Corporate Chronicles

Corporate Chronicles: The Final Episode

The 13th episode of a 13-part weekly series on good governance and ethical conduct.

This concludes the series on corporate governance and matters of public interest. I will continue to post and try to answer questions on ethical conduct and governance. I do hope that we will continue the conversation to make a difference.

Beyond the Boardroom: A message (hopefully) of hope

For 13 weeks, we lifted the veil and shone a light through the dark shadows to illuminate the realities of the corporation. We've exposed the dangers of groupthink, the insidious grip of cronyism, and the silencing of critical voices. This isn’t just theoretical; this was my reality.

Recap

A quick review of what I shared – but which is not the sum of my 13-page memo (as that will be the subject of another discussion, elsewhere).

• I raised certain governance and ethical questions at an executive meeting on 6 September 2023 at which all the executive leadership members, to whom I have referred during these Corporate Chronicles, were present. Based on the concerns I raised and the non-answers I received from two key members of the leadership), the next day, 7th September 2023, I requested a meeting with the (new) Chairperson of the Governance, Nomination & Remuneration Committee, to share those concerns. Less than 12 hours later in the wee hours of the 8th September 2023, I received an urgent request from my boss, the (former) CEO, to meet with him that very day. I never had the meeting I requested with the Chair.
• At that meeting, it became clear to me that the issues I had raised? (all of which are fully detailed in the 13-page document) in that meeting of the 6th September, in doing my job as the then General Counsel were the subject of much discussion with the leadership and the Chairman of the Board.?This was a pattern that had begun in 2022 when I challenged the so-called Delphi leadership training programme run by close personal friends of the then CEO which I was forced to attend.
• On 11 October 2023, I attended a meeting with the (former) CEO at which I again raised the issues I’d previously raised on 6 September 2023, along with the other concerns that I had already placed in the 13-page document and which I discussed at length with the CEO. I received no response either verbal or written to address any of the concerns.
• This lengthy, detailed memo (containing nine (9) NOT 100 concerns) was put into the hands of the company CEO after several attempts to find answers and resolution to serious issues of ethics, governance and transparency I raised, were repeatedly and blatantly ignored.
• Additional attempts to engage with the Chair and BOD were thwarted, and HR failed to behave like HR, instead pressing me to engage with the rites and rituals of the guru couple, to stay employed.?
• I had my privacy invaded by an external supplier, and personal friend of the higher-up, and then was publicly ridiculed and abused by the supplier when I would not submit to unorthodox and bizarre rituals aimed at ‘groupthink’ and far far and away from reality. All, unwittingly funded in USD by our shareholders.
• I raised concerns about the irregularity of the Chair and other UK based and other members of the BOD who are supposed to have independent oversight, joining into the rituals – paid for in USD by shareholders.?
• I raised concerns about the concentration of power into the hands of a singular, deified leader who was present at every committee and had influence on all matters – including his own salary, (and unusual changes to the bonus schemes).
• I expressed incredulity at the lack of action by the Chair to reign in rather than exalt the CEO or to question irregularities in spend, in procurement, processes and structures.?
• I raised concerns about unusual and excessive spending of USD – that were not linked to strategic objectives – and reflected a preference for non-local service providers payable in significant ForEx sums.
• My penance for doing my job was to be threatened into silence, maligned and banished. I was punished for speaking truth to power and protecting shareholders interest.?
• Despite the fact that I was a three years away from retirement, an active investor in shares, standing to benefit from bonus schemes, I resigned on principle. Although there are differing opinions on the how and the why, I knew that this was my only recourse.
• The contemptuous statements, attacks, ridicule and smear campaigns empower me. ? The cronies and sycophants who have benefitted or share somehow in the fraternity mean nothing to me. Right-thinking people, and those who do not look for the answers from the dead, continue to support me.?

No report, no respect

With regard to the report that was ironically released on Good Friday, 4th April, I have not seen the report, I have not been contacted and almost 4 months later, I am still awaiting a response to my 13-page memo. But more on that another time.?

Moving Forward

Can WE do anything?

How can we look from the boardroom to beyond and use our power to instigate meaningful change? It lies within our collective grasp. We hold the power. We hold the power of our voices and our views.

Activism isn't about grandstanding; it's about demanding accountability and ensuring our investments are managed responsibly.?

Truth must prevail

When boards and executives wield unchecked power, and prioritise personal gain over long-term value creation, they do not take into consideration the interests or views of all stakeholders. We may make questionable decisions that erode our investments and negatively impact stakeholders including shareholders and employees.?

This isn't an anomaly; headlines scream of corporate misconduct daily and boardroom egos and powers have disabled the best future of many organisations. Enron. CLICO. Carillion. Theranos. Wirecard. The UK Post Office.

I will explore some ways we can collectively become more active guardians of our investments; ways in which we can break this culture of silence and acceptance and how we can repair our broken governance and justice systems.

