Archive

Since I started the blog a few months ago, I have aimed for new content every two weeks or so. I am happy to see that I still have enough topic ideas to keep me busy for the next year or so. In the immediate term, I am pressing pause on writing while my family

I had this as a topic to write about, but Deloitte recently put out an article that I think is excellent. Their site seems to have a lot of good information for CFO’s.

In my new book, The CFO’s Guide to Good Corporate Governance, I start the chapter on the Board of Directors meetings as follows:

“As a former auditor, I attended countless Audit Committee and Board meetings. Some meetings were crisp, lively and energetic. Management came to the meeting prepared and ensured their Board was prepared. Issues were discussed and debated and consensuses emerged. I left these meetings feeling inspired and energized.

Most meetings I attended left me wishing I had brought something sharp with me. Materials were hot off the printer and rushed to the attendees, occasionally as the meeting was in progress. Management awkwardly talked through the PowerPoint slides while Board members checked their BlackBerrys. Rarely would the important issues get adequate time for discussion. The discussions would veer off on some tangent and half the agenda would be squeezed into the last ten minutes.”

When I wrote the above, I had not been to a Board meeting that felt like a soul draining waste of time in a number of years. I was recently reminded that what sometimes made it painful was how management elected to have a strategic discussion with the Board. 

In my last post, I provided a few tips for the Board to improve communication with management and ultimately improve the corporate governance of the company. This post flips things around and assumes the Board needs a kick in the pants. The good news is that management can really influence Board effectiveness. I have come

There are many, many examples of management teams that are not interested in corporate governance. Their focus is solely on pursuing opportunities and executing the business plan. Financial reporting and forecasting and presenting to the Board is not a priority. From the Board’s perspective, this focus can be frustrating, especially if performance has been middling. 

In my book, The CFO’s Guide to Good Corporate Governance, I write about adopting mandates for the various committees of the Board of Directors. I also have a chapter that focuses exclusively on the Audit Committee meeting. In doing so, I made the assumption that all companies formed appropriate committees and held periodic meetings. While

An effective Board of Directors is a significant component of an effective corporate governance framework. Effectiveness can be represented by quality and robustness. I define quality as the Board being fully engaged and actively fulfilling its mandate. I define robustness as having individuals on the Board with complementary skill sets and a majority of independent Board members.

As a former auditor, I attended countless Audit Committee and Board meetings. Some meetings were crisp, lively and energetic. Management came to the meeting prepared and ensured their Board was prepared. Issues were discussed and debated and consensuses emerged. I left these meetings feeling inspired and energized.

Most meetings I attended left me yearning for the local pub. Materials were hot off the printer and rushed to the Board as the meeting was in progress. Management awkwardly read the slides shown up on the wall while Board members checked their Blackberries.

When asked how the company ended up getting into a market that had little to do with their stated strategy, the Chief Operating Officer replied, “I’m not sure. We thought it sounded really interesting so we went ahead with it. In hindsight I wish we had left it alone”

When asked how they came up with the purchase price for a set of assets, the Chief Financial Officer indicated with a bit of disdain, “That one really ticks me off. I provided a pretty thorough analysis indicating a value range. Next thing I hear we paid them ten times that! What a waste of money.”

Many individuals struggle to verbalize the concept of corporate governance. Some will mumble something about “the tone at the top” and internal controls. Their description is true, but vague. Simply put, when we talk about corporate governance we are talking about the framework put in place to ensure the above two examples do not occur.

Corporate governance is about allocating the authority to act to various individuals in the organization, defining the roles and responsibilities of the board of directors, management and staff, and making clear how decisions will be made. I tend to think about corporate governance in terms of documents and actions. 

I am just in the process of getting this site up and running and publishing my book, The CFO’s Guide to Good Corporate Governance. In conjunction with that book, this blog will cover a variety of topics related to corporate governance. Thanks for checking in. There will be new content no later than July 15th.