Long-term value creation — the board's new agenda.
A big shift in public ownership has created a new set of challenges for boards. Much of the $14 trillion of assets that firms like Vanguard, BlackRock, and State Street manage is now held in index funds, creating a huge class of permanent institutional investors who own almost 60 percent of the Fortune 500. These investors are stating in no uncertain terms that simply managing for short-term shareholder profit is not acceptable.
Bill McNabb, Ram Charan, and Dennis Carey have been on the front lines of these changes with the investment community, corporate boards, and top-level management teams. Since TSR (total shareholder return) cannot keep the short and long term in balance, the authors argue, boards should focus on a different kind of TSR—talent, strategy, and risk—because decisions and actions around these factors, more than any others, determine whether or not a company creates long-term value. This book redefines the board's agenda and explains how to:
Build and incentivise the right leadership teamHelp leaders take a longer view and communicate it to investorsRefresh board composition and create diversity to meet the new challengesKeep major risks, such as cyberattacks and sexual harassment allegations, front and centreAnalyse the business through the eyes of a shareholder activistWith the new realities of corporate ownership, boards need to lead for the long term. This authoritative book shows them how.
