Archive | Book Reviews

CEO Pay Machine Destroying America

The CEO Pay Machine (cover)The CEO Pay Machine: How it Trashes America and How to Stop it (Amazon) by Steven Clifford should be mandatory reading for all compensation committees and those who vote proxies for large funds. The book is easily read and understood by the layperson. It also includes the fact-based evidence needed to convince fiduciaries that voting against most executive pay packages is one of the first steps to restoring shareholder value, company sustainability and the very foundations of American democracy.

Why combine CEO and chair positions or pay executives with options when both practices lead to poor results? We don’t except “everyone else does it” as an excuse for harmful behavior from our teenagers; why should we accept it as a reason from compensation consultants and the former CEOs sitting on most corporate boards? Clifford also outlines possible remedies but nothing will be done unless we shift public opinion. If widely read and discussed, The CEO Pay Machine could be central to change. Continue Reading →

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Capitalists Arise!: Serve Stakeholders

Peter Georgescu

Peter Georgescu

Peter Georgescu’s Capitalists Arise!: End Economic Inequality, Grow the Middle Class, Heal the Nation correctly identifies short-termism and a focus on stock price as a problem contributing to growing wealth inequality. His solutions depend on enlightened managers and boards to transform how America does business by taking all stakeholders into account, not just shareholders. I say, don’t count on enlightened self-interest by those now in control. They are unlikely to overturn the system that benefits them.

Transformation is not likely to come from those in power, even if it would be to the advantage of all. Transformation must be demanded from below. Any transformation system that purports to consider all stakeholders must effectively redistribute power. We cannot depend on benevolent dictatorships like Facebook’s Mark Zuckerberg or Alphabet’s Sergey Brin and Larry Page to act as if all stakeholders matter. To get where Georgescu correctly wants to go, there must be a real shift in power. Continue Reading →

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What Ought to Be: Why Grow Up?

Why Grow Up? between what is and what ought to be

Why Grow Up? between what is and what ought to be

According to Susan Neiman, the most important distinction in the world is the difference between what is and what ought to be. Recognizing that distinction is central to the process of growing up. (Why Grow Up?: Subversive Thoughts for an Infantile Age)

You need not be Peter Pan to feel uneasy about the prospect of becoming adult. Indeed, it’s easy to argue that Peter Pan, most drastically imitated by Michael Jackson, is an emblem of our times. Being grown-up is widely considered to be a matter of renouncing your hopes and dreams, accepting the limits of the reality you are given, and resigning yourself to a life that will be less adventurous, worthwhile and significant than you supposed when you began it.

However, life doesn’t have to be less adventurous if you never give up on creating what ought to be. We all have an opportunity to change our culture, if only in small increments. Too many people are sleepwalking through life, thinking what is given can not be changed. Of course, it helps to know where we are and how we got there to understand what changes are possible or most likely. Continue Reading →

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Scale: Corporate Governance Perspective

Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and CompaniesScale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies is about big data and takes a big time commitment to read. Scale is neither poetry or a novel. It is primarily information and speculation. 450 pages could have been distilled to 45. That said, this slog of a read should get anyone thinking with fresh insights. Below are my reflections on small portions of this tome by Geoffrey West, a senior fellow at Los Alamos National Laboratory and a distinguished professor at the Santa Fe Institute.

Highly complex systems have their origin in very simple rules governing the interaction between their individual constituents.

Yes, Darwin still applies in the modern world.

In biology, network dynamics constrains the pace of life to decrease systematically with increasing size following the ¼ power scaling laws. In contrast, the dynamics of social networks underlying wealth creation and innovation leads to the opposite behavior, namely, the systematically increasing pace of life as city size increases: diseases spread faster, businesses are born and die more often, commerce is transacted more rapidly, and people even walk faster, all following the approximate 15 percent rule.

How will the Internet impact these generalizations? Perhaps the pace of globally connected small towns like Boulder or Davis outpace more the more isolated Pyongyang? Being interconnected may be more important than size. As he repeatedly points out in Scale, correlation is not causation. Continue Reading →

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The Shareholder Action Guide

The Shareholder Action GuideThis could be the most important book you will read in 2017, For more than twenty years, I have been posting to corpgov.net, thinking I should write a book. The closest I got was The Individual’s Role in Driving Corporate Governance, a chapter in The Handbook of Board Governance. Now it is too late. Andrew Behar has stolen my thunder with The Shareholder Action Guide: Unleash Your Hidden Powers to Hold Corporations Accountable. Behar tells better stories and takes a more practical approach than I probably would have. He even has one of my favorite cartoons right before the Contents page.

yes-the-planed-got-destroyed

My task now is to help him get more readers, so they can join in our good work.  Buy the book at Amazon.com.

