One Minute Governance

Matt Fullbrook
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One Minute Governance podcast

Are you a director, senior executive, investor, or someone who‘s just curious about corporate governance? Tune in for insights about how things work inside and outside the boardroom, based on 20 years of experience and interactions with thousands of directors from around the world. Each episode lasts about one minute and will provide you with questions to ask yourself, your board and your management team, designed to optimize the way your organization makes decisions. Matt Fullbrook is a corporate governance researcher, educator and advisor located in Toronto.

  1. 1 DAG GELEDEN

    227. Is our pain really necessary?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #25: Is our pain really necessary? In the previous episode, I admitted that work sometimes sucks, and the work of a board is no different. Despite the fact that we can never completely avoid or alleviate the pain of board work, that doesn’t mean we shouldn’t try. So now that you’ve identified and described your pain points, the next question is whether we really have to suffer, or if there might be a different path. The fact is that almost everything that boards do is optional. In other words, the list of specific activities that a board *must* perform is short. Now, there’s tonnes of optional stuff that boards *should* do to make sure that their butts are covered and that they feel confident they’ve discharged their duties. But even here, the range of approaches that boards take to discharging their duties is strangely narrow. Making matters worse, boards have a tendency to want to model themselves after each other. Whenever they need to do something new or different, the first question is “well, what are other boards doing?” The answer, I’m afraid, is “nothing very interesting.” What I’m getting at is that a lot of your pain might be unnecessary, but you’ll never find out if you’re not open to ditching some of the optional stuff and resisting the urge to seek validation from other boards. As long as you’re complying with laws and regulations, I think it’s worth experimenting with novel approaches to pain relief.

    2 min
  2. BONUS: Matt's Australia/New Zealand Roadshow

    4 DGN GELEDEN

    BONUS: Matt's Australia/New Zealand Roadshow

    Check out Matt's tour schedule here: https://ffm.live/MattinOz   TRANSCRIPT: Hi everyone. Matt Fullbrook here. This is a quick bonus episode of OMG to spread the word to everyone who follows the show that I’m going to be in Australia and New Zealand next month on a bit of a roadshow. Over the course of the month, I have stops in Brisbane, Auckland, Melbourne and Sydney (in that order) with events tailored for everyone from students to board chairs to CEOs to generally curious nerds. There are breakfast events, cocktail events and casual dinners. If you’re going to be in any of those places in October, or if you know anyone who is, check out the link in the show notes for an evolving list of dates, including links to get tickets or submit RSVPs. If you’re hearing this, I assume it means you’re a fan of the show, and if you like OMG you’ll really enjoy all these sessions. Thanks for checking it out and spreading the word. Hope to see you down under.

    1 min

  3. 5 DGN GELEDEN

    226. What are the most painful elements of our meetings?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #24: What are the most painful elements of our meetings? The work of a board is, well, work. And for almost all of us, work sometimes sucks. The fact that work sometimes sucks is not an indication that something is wrong. It’s just often a fact of life. As long as it also doesn’t suck – preferably most of the time. So, with that out of the way, board meetings are sometimes painful. Different parts of board meetings might be painful to different participants. For example, what’s painful for the board is often less painful for management and vice versa. But in almost all of the cases I’ve encountered, there are parts of board meetings that are painful for everyone. Maybe it’s the times when we pull something out of consent agenda. Maybe it’s the presentations by that one executive who’s just kinda boring. Maybe it’s every time that jerk – let’s call him Matt – opens his mouth and goes on and on about some nonsense. Maybe it’s the sheer quantity and weight of the compliance burden we face. Again, I’m not saying that the pain is necessarily bad, and I’m certainly not trying to imply that I know how to relieve all your pain. But if pain relief is to be found, we need to start by naming it.

    1 min

  4. 16 SEP.

    225. What might *I* do to make things a bit better?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #23: What might I do to make things a bit better? Conventional definitions of corporate governance frame it as something that exists: a system of processes and structures that promote transparency and accountability or some other such nonsense. Nonsense because it leaves us with the impression that corporate governance isn’t something that actual people actually do. There’s a similar problem with thinking of corporate governance only as a thing that belongs to the board, as a whole. As in, nobody other than the whole board collectively might have any impact on corporate governance. A weird implication of that framing is that it obscures the fact that individual directors matter. Personally, I believe that an individual director or senior executive can cause good governance to happen. This won’t surprise anyone who’s followed this show for a long time, but when a single person is intentional about the conditions that affect our decisions, that person is literally doing good governance. Just them, on their own, doing good governance. So, what might *you* do to make things a bit better?

    1 min

  5. 12 SEP.

    224. Is benchmarking a sensible way to set CEO pay?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #22: Is benchmarking a sensible way to set CEO pay? If you haven’t listened to the previous episode about knowing whether your CEO is doing an awesome job or not, you might want to take a sec and do that. A very large proportion of organizations I meet, and probably 99% of listed companies in the Western world all set their CEO’s compensation amount and structure in large part based on comparisons to their peers, also known as “benchmarking”. This makes sense if you believe that the most important part of CEO compensation is to avoid having your CEO quit and leave for another organization that pays better. The thing is, we have no idea how low a CEO’s pay would have to go before they might quit. And if we combine that with the stuff from the previous episode about how hard it is to know whether a CEO is any good or not, then we’re left with an important question. The one that’s the subject of today’s episode. One of the main problems with basing CEO pay on benchmarking is that it causes CEO pay to increase rapidly from a starting point that was already unjustifiably high. But even if we don’t care too much about the amount, benchmarking also lets boards off the hook of thinking too hard about what truly effective compensation really looks like. I promise you the answer to that question is not “effective compensation for our CEO looks like whatever everyone else is doing.” So, is benchmarking really a sensible way to set CEO pay?