America and The Business Roundtable: Promises vs Reality

In 2019, American business made a bold declaration – corporations would prioritise serving ALL stakeholders, not just shareholders. This seemed like a seismic shift from decades of shareholder primacy. But did anything really change??

Sadly, for many corporations, it appears this was merely a statement, not a true shift in mindset.? I know this firsthand. As both a former employee of numerous corporations and a current shareholder, I've seen the disconnect between rhetoric and reality.

Theoretically, this new purpose SHOULD mean a win-win for shareholders and employees. Protecting investments means protecting jobs and livelihoods. Yet, cronyism, secrecy, and abuses of power still run rampant in too many boardrooms.

Your Voice Matters … or does it?

Can shareholders – even institutional ones – really hold corporations accountable in our system? Can employees move beyond being passive bystanders? Boards are SUPPOSED to represent us, to exercise responsibility.? But what happens when that trust is shattered, as it is all too often? The damage is already done.

This isn't just about business. We see parallels in politics, where leaders amend constitutions to extend their own power. Isn't it the same when corporate owners change the rules to benefit themselves at the expense of the rest of us?When the Corporation acts almost like a law unto itself and what goes on behind closed doors is shrouded in secrecy …?

Political Playgrounds: Corporate Echoes

Just like politicians manipulate systems for self-interest, executives can twist corporate rules to benefit themselves at the expense of the true owners – the shareholders.? They may push for golden handshakes or parachutes, “friendly’ boards, or changes to the corporate charter that make it harder to remove them or challenge their decisions.

These tactics echo the actions of leaders who modify democratic rules to stay in power.? In both cases, this is an abuse of authority – manipulating the system for personal gain while harming the broader group they are supposed to serve.

The Price of Unchecked Power

When ownership (shareholders) and control (management) are separated, it's a recipe for trouble.? Managers may chase personal benefits or risky strategies that harm shareholders, destroying value in the process.

This is why corporate governance is so crucial. We need independent directors, vigilant institutional investors, and the power of activist investors.? These mechanisms serve as checks and balances,? helping keep management aligned with shareholder interests.

Various corporate governance mechanisms are employed to mitigate these agency costs, including performance-based compensation, the appointment of independent directors, and the active monitoring roles of institutional investors. These mechanisms aim to align the interests of managers with those of shareholders and to reduce the likelihood of moral hazard and managerial opportunism.

From Symbolic to Substantive Stakeholders to ….

Shareholders cannot solely rely on the integrity of management. This leaves us vulnerable. Corporate failures and scandals show us the very real cost of this misplaced trust: financial losses, a tarnished reputation, and risky strategies that sacrifice the company's future. Employees feel the pain too – layoffs, underinvestment in workers, and decisions prioritising short-term stock boosts over their well-being.?

It's Time to Challenge the Status Quo

No question too small. No stupid questions. Small but big.

But there's another way.? Shareholders – even minority ones – can become active watchdogs. By using proxy access, forming advocacy groups, and demanding change, we protect our investments and ensure ethical leadership.? This isn't just about money; it's about companies that treat their people right and make decisions that benefit the larger community.

Employees: Finding Your Power

Employees, too often seen as powerless, hold immense potential. Unions provide a collective voice, negotiating not just for better wages, but for a say in the decisions that directly affect their jobs and the company's direction. This is particularly critical as industries constantly transform through technology and global pressure.

Shareholders and Employees: A United Front

Imagine the power if shareholders AND employees worked together, using collaborative platforms for a more democratic and transparent governance structure.? This ensures the company serves the interests of those who create the value, not just those at the top.

Reflection rage rebellion

By using tools like proxy access, shareholders can nominate directors who truly represent their interests, rather than simply rubber-stamping the executive-chosen candidates who may perpetuate existing management biases.

Additionally, forming shareholder advocacy groups can help unify and amplify their voices, pushing for changes in corporate governance practices, such as transparency in executive compensation and strategic business decisions.

Unions?

Employees, on the other hand, can also influence corporate governance through the formation of unions or union-like groups. These organisations empower workers to negotiate collectively, not just for better wages and working conditions but also for a voice in strategic decisions that affect their employment and workplace environment. The collective bargaining power of unions can serve as a counterbalance to the concentrated power of corporate executives, ensuring that employee interests are considered in business decisions. This is especially pertinent in industries where technological changes and global competition put additional pressures on workers.

Incorporating the voices of both shareholders and employees in the governance structure through collaborative platforms and unions can help mitigate the risks associated with the separation of ownership and control. This approach leads to a more democratic form of corporate governance where the power of control does not automatically imply de facto ownership as it does now.

A stakeholder-inclusive approach helps ensure that companies act in the best interests of all parties involved rather than the select few at the top.

Rage. Rebellion. Resist.