Want to make misbehaving corporations mend their ways? You can! Behar tells you how in this guide for good corporate citizenship. I teach an occasional seminar at a local university, hoping to inspire mostly retirees to use their investments as a tool to make corporations accountable. Behar covers much the same ground I do but in great detail, beginning with a few examples of bad corporate behavior and a brief explanation of corporate power.
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The Responsible Investor Handbook: Review

Responsible Investor HandbookThe Responsible Investor Handbook; Mobilizing Workers’ Capital for a Sustainable World by Thomas Croft and Annie Malhotra provides a ‘how-to’ manual for workers and trustees who seek to ensure our money is working us, not against us. Buy the book from Greenlead Publishing or Amazon.

As I write this review, the US SIF Foundation released their 2016 Biennial Report on Sustainable, Responsible and Impact Investing (SRI) Trends. SRI assets now account for $8.72 trillion, or one in five dollars invested under professional management in the United States, according to the report.  Continue Reading →

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Value Creation Thinking: Review

Value Creation ThinkingWhile primarily concerned with explaining value creation thinking and the life-cycle valuation framework, the book also delves into context, specifically how Bartley Madden views evolved.

I find his work compelling, at least in part because he shares my interest in understanding the world from the bottom up, instead of top down. Additionally, he focuses attention on “how we know what we think we know,” which takes me back to my studies in the sociology of knowledge. I am less sure about his embrace of systems theory but he deploys that tool well in the context of analyzing firm performance.

Value Creation Thinking: On Capitalism

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The Handbook of Board Governance: Part 8

the-handbook-of-board-governance-a-comprehensive-guide-for-public-private-and-not-for-profit-board-members

The Handbook of Board Governance

This may the last installment for my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Members. With the current post, I provide comments on Part 8 of the bookGovernance of Different Forms… a kind of catch-all for nonprofits, non-North American firms, startups, small-caps, and family firms… whatever didn’t easily fit in prior parts. 

See prior posts on introductory comments and those on Part 1Part 2Part 3Part 4, Part 5, Part 6 and Part 7. As I have indicated before, The Handbook of Board Governance is one of the most popular collections of articles of interest in the field of corporate governance. Look at where it ranks at Amazon today within the entire field (fluctuates daily) and you will note that its scope is arguable much broader than all those ranking above it. At more than 850 pages with 50 authors for less than $50, it has to be a best buy for those looking for practical information and theory in corporate governance today, and for several years going forward. Continue Reading →

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The Handbook of Board Governance: Part 7

The Handbook of Board GovernanceI continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 7 of the bookGovernance of Sustainability. This is why I got into the field as an NIMH Fellow in the late 1970s studying what forms of corporate governance would be best for corporations AND society. This part of the Handbook is worthy of a separate 100-page book by itself, probably with broader appeal to the general public. Continue Reading →

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Torres-Spelliscy: Corporate Citizen?

Ciara Torres-Spelliscy holding Corporate Citizen?

Ciara Torres-Spelliscy

Torres-Spelliscy’s Corporate Citizen? An Argument for the Separation of Corporation and State, analyzes the trail of legal cases that led to the 2010 Supreme Court decision in Citizens United, as corporations won rights originally reserved for citizens. Not only are they winning the rights of real persons, but they are avoiding the responsibilities of citizenship… like paying taxes.

Before reading the book, I vaguely knew one of the first key decisions stemmed from the Fourteenth Amendment to the U.S. Constitution, which says,

[n]o state shall… deprive any person of life, liberty or property without due process of law, not deny to any person… the equal protection of the laws.

