Board of Directors and other Advisors - Entrepreneurship 101
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Transcript of Board of Directors and other Advisors - Entrepreneurship 101
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David Pasieka – Liberty Utilities December 2011"
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Governance Failures…… Ø Worldcom
Ø Enron
Ø Martha Stewart
Ø Bear Sterns
Ø Lehman Bros
Ø Nortel
Ø Hollinger
Ø RIM
Ø eHealth
Ø Olympus
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Why - Why – Why?
§ Management Reporting Spin
§ Part-Time role / Full Time Need
§ Forceful CEO’s
§ Board Skill and Experience
§ Unwavering Trust of Management
§ Unwillingness to Rock the Boat
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The Corporation
Board of Directors Shareholders
Management Advisory Board
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Key Linkages
Shareholder
Board of Directors
Management
Auditor
Committees
Advisory Board Team
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Boards over Time
Stage Financing
Influence
Governance Board of Directors
Advisory Boards
Time
Complexity
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Director’s Duty
Ø Fiduciary Duty- “To act in the best interests of the corporation. It is this notion that all stakeholders need to be considered.”
Ø Duty of Care – “To exercise the care, diligence and skill that a reasonably prudent man would exercise under comparable circumstances.”
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Stakeholder View
Shareholders / Public / NGO’s / Competitors / Global Markets
Employees Legislators
Scientists / Banks / Media / Customers / Investors
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Directors Functions
Ø Hire / Fire CEO Ø Reviews & Approves the
Strategic Direction of the Corporation
Ø Monitor the Performance of Management
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Directors Tools
Ø Information: Ø Right amount to absorb key issues and
make informed decisions.
Ø Process Ø Independence & Diligence. Ask lots of
Questions.
Ø Business Judgment – Background, Insight, Experience
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Bright Red Line Ø Very Passive: Rubber Stamp
Ø Management sets and drives agenda Ø Packages are late or Walked in Ø CEO strong willed Ø Infrequent meetings Ø Board Never votes no
Ø Moderate Ø Very Active: Micro Management
Ø Board meets monthly, lots of Committees Ø Board is stronger then the CEO Ø Board Committee work extensive Ø Board Large / Executive Committee Active Brown Governance 2005
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TSX Governance Guidelines
National Instrument 58-101 Ø Board of Directors Ø Orientation and Continuing
Education Ø Ethical Business Conduct Ø Nomination of Directors Ø Compensation Ø Other Committees beyond Audit,
Comp & Nominating Ø Assessments
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Building Your Board(s)
Ø Define Strategic Gap Ø Business Experience Ø Management Experience Ø Directors Experience Ø Personal Attributes Ø Ready / Willing / Able
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Board Chemistry
Ø Strong Board Chair
Ø Constant Tending of Culture and Composition
Ø Senior Management Equipping Directors
Ø Bias to Forward Looking Insight vs Rear View Judgements
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What’s the Motivation?
Ø Favour to CEO Ø Status / Prestige Ø Interesting & Engaging Ø Opportunity to Network Ø Give Something Back Ø Fun Ø Remuneration
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What’s the Risk
Ø Insolvency Liabilities: Ø Payments to Employees Ø Payments to Creditors Ø Payments to Government
Ø Personal Conduct Ø Insider Trading
Ø Joint & Several Liability
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Defending the Risk
Ø Fiduciary Duty Ø Duty of Care Ø Due Diligence Ø Corporate Indemnity Ø Director & Officer
Insurance
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Key Advisory Roles
Ø “The Customer” Ø “The Geek” Ø “Dad” Ø “Tight Ass” Ø “Jerry Maguire”
“Art of the Start” – Guy Kawasaki
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Managing Your Board Ø Orientation Ø Effective Charters Ø Meeting Management Ø Board Materials Ø Agenda / Minutes Ø In Camera Ø Ongoing Assignments Ø Celebrations
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Evaluating Participation
Ø On the Masthead
Ø Silent and Deep
Ø Personality Challenged
Ø Ethical Poison
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Is It Time to Act?
Ø Do they come prepared for the meetings?
Ø Can you get your Advisors when you need them?
Ø Is to much time being spent on trivial issues?
Ø Are all members contributing to critical discussions?
Ø Are you getting great return?
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Assessment Approaches
Ø Attendance at Meetings Ø For the “Good of the Board” Ø One on One Coaching Sessions Ø Survey - Board / Peer Performance Ø 360 degree Feedback Ø High Tech Interactive Ø Third Party Observers
“Cheap & Cheerful”
“Expensive & Comprehensive”
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For the “Good of the Board” Round the Table (Verbal)
Ø What Worked / What Didn’t Ø Areas to Improve Ø Emotional Decompress
Survey 1 to 5 (Written): Ø Pre-materials Concise and Helpful? Ø Everyone prepared? Ø Issues covered Trivial or Important? Ø Discussion Focused Operational or Strategic? Ø Stayed on Track? Ø Who were the Heroes? / Who were the Foes?
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In Summary
Ø The Corporation Ø Directors Duty Ø Building Boards Ø Managing Boards Ø Evaluating Boards
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References Ø Corporate Governance – Carol Hansell 2003
Ø Integrity in the Spotlight – Maureen Sabia & James Goodfellow 2005
Ø National Instrument 58-101- Disclosure of Corporate Governance Practices
Ø CICA 20 Questions Series
Ø www.Wallstreetfollies.com
Ø “Money for Nothing: How the Failure of Corporate Boards Is Ruining American Business and Costing Us Trillions.” – Gillespie 2008
Ø Globe and Mail Board Games – 2011
Ø www.Guidedfutures.com - 2011
Ø Corporate Governance in Canada – Osler 2009
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David Pasieka! [email protected]!