Lectures 4 & 5 Flashcards
Public Vs. Private Companies
Public - on S-Ex, regulated info release
Private - fewer shareholders, different investment options, not on S-Ex, “closely held”
Governance Hierarchy
StH / ShH TO Board of Directors TO CEO TO Executive Leadership Team // (CEO and Executive Leadership Team are employees FYI)
Board of Directors
not day-to-day operations or employees, represent ShH interests, hire CEO, provide objective oversight & expertise
CEO
Chief Executive Officer, sets/implements strategy
Shareholder Voice
Board of Directors
Annual Meetings (updates, votes, nominations)
Exit (sell shares) / Voice (write letter, proxy vote etc) / Loyalty (do nothing - signal acceptance)
Best Corporate Governance Practices
BOARD independence and accountability (elected, no relationship)
DIVERSITY (gener, race, background)
COMPENSATION (tied to performance)
DUALITY of CEO/Chair (2 difference people)
ShH voting rights
Strat Comms Role & Governance
relationship b/w org and public, be friends w ShH, StH, bring feedback to board BY being educated on governance practices, monitor feedback, release timely/good info
Enron
hid debt/toxic assets from shareholders among other things– went bankrupt
Unethical leaders, no board accountability, poor financial reporting
Volkswagen “Dieselgate”
installed software to evade emissions standards
sketchy w auditors, poor transparency and regulatory oversight
Wells Fargo Fake Customer Accounts
made to meet aggressive internal sales goals. Poor internal controls / accountability / customer-focused culture
WWE “Operation Raw Deal”
Steroid ring. Bad internal politics/ethical practices/regulatory oversight
Intangible Assets:
non-financial value/non-physical, future benefit, “soft”. ie Patents, Processes, Plans, Reputation, Relationships, Logos/trademarks
IA MANAGEMENT = LEAD INDICATOR OF PERFORMANCE
Tangible Assets
Physical, “hard” - ie machinery, buildings, trucks. Generally could be sold to make profit
Financial
Stocks, bonds, cash, NOT intangible
IA on Financial Statements
listed as expenses not assets - R&D, Advertising, PR
Balanced Scorecard
Kaplan/Norton (1992). 4 Categories of Performance Data
1. FINANCIALS
2. CUSTOMERS
3. INTERNAL BUSINESS PROCESSES
4. LEARNING & GROWTH
IA Categories
EMPLOYEES
ESG
MANAGEMENT
REPUTATION/BRAND/RELATIONSHIPS
R&D
VISION/STRATEGY
Employee KPI
retention/engagement
diversity
awards for culture (external)
ESG KPI
awards (external)
recognition on lists (external)
Management KPI
Leadership credibility
Financial success
Reputation / Brand / Relationships KPI
Top brand lists
earned media sentiments
3rd party value calculations
R & D KPI
IP tracking/issuing of patents
3rd party evaluations
awards for R&D
Vision/Strategy KPI
Customer centric data, attraction, loyalty
market share
Sales order backlogs
IA & Communications
important for developing trust
giving stakeholders important information BY
engaging with StH
Identifying ways to share info about IA
Giving regular updates