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The Handbook of Board Governance: Part 6

The Handbook of Board GovernanceI continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 6 of the book, Governance of Information TechnologySee prior introductory comments and those on Part 1Part 2Part 3Part 4 and Part 5. As I have indicated before, The Handbook of Board Governance will soon be the most popular collection of articles of current interest in the field of corporate governance, if it isn’t already. Rank 8 at Amazon within the entire field (fluctuates daily). Continue Reading →

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The Handbook of Board Governance: Part 5

I continue my review of The Handbook of Board Governance: A CoThe Handbook of Board Governancemprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 5 of the book, The Unsolved Governance Problem: Performance Measurement and Executive Pay. Talk to any of your acquaintances outside the corporate governance industrial complex and they will all have an opinion regarding CEO pay. This is a part of the book everyone can relate to. 

See prior introductory comments and those on Part 1Part 2Part 3 and Part 4. As I have indicated before, The Handbook of Board Governance will soon be the most popular collection of articles of current interest in the field of corporate governance.” It is already ranked 10 at Amazon (although ranking fluctuates daily, like a thinly traded stock). Continue Reading →

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The Handbook of Board Governance: Part 4

The Handbook of Board Governance

The Handbook of Board Governance in Times Square

I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 4 of the book, The Rise of Shareholder Accountability. As a shareholder advocate, this is my favorite part of The Handbook of Board Governance. See prior introductory comments and those on Part 1Part 2 and Part 3. I suspect The Handbook of Board Governance will soon be the most popular collection of articles of current interest in the field of corporate governance.”

The Handbook of Board Governance: The Happy Myth, Sad Reality

Robert A.G. Monks warns, capitalism without owners will fail. The chapter is a condensed and updated version of Citizens DisUnited: Passive Investors, Drone CEOs, and the Corporate Capture of the American Dream, which I reviewed here. Continue Reading →

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The Handbook of Board Governance: Part 3

The Handbook of Board Governance - book coverI continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 3 of the book, Risk Governance, Assurance and the Duties of Directors. See prior introductory comments and those on Part 1 and Part 2. I suspect the book will soon be the most popular collection of articles of current interest in the field of corporate governance.  

The Handbook of Board Governance: The Rise and (Precipitous, Vertiginous, Disastrous) Fall of the Fiduciary Standard

Nell Minow starts us out in Part III with a brief essay: The Rise and (Precipitous, Vertiginous, Disastrous) Fall of the Fiduciary Standard. Yes, she’s unhappy with a deteriorating fiduciary standard. Most readers will agree. Minow is not only the ‘queen of good corporate governance,’ according to BusinessWeek, but is also known at the Movie Mom. Nowhere else in The Handbook of Board Governance are you likely to find references to superheroes and kryptonite.

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The Handbook of Board Governance: Part 2

The Handbook of Board GovernanceI continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 2 of the bookWhat Makes for a Good Board? See prior introductory comments and those on Part 1. I suspect the book will soon be the most popular collection of articles of current interest in the field of corporate governance.

The Handbook of Board Governance: Director Independence, Competency, and Behavior

Dr. Richard Leblanc‘s chapter focuses on the above three elements that make an effective director. Regulations require independence but not industry expertise; both are important elements. Leblanc cites ways director independence is commonly compromised and how independence ‘of mind’ can be enhanced. He then applies most of the same principles to choosing external advisors.  Throughout the chapter he employees useful exhibits that reinforce the text with bullet points, tables, etc. for quick reference. Continue Reading →

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The Handbook of Board Governance

The Handbook of Board Governance

When I agreed to contribute a chapter to Richard Leblanc’s book, I knew he was an excellent speaker, blogger and teacher. I also suspected he was a good promoter. How else could he attract over 23,000 members to his Linkedin group, Boards & Advisors? But, I never dreamed I’d see The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Members make the lights of New York’s Times Square across from the Hard Rock Cafe. Now I’m half expecting to see Leblanc on the late night TV circuit, like a candidate for public office reaching out to voters.
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Review: What They Do With Your Money

What They Do With Your MoneyWhat They Do With Your Money: How the Financial System Fails Us and How to Fix It

What they do with your money is central to many issues of citizens around the world. This wonderful new book by Stephen Davis, Jon Lukomnik, David Pitt-Watson helps readers connect the dots. While its focus is on the financial system, its purpose is empowering individual citizen investors and those who would be investors if that system were redesigned to serve us all.

