Welcome to the Boardroom Governance Podcast. I’m your host, Evan Epstein. In this episode, I talk with Professor David Larcker and Brian Tayan from the Stanford Graduate School of Business. We dive into their latest book “The Art and Practice of Corporate Governance.” In this book they examine core issues of corporate governance today, including board effectiveness, compensation and incentives, organizational risk, succession planning, activism, and ESG. Each chapter explores a specific topic within corporate governance, weaving together compelling stories and practical research to illustrate the factors that drive good and bad outcomes. This book is a must-read for executives, directors, shareholders, and anyone else interested in learning how companies are run and how to improve their performance. This is the second podcast episode that I record with David and Brian, the first one was E50 (Feb 2022) where we talked about their article “Seven Myths of ESG”, debunking some of the most common and persistent myths about what ESG is, how it should be implemented and its impact on corporate outcomes, “many of which,” they contend, “are not supported by empirical evidence.” If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can also contribute as a Patron on the link patreon.com/BoardroomGovernancePod and you can subscribe to the Boardroom Governance Newsletter at evanepstein.substack.com
0:00 -- Intro.
1:38 -- Start of interview.
2:26 -- On the origin story of their latest book: "The Art and Practice of Corporate Governance."
7:32 -- About the Boeing 737Max case. The cultural shift. "Safety was just a given."
12:29 -- About Netflix's "Radical Transparency in the Boardroom." Reference to their 2010 case study "Equity on Demand, the Netflix Approach to Compensation."
18:37 -- On the question of CEOs moving up to the Chairman position, (the role of Executive Chairman).
22:39 -- On the evolution of CEO compensation, Say-On-Pay and CEO-to-worker pay ratios.
27:06 -- On the practice of awarding "mega grants" to CEOs (particularly with founder-led tech companies, emulating Elon Musk's Tesla case).
30:42 -- On compensation issues regarding the recent SVB and other bank collapses. "Incentives are more than just the dollar value."
35:11 -- About the "epic misbehavior at Uber", unicorns and other private venture-backed company governance issues.
42:42 -- On the double-edged sword of CEO activism.
45:05 -- Engaging employee activists. The Coinbase example. The General Counsel View on ESG Risk (2021).
52:35 -- On the backlash on ESG (see previous episode E50 "The Seven Myths of ESG.")
57:51 -- Corporate governance topics that they are currently working on: 1) SEC overreach and disclosure, 2) DEI, and 3) What's going on at the board level: new data and insights will be released soon!
David Larcker is the James Irvin Miller Professor of Accounting Emeritus at the Stanford Graduate School of Business and he’s a Senior Faculty at the Arthur and Toni Rembe Rock Center for Corporate Governance. His research focuses on executive compensation, corporate governance, and managerial accounting.
Brian Tayan is a member of the Corporate Governance Research Program at the Stanford GSB. He has written broadly on the subject of corporate governance, including boards, succession planning, executive compensation, financial accounting, and shareholder relations.
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You can follow the Stanford Corporate Governance Research Initiative on social media at:
Twitter: @StanfordCorpGov
LinkedIn: https://www.linkedin.com/showcase/corporate-governance-research-initiative/about/
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You can follow Evan on social media at:
Twitter: @evanepstein
LinkedIn: https://www.linkedin.com/in/epsteinevan/
Substack: https://evanepstein.substack.com/
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You can join as a Patron of the Boardroom Governance Podcast at:
Patreon: patreon.com/BoardroomGovernancePod
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Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License