What do you think are the biggest issues in corporate governance today, and why? Did the author EXPRESS a good job of predicting what was to come?

Although the biggest concerns in corporate governance today are different than they were twenty years ago, there are a few similarities. William McDonough seemed concerned with corporations having good stewardship with independent directors. He also pushed for more transparency from companies. Beyond that, much of what he talked about was process-oriented and inward-looking for corporations.

Today, the greatest concerns in corporate governance seem to be more outward-focused. ESG, or environmental, social, and governance, is the trending acronym. (a strong emphasis on social and environmental) Data privacy is a huge concern that wasn't on many's radars in the early 2000s. Furthermore, there has been a shift in the perception of the value of workers as generations move from work to retirement. Generation X is now taking the reigns in senior management, but it's a small generation. There are not enough of us to go around. I think that may be driving an increase in concern over "human capital." Lastly, remote work is a tidal wave of a trend that has already changed the way we work. With the increase in power on the part of employees, it's not likely to go away.

The fact that William McDonough touched on three issues that are still relevant seems like a pretty good record to me. Yogi Berra once said, "It's tough to make predictions, especially about the future."

Are executives paid too much money relative to what they do? Why or why not? Can you find some examples of excessive executive compensation?

I have believed for a long time that executives are paid too much money relative to what they do. There is a belief among boards that they must compete for members of a talent pool that is very limited. The talent pool is not as limited as they think. Boards also like to pay above average; it's a prestige thing. Unfortunately, if every company proceeds to raise their executive pay above the average each time they consider pay, we can easily see what will happen over time.

Growing up, my Dad worked for John Deere as a manager. He ended up being with the company for 40 years, and by the time he finished, he and his friends ran the company. I can remember my Dad telling me that his friend Sam Allen made a lot less than the CEOs of many of John Deere's rivals while John Deere outperformed them regularly. As William McDonough points out, there doesn't seem to be any link between executive pay and corporate performance. Jim Collins also speaks about this a little bit in his book, Good to Great. He talks about getting the right people on the bus as the first step to success. He goes on to say that the right people are going to work their tails off because of who they are, not because of performance pay. Performance pay is a myth. The reading this week in our textbook highlighted that the executive pay outliers on the high end in the SP500 underperform their peers. What in the world is going on?

Example: Fortune Magazine reports that David Zaslav made $62 million dollars per year while delivering a -16.9% compound rate of return in Warner Bros. Discovery share price. Surely the board could have found someone much cheaper who could do just as poor a job?

Final thought: I've been thinking about how to deal with this for some time. I suspect that simply issuing shares to CEOs as a large part of their compensation package with an exceptionally long lockup period of fifteen years may help get them thinking about the business's long-term success. But frankly, overall, CEO and executive pay are out of hand. It's not good for shareholders, it's not good for employees, and it's not good for society. There are lots of talented people out there. Unless dealing with a visionary founder, these multimillion-dollar salaries are ridiculous.

PLEASE RESPONSE WITH YOUR OPINION IN REGARDS FROM THE ABOVE STATEMENT. ( WHAT DO U THINK?)