Fixing the system won’t be easy. We can’t count on most of those those benefiting from the system to initiate needed changes but the authors provide a roadmap of how needed reforms can be accomplished. Continue Reading →

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Authoritarian Capitalism in the Age of Globalization

Authoritarian Capitalism in the Age of GlobalizationPeter Bloom, of the Department of People and Organisations at The Open University in the UK, takes on a very ambitious project in his recently published book, Authoritarian Capitalism in the Age of Globalization. In a strong critique of neoliberalism, Bloom argues that marketization does not inexorably lead to democratization, it more frequently leads to authoritarian capitalism.

Marketization and globalization incentivize governments to pursue coercive forms of politics favoring foreign investors and corporations at the expense of popular opinion and public welfare. Although he focuses on transitional economies such as Singapore, Mexico, China and Russia, I can see how his analysis fits nicely with the rise of Donald Trump in America. Continue Reading →

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Shareholder Empowerment – Review Essay

Shareholder Empowerment: An IntroductionShareholder Empowerment

Shareholder Empowerment: A New Era in Corporate Governance (link) by Maria Goranova and Lori Verstegen Ryan (editors) is the best book on corporate governance I have read in quite some time. No, it does not have all the answers but it does ask many of the right questions. For an academic reader, I found it a surprising page-turner.

Maria Goranova and Lori Verstegen Ryan, the editors, set up the central problem in the introduction. There is growing public outrage over the pay gap of CEOs and average employees. Corporations are no longer reliable providers of job security, healthcare and retirement benefits. Power has been shifting from corporate officers and directors to shareholders. Finance and legal scholars, “who equate the well-being of corporations with the well-being of investors,” have dominated the corporate governance debate. Perhaps the management academy can shed some insight into these issues. Continue Reading →

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Corporate Concinnity in the Boardroom

Received for Review –  Corporate Concinnity in the Boardroom: 10 Imperatives to Drive High Performing Companies

Corporate Concinnity in the Boardroom

“ . . .a really important book about how to maximize the performance of companies and provides rare, clear common sense guidance for Boards of Directors that is worth its weight in gold.” –Hap Klopp, Founder and former CEO, The North Face, author, lecturer, serial entrepreneur 

Nothing should be more important than building exceptional, sustainable leadership teams, effective governance platforms, and a strategy to make them work well together.  According to her publisher, forward-thinking board members, C-suite executives, family business owners, and investors who are committed to excellence and continuous improvement in governance will be well served by embracing the framework that advisor Nancy Falls outlines in her new book Corporate Concinnity in the Boardroom: 10 Imperatives to Drive High Performing Companies. Continue Reading →

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Review: Carl Gershenson – Protecting Markets from Society

Carl Gershenson

Carl Gershenson

Carl Gershenson – “Protecting Markets from Society: Non-Pecuniary Claims in American Corporate Democracy” forthcoming in Politics & Society looks at the role of the state as ‘market protector.’ Protecting us from inside trading, pump and dump schemes, policing market players? Yes, that may be the primary duty of agencies such as the SEC. However, Gershenson turns our attention to a very important secondary duty – “protecting the market from disruptive challengers so that corporations may operate as if markets were autonomous.”

As we have seen in The Rise and Fall of Homo Economicus: The Myth of the Rational Human and the Chaotic Reality and the Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Streetpeople are not rational robots. Continue Reading →

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Review: The Rise and Fall of Homo Economicus

The Rise & Fall Of Homo EconomicusThe Rise and Fall of Homo Economicus: The Myth of the Rational Human and the Chaotic Reality by Yannis Papadogiannis deserves wide circulation for documenting the failed state of economics as science. Humans are a far cry from the rational creatures mainstream economics assumes. Economics as a science will never be as mathematically precise as Newtonian physics. And, of course neither will physics.

Papadogiannis does an excellent job of walking lay readers through the history and fallacies of modern economics, presenting findings from sociology, neuroscience, and elsewhere that have led to an incomplete rise in behavioral economics, although we are still far from a paradigm shift.  Continue Reading →

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Review: Handbook of Organizational and Managerial Innovation

Organizational and Managerial InnovationHandbook of Organizational and Managerial Innovation (Elgar Original Reference) edited by Tyrone S. Pitsis, Ace Simpson, and Erland Dehlin.

Innovation is never free of its social context, its resistors, enablers, recalcitrants, champions and the like. Indeed, innovation can be thought of as the very stuff of social relations, as in the case of Hannah Arendt’s (1958) idea of innovation being integral to democracy and vice versa. Wherever there is an absence of democracy, Arendt argued, there is also the decline of innovation.

