private Equity Investment 1, 2, 3, 4, 5, Private sector 1, Processes board members Productivity 1, 2, 3, 4, Profession Profile Profit growth Profits 1, 2, 3, 4, 5, 6, 7, 8, Programs 1, 2, Prolonged inflation 1, Property owner 1, Proposals 1, 2, 3, – climate change Protecting controlled unclassified information Protection 1, 2, 3, 4, 5, 6, 7, Proxy 1, 2, 3, 4, Proxy advisor power 1, Proxy season Public companies 1, 2, 3, 4, 5, 6, 7, 8, Public Company Accounting Oversight Board (PCAOB) Public company ownership 1, Public corporations 1, 2, 3, Pulp 1, Purposeful work 1, 2, 3, R Railroads 1, 2, 3, Rates 1, 2, 3, 4, 5, 6, 7, RCOD (responsible corporate officer doctrine) Reforms 1, 2, 3, Regulations 1, 2, 3, 4, 5, 6, Regulators 1, 2, 3, 4, 5, 6, 7, 8, Relationships 1, 2, 3, 4, 5, 6, 7, 8, – contractual Repeal 1, 2, Requirements 1, 2, 3, 4, 5, 6, 7, 8, Resilience 1, Resolution Trust Corporation (RTC) Resources 1, 2, 3, 4, Responsibilities 1, 2, 3, 4, 5, 6, 7, 8, – operational 1, Responsible corporate officer doctrine See RCOD Review 1, 2, 3, 4, 5, 6, 7, 8, Review issues for boards to address highlighted by NYSE, Risk appetite 1, 2, Risk effectively 1, 2, Risk management 1, 2, Risk management crisis 1, Risk management system 1, Risks 1, 2, 3, 4, 5, 6, 7, 8, Rockefeller, JD 1, Role 1, 2, 3, 4, 5, 6, 7, 8, – board’s 1, 2, 3, 4, 5, 6, Roosevelt 1, RTC (Resolution Trust Corporation) Rules 1, 2, 3, 4, 5, 6, 7, 8, S Salesmanship Sarbanes-Oxley Act 1, 2, 3, Scandals 1, 2, 3, 4, 5, Securities 1, 2, 3, 4, 5, 6, 7, 8, Securities laws 1, 2, – federal 1, 2, 3, 4, Securitization 1, 2, 3, Senior executives 1, Senior management 1, 2, SEPs (simplified employee pensions) Services, consulting 1, Sessions, executive 1, Settlements 1, 2, Share ownership 1, Shared value 1, 2, Shareholder activism 1, 2, Shareholder activists 1, Shareholder candidates Shareholder interests 1, 2, 3, 4, 5, Shareholder litigation 1, 2, Shareholder meetings 1, Shareholder perspectives 1, Shareholder power 1, Shareholder proposals 1, Shareholder rights 1, 2, Shareholder value 1, 2, 3, 4, – increasing 1, – maximize – maximizing 1, 2, 3, Shareholder votes 1, Shareholders 1, 2, 3, 4, 5, 6, 7, 8, – activist 1, – body of – individual – large 1, 2, – largest 1, Shares 1, 2, 3, 4, 5, 6, 7, 8, – management company Shares of stock 1, Sherman Act 1, Shifting dynamics 1, 2, 3, 4, 5, 6, Ships 1, 2, Short termism 1, Simplified employee pensions (SEPs) Skills 1, 2, 3, 4, 5, 6, 7, 8, Skills matrix 1, Society 1, 2, 3, 4, 5, Solon Asset Management Corporation South Sea bubble SOX, 1, 2, 3, 4, SP (Special Publication) Special publication (SP) Special purpose vehicle (SPV) 1, Speculation 1, Spreads 1, SPV See special purpose vehicle Stakeholders 1, 2, 3, 4, 5, 6, 7, 8, Standard Oil 1, Standing committees 1, 2, State statutes 1, States 1, 2, 3, 4, 5, 6, 7, 8, Stewardship 1, Stock exchanges 1, 2, Stock market 1, 2, 3, 4, 5, Stock market investing Stock market investors 1, Stock market’s value Stock options 1, – at-the-money Stock ownership Stock price 1, 2, 3, 4, 5, 6, 7, 8, Stock-based compensation 1, 2, Stocks 1, 2, 3, 4, 5, 6, 7, 8, Strategy 1, 2, 3, 4, 5, 6, 7, 8, – corporation’s 1, 2, – long-term 1, 2, Strong organizational framework Structured products conundrums 1, 2, 3, 4, Subcommittee 1, Succession planning 1, 2, Support 1, 2, 3, 4, 5, 6, 7, 8, – average – averaged Supreme Court 1, 2, 3, 4, 5, Sustainable business Synthesis 1, T Tailor board work 1, 2, 3, 4, 5, 6, 7, TARP (Troubled Asset Relief Program) Taxes 1, 2, 3, 4, 5, 6, 7, 8, Technologies 1, 2, 3, 4, 5, Territories 1, Thrifts 1, 2, Tone 1, 2, 3, Tone at the top 1, 2, 3, 4, Trade 1, 2, 3, 4, 5, 6, 7, 8, Traders 1, Trading 1, 2, 3, 4, 5, 6, 7, 8, Trading companies 1, Training 1, 2, 3, 4, Tranches Transactions 1, 2, 3, 4, 5, 6, 7, 8, –– conflict-of-interest Troubled Asset Relief Program (TARP) Trust 1, 2, 3, 4, 5, 6, 7, 8, – the Trustees 1, 2, Trusteeship Turnaround 1, Turnaround plan 1, 2, Turnaround strategy 1, U Unemployment 1, 2, United Nations Intergovernmental Working Group United States 1, 2, 3, 4, 5, 6, 7, 8, United States corporation law United States Senate Committee 1, 2, V Valeant 1, Value creation, long-term 1, Value tempered Judgment Values 1, 2, 3, 4, 5, 6, 7, 8, – discounted Vanguard 1, 2, 3, Vanguard companies create innovation Vehicles, special purpose 1, Vendors 1, 2, 3, 4, 5, VOC, 1, 2, 3, Volatility 1, 2, 3, Volcker, Paul Vote 1, 2, 3, 4, 5, 6, 7, 8, Votes cast 1, Voting 1, 2, 3, Voting power 1, W, X, Y, Z Wall Street 1, 2, 3, 4, 5, 6, 7, 8, Warrant strips 1, Wealth 1, 2, 3, 4, 5, 6, Welfare 1, 2, 3, Women 1, 2, Work 1, 2, 3, 4, 5, 6, 7, 8, – board’s Work directors Workers 1, 2, 3, 4, 5, 6, – private-sector World War II, 1, 2, 3, 4, 5, 6, ... futures if they will the job before them By building an understanding of the origins and legal basis for their role, these directors will arm themselves to prevail in the governance revolution The role... carefully culled for them, are all too vulnerable to attack Many not fully understand the job they are there to do, but feel nonetheless that they are supposed to know, or they would not have... of the function of boards and board members, except when Enron or Lehman Brothers or the Weinstein Companies collapse, at which point everyone is eager to pin the tail on the board of directors