Board of Directors - First Principles at Public Companies
There were hundreds of activist campaigns last year, often with the goal of making some change to the board of directors composition. Most investors focus on the business and management quality, what is so important about the board anyways? Ultimately the board of directors sets the tone at the top for the whole organization in the way that they hire, fire, and incentivize senior executives, as well as live by their own example.
Attached is an essay on how to think about what is important for board members and overall board function as well as a tribute to one of the best activists who recently passed away - Ralph Whitworth of Relational Investors. He successfully transformed the boardroom culture of numerous large and highly politicized companies which ultimately resulted in tremendous value creation for shareholders.
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