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Review – The Nature of Corporate Governance: The Significance of National Cultural Identity

TheNatureofCorporateGovernanceThe Preface to this book is so powerful that I have to begin my review with the words of the authors, Janet Dine and Marios Koutsias.

The thesis of this book argues that national corporate governance is extremely important for societies. Recently many scholars have said that a convergence of corporate governance is inevitable. We believe that it is true but like Mark Twain said “the reports of my death are greatly exaggerated.” We show that although there is some convergence, national law of corporate governance is thriving. We also believe that it is necessary for the identity of each country. The reason that national diversity in corporate governance is still widespread is because of the history, philosophy and economy of each county as shown in its cultural heritage, and which it gives its identity. The cultural heritage in each state is identifiable in the company law and corporate governance codes. We consider that this is crucial for the well being of democratic nations. Convergence in corporate governance is a threat to ordered commercial regulations because of the power of the preeminent economic paradigm in the West which is the neo-liberal model. The neo-liberal agenda that predicates deregulation, privatisation and the liberalisation of markets is moulding many jurisdictions into an Anglo- American model of corporate governance which is dangerous for a number of reasons: Continue Reading →

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Review: Getting Women on to Corporate Boards

GettingWomenontoCorporateBoardsThis slim but informative volume contains contributions from practitioners, policy-makers, principle-setters, advocacy groups and researchers on gender balance in the boardroom, the outcomes of the Norwegian quota law and its snowball effects in other countries. The book came out of a Think Tank organized in Oslo in March 2011. The Norwegian quota law demanded a minimum share of either gender of 40% on boards of publicly listed companies, about 1500 corporations as of January 2008.

Norway took a radical approach. The penalty for not meeting the quota was dissolution. No company took that chance. By any reasonable measure, the Norwegian law is a success. Has Norway’s example started a “wave effect” of momentum around the world? I think so, although Norway had a head start over most countries because they already had a strong base of human rights. Continue Reading →

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Review: Corporation Nation

Corporation Nation (Haney Foundation Series) by Robert E. Wright  delves into the history of the corporation, particularly in pre-Civil War United States (the antebellum period). Like the earlier reviewed Shareholder Democracies?: Corporate Governance in Britain and Ireland before 1850, Corporation Nation addresses central issues such as agency theory, democracy and public interest through the lens of history.

Despite protests that corporations were potentially corrupting, U.S. state governments early on combined to charter more corporations per capita than any other nation—including Britain—effectively making the United States a “corporation nation.” Robert E. Wright traces the shift in corporate governance from relatively self-governing business republics to the much more regulated entities we are familiar with today. Continue Reading →

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Review: Handbook of Research on Promoting Women's Careers

The march of women into the upper echelon seems inevitable. A few points from the introduction:HandbookOfResearchOnPromotingWomensCareers

  • 60% of recent university graduates have been women, 50% of those graduating with advanced degrees in law and medicine, 1/3 of those with MBAs.
  • There will be labor and skill shortages in all developed countries over the next two decades as baby-boomers retire.
  • Women make 89% of the consumer purchasing decisions.
  • Companies with more women in top management positions are more successful.
  • Women are less greedy, less likely to engage in theft, fraud and corruption, protecting their organizations from failure and poor reputation.
  • Organizations retaining and advancing qualified women have an advantage in the war for talent. Continue Reading →
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Review & Reflections: The Cadbury Committee

TheCadburyCommitteeThe Committee was formed in 1991, the same year I read Power and Accountability: Restoring the Balances of Power Between Corporations and Society by Robert A.G. Monks and Nell Minow. I had spent years in academia searching for the perfect corporate form. I studied corporate systems around the world and headed California’s cooperative development program. It was obvious to me the dominant form of corporate governance in the US and UK needed improvement.

Monks and Minow brought confirmation from experts in the field. The appointment of the Committee on the Financial Aspects of Corporate Governance, better known as the Cadbury Committee, in May that year by the London Stock Exchange, the Financial Reporting Council, and the accountancy profession meant even those running the markets knew something was wrong. Real change was possible.

The Cadbury Committee: A History takes the reader back to those days to see how changes happened and why. Thankfully, Laura F. Spira and Judy Slinn took the initiative to document the Committee’s history while many members are still alive. Continue Reading →

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