• Know your rights: Familiarise yourself with shareholder voting rights and company proxy statements. Don't be afraid to leverage your vote, even if it seems like a small gesture.
• Ask questions: AGMs are not mere formalities. Engage with management, ask probing questions, and demand clear answers.
• Seek common cause: Connect with other shareholders, both institutional and individual. A united front is far more powerful than a lone voice.
• Support activist investors: While their methods may sometimes be controversial, activist investors can be a catalyst for much-needed change.
• Ask Tough Questions: Don't let AGMs become rituals. Hold management and boards accountable with direct, probing questions
• The Power of 'No': Don't be afraid to leverage your vote against board members or decisions you believe are harmful.

Beyond shareholder value: A voice for employees too

By demanding responsible governance, we don't just protect our investments; we create healthier companies with a stronger future. When boards are held accountable, decision-making becomes more ethical and long-term focused. This, in turn, benefits not just shareholders but also employees, whose livelihoods depend on a company's success.

A Call to Action for Boards and Executives:

This isn't about shareholder micromanagement; it's about a healthy dialogue and mutual respect. Boards and executives must embrace greater transparency and shareholder engagement. A robust system of checks and balances is essential for long-term corporate health.

For Institutional Investors:

Embrace your fiduciary duty! Don't be afraid to use your voting power to hold management accountable. Collaboration with individual shareholders can create a powerful force for positive change.

For All Shareholders:

We have the right and the responsibility to be active participants in the companies we invest in. Let's raise our voices, demand answers, and work together to ensure a future where shareholder rights are not just symbolic, but a powerful force for good. The future of our investments, and the well-being of countless employees, depends on it.

This is not just about protecting our investments; it's about protecting the future.

Change isn't easy, but can we truly accept the status quo? We've exposed groupthink, cronyism, and silenced voices. While uncovering these issues can feel like wielding a flashlight in a vast cave, there's a growing force for good. Consumers are demanding better, whistleblowers are speaking truth to power, and some companies are embracing transparency. But can we remain trapped in a cycle of reactive outrage? It's time to move beyond simply exposing the darkness. We need to ask tougher questions: How do we hold those in power accountable? What real role do shareholders have in demanding ethical leadership? Are our current governance structures simply cages for conversations, allowing misconduct to fester beneath the surface? We need a complete overhaul, ensuring shareholders can truly nominate directors, not just rubber-stamp pre-selected choices.??

And yes, there must be consequences. Those who abuse power must face more than just scrutiny. They must face real penalties, from fines to loss of positions.

Examining existing structures and demanding a reset of leadership at organisations under scrutiny is crucial to break the cycle and ensure these issues don't become a recurring nightmare.

Resigning is not enough

On 27th December 2023, I resigned on principle from the Massy Group as its Executive Vice President, Business Integrity & Group General Counsel. This was after being told that I didn't fit in, that I asked questions that made people feel uncomfortable. It came after I asked questions about certain things that I became aware of several weeks before I left the company. The clue is in my former title. Two clues.

While I resigned on principle and left with nothing (not even my phone ??) it doesn't mean it ends here. Or that I end here. Read Paul Gilbert 's article on what comes after resigning and that is where you will find me. The After Resigning bit and what comes next not just for me but for our organisations.

Thank you for staying with me over these 13 weeks and before. I hope to continue to have the pleasure of your company.?

Round up, references and reading

1. Post 1 of 3: The Massy Group Investigation Raises More Questions Than Answers?
2. Post 2 of 3: The Massy Group Investigation: More Questions Than Answers?
3. Post 3 of 3: The Massy Group Investigation: No Answers
4. The Corporation
5. The New Corporation
6. Business Roundtable: The Purpose of the Corporation
7. Boardroom Echoes & Egos: The dangers of groupthink : Corporate Chronicles Episode 1?
8. The Role of the General Counsel & Directors' Duties: Conform or Resign : Corporate Chronicles Episode 2
9. Cons, Conflicts & Cronies: Forces For Bad : Corporate Chronicles Episode 3?
10. Don't Stop the Carnival : It's in our DNA Corporate Chronicles Episode 4?
11. How to Dodge Accountability: Gag Orders and NDAs : Corporate Chronicles Episode 5?
12. Dark Shadows: Order in the Boardroom : Corporate Chronicles Episode 6?
13. Lifting the Veil - Disorder in the Boardroom : Corporate Chronicles Episode 7?
14. Letting Go of Logic: The 'CULT' in Culture : Corporate Chronicles Episode 8?
15. The OneWay: A Cult Uncovered : Corporate Chronicles Episode 9?
16. Through the Looking Glass: Bizarre Business Beliefs : Corporate Chronicles Episode 10
17. The Investigation: Weapon or Key? : Corporate Chronicles Episode 11?
18. The Whistleblower and the Truth Teller Corporate Chronicles Episode 12?
19. Flings, fast food, flights and fossil fuels: Bad Behaviour by the Big Boys : Boardrooms and Bedrooms
20. Resigning is not enough : Paul Gilbert