Re: Corporate governance—crowned
Unless you are Winston Churchill, I doubt you're going to surprise me. Especially if we're going to discuss corporate governance.
Board Members aren't elected by shareholders. Board Members have their seats confirmed by voting shareholders after the company has nominated someone for a seat using whatever mechanisms are in the company by-laws. That voting shareholders bit is crucial, not all shareholders can vote, you do know that, right? Not all shareholders own any portion of the company. You know that too, yeah?
Apparently not. I'll explain to you how companies work. While the following is most prevalent in tech, the defense and energy industries do it a lot as well. Class B Common Shares generally do not entitle shareholders to a vote in any aspect of a company. In the rare cases where Class B shareholders get a vote it is not a vote-per-share arrangement. The company will have a share conversion ratio where for every (x) number of Class B shares converts, for the purposes of voting, to one (1) Class A share. That ratio varies from company to company (at the last publicly traded company I worked at the ratio was 23.5:1) but it's almost always a number beyond the means of non-institutional investors to purchase enough shares to influence the company. Class A shares aren't generally available to non-institutional investors. An individual can buy them, but there's usually a minimum purchase requirement that only crazy people would dabble in. Exposure is simply too great for people who don't hate their families.
Carrying on, Class B shareholders do not own any part of the company. They are effectively making a small loan to the company and if share price has increased since the origination of the loan then they that increase as well. They don't own any part of the company, therefore are not given the same voting rights as Class A shareholders. Kind of neat how the world works, huh?
If you actually understand where shareholders actually fit into reality everything is different that what you thought you knew. The Board is there for the Company. Like I said, you'll get a few institutional investors on the Board simply because of the volume of voting shares they own, but you want them kept to a minimum. If too many of those sorts you get into situations like HP is in. Like some rube up there commented, Boards that participate in planning are always fucked. Each Board member is only looking out for their own interests and it'll never succeed. The Board at HP has been 100% worthless since the Compaq acquisition. Which is why I took my money out of there.
You've got the entire situation turned around. A Board that's not there to enable the CEO is a worthless Board. If you don't like the way a company is governed you can decline to invest, or you can try to buy enough voting shares to matter. Beyond that shareholders have no rights and it's not up to you, or anyone else, how the company is governed if you don't have the power to change it to your liking. There's nothing wrong with one person being Chairman, CEO and the largest shareholder. If you don't like it don't put your money in there, but if you are going to invest money in publicly traded companies it's best if you have an idea of how companies actually work. Otherwise you'll just end up looking foolish.