Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success

Grasping the Holy Grail of Governance

Shareholders, boards of directors, and managements should agree on one thing—the primary goal of a corporation is to add shareholder value on a sustained basis. However measured—be it profit, economic value added, stock price relative to time or other benchmarks, or return based on any of a number of denominators—adding value is the primary goal. Yes, acting with integrity and high ethical values and going beyond compliance with applicable laws and regulations are extremely important and, indeed, support the objective of adding value. Some believe that helping to satisfy the needs of other stakeholders also is an important purpose of the corporate entity. But let's focus here on the primary corporate goal: adding shareholder value.

In working with boards of directors, senior managements, and institutional investors over many years, it's become evident that while the notion of adding shareholder value is universally accepted and embraced, how companies seek to do so varies widely.

It's All about Alignment

Please forgive the overused word alignment, but that's what this Holy Grail really is all about. Put simply, it's about consistency of purpose and relationship and mutual supportiveness of strategy, implementation plan, organization, resources, performance metrics, and compensation, all risk-based. In concept the idea is straightforward. In execution, it's highly challenging. You'll see here what may be viewed as a high-level summary of some ...