    2 min

  6. 9 SEP.

    223. How do we really know if our CEO is doing an awesome job?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #21: How do we really know if our CEO is doing an awesome job? Did you know that there’s no evidence that the market for CEOs is efficient? An efficient market is one where supply and demand are basically equal. When a job market is efficient it means that both sides of a potential transaction have lots of information about each other and they are able to confidently assess the talent of the candidates, the appropriateness of the compensation, etc. We don’t have any of that for CEOs. There’s a great summary of this in Larcker and Tayan’s amazing paper Seven Gaping Holes in our Knowledge of Corporate Governance, which I’ve referenced a few times on this show. Anyway, since we have no objective way of knowing whether our CEO is the most qualified person for the job, or whether we’re paying them appropriately, it raises an even more urgent question of how good they might be at their job. You can’t just say, “well the company is really profitable and shareholders are happy, therefore the CEO must be amazing.” Why? Partly because to confidently prove that the CEO is the cause of that success would require you to get rid of the CEO and see what happens. Or to have a multiverse with an infinite number of different CEOs so you can compare them against each other. And how many stories can we think of where a CEO had great performance at the time, but once they were gone we realized that they’d done lots of damage in the process. But answering this question should start, in my opinion, with an open-ended and open-minded conversation about what doing an awesome job really means. In terms of actions AND results.

    2 min

  7. 5 SEP.

    222. What *really* motivates our CEO?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #20:  What *really* motivates our CEO? If you have the patience to follow me on LinkedIn, you may have noticed me complaining loudly about executive compensation a couple of times in the past year. I think it’s totally broken, and nobody seems to have any interest in fixing it. The fact is, we have no idea what a CEO is actually worth to a firm and we have no idea how different compensation approaches and amounts cause CEOs to behave. And in the meantime, the obsession with benchmarking CEO pay against other CEOs is designed specifically to cause pay to go up forever, thus exacerbating the wealth gap…which we actually DO know is provably bad for everybody. And part of the reason why I find this so infuriating is that the core of the solution to these problems starts with a really simple question, which happens to be the subject of today’s episode. Let’s imagine that it turns out that our CEO likes money. Likes it A LOT! And that’s convenient, because we happen to be paying them in money and not, say, salamanders. So that’s great. Except what if there’s something that might motivate our CEO even more than money (or salamanders). What if it turns out that if we gave them Friday afternoons off they would jump out of bed every morning and work 10x harder, even if we paid them half as much money? Or what if they would literally give up EVERYTHING to dance the Macarena with Taylor Swift? We could craft some huge and ambitious 5-year operational goals and spend that time convincing Tay Tay to get to work on jumping and turning 90 degrees to her left. People are complicated, and so are their interests and motivations. What could you learn by exploring this question?

    2 min

  8. 2 SEP.

    221. How, specifically, do our board evaluations make us better?

    This season, every episode of OMG focuses on a question that directors really need to answer. OMG is written, produced, narrated and scored by Matt Fullbrook.   TRANSCRIPT: Question #19: How, specifically, do our board evaluations make us better? I’ve had the amazing privilege of working with many, many boards on board evaluations over the years. I would guess that the first one I ever worked on was 20-ish years ago and the most recent one was within the past couple of months. Most board evaluations take tonnes of time and money to conduct. They involve some combination of interviews and/or surveys and analysis and reporting and facilitation. If you’re really unlucky as a board, your board evaluation tells you that everything is perfect. It might feel good, but deep down you know you might be pretty good, but definitely not perfect. But even the lucky ones basically never get their money’s worth. Let me put it this way: a great board evaluation should make give you fuel to be tangibly better tomorrow than you were yesterday. Right? Otherwise, what’s the point? Hence today’s question: how do our evaluations make us better? When exploring this question, try to have high standards. As in, try not to settle for “well, we added one more item to consent agenda and that saved us 46 seconds at the last meeting!” And don’t confuse NEW behaviour with BETTER behaviour. Just because something might have changed doesn’t mean it has improved. My hope is that exploring this question will increase your expectations of your board evaluations overall, and of the consultants you hire to conduct them.

    2 min
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Are you a director, senior executive, investor, or someone who‘s just curious about corporate governance? Tune in for insights about how things work inside and outside the boardroom, based on 20 years of experience and interactions with thousands of directors from around the world. Each episode lasts about one minute and will provide you with questions to ask yourself, your board and your management team, designed to optimize the way your organization makes decisions. Matt Fullbrook is a corporate governance researcher, educator and advisor located in Toronto.

Informatie

  • Maker
    Matt Fullbrook
  • Jaren actief
    2020 - 2024
  • Afleveringen
    244
  • Beoordeling
    Veilig
  • Copyright
    © Copyright 2024 All rights reserved.
  • Website van aflevering
    One Minute Governance

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