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It is know since companies have existed that this is indeed bad corporate governance. The CEO should be firable at the leisure of the board, and the board at th
by xwolfi 4y ago
It is know since companies have existed that this is indeed bad corporate governance. The CEO should be firable at the leisure of the board, and the board at the leisure of the shareholders.
What seems to happen often is blurried lines: the ceo founder is majority shareholder, the board is his family, friends and paid lawyers, the shareholders are asleep at the wheel as long as some profits rain in, the regulator finds no law broken.
Tesla is a model of bad governance, to the point the harshest sanction a regulator could levy against their chairman/ceo for manipulating the stock price, a capital sin, is to make him only CEO, while not removing his family members from the board... a systemic european bank is the model of good governance: you can see epic ceo vs board fights, shareholder revolutions etc etc.
- mijamo 4y agoActually this isn't the whole truth. There is a substantial body of literature around the effect of merging both positions or not and it is not really conclusive in any direction. You mention Europe but for instance in France it has been a corporate tradition too have both merged and separation has statistically lead to a significant underperformance. FYI it is called the agency vs stewardship theories and currently it seems like a academically the stewardship is slightly favored.