What do you think?
Rate this book
The Activist Director: Lessons from the Boardroom and the Future of the Corporation
Some of the worst corporate meltdowns over the past sixty years can be traced to passive directors who favored operational shortcuts over quality growth strategies. Thinking primarily about placating institutional investors, selective stockholders, proxy advisors, and corporate management, these inattentive and deferential board members have relied on short-term share price increases to sustain their companies long term. Driven by a desire for prosperity, not posterity, these actions can doom any company.
In The Activist Director , attorney Ira M. Millstein looks back at fifty years of counseling companies, nonprofits, and governments to actively govern their corporations and constituencies. From the threat of bankruptcy and the ConEd blackout of 1970s New York City, to the meltdown of Drexel Burnham Lambert in the late 1980s, to the turnaround of General Motors in the mid-1990s, Millstein takes readers into the boardrooms of several of the greatest catastrophes and success stories of America's best-known corporations.
His solution lies at the a new breed of activist directors who partner with management and reject short-term outlooks, plan a future based on growth and innovation, and take responsibility for corporate organization, strategy, and efficiency. What questions should we ask of potential board members and how do we know they'll be active? Millstein offers pragmatic suggestions for recruiting activist directors to the boardroom to secure the future of the corporation.
In The Activist Director , attorney Ira M. Millstein looks back at fifty years of counseling companies, nonprofits, and governments to actively govern their corporations and constituencies. From the threat of bankruptcy and the ConEd blackout of 1970s New York City, to the meltdown of Drexel Burnham Lambert in the late 1980s, to the turnaround of General Motors in the mid-1990s, Millstein takes readers into the boardrooms of several of the greatest catastrophes and success stories of America's best-known corporations.
His solution lies at the a new breed of activist directors who partner with management and reject short-term outlooks, plan a future based on growth and innovation, and take responsibility for corporate organization, strategy, and efficiency. What questions should we ask of potential board members and how do we know they'll be active? Millstein offers pragmatic suggestions for recruiting activist directors to the boardroom to secure the future of the corporation.
240 pages, Hardcover
Published December 20, 2016
9 people are currently reading
63 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 5 of 5 reviews
August 20, 2018
In this text spanning more than 60 years, Ira Millstein portrays the huge changes that have occurred within the area of corporate governance. Millstein at the business law firm Weil, Gotshal & Manges was one of the early pioneers in establishing an area that we today take for granted. The direction of the field was no so certain in the 1950’s when Millstein set out to improve structures and by this came to challenge many imperial minded CEOs.
In the first chapter the author paints a bleak picture of today’s stock market. He then provides a solution in a board centric imperative. In chapters 3 through 9 noteworthy events during Millstein’s long career are presented. Most of these are disasters due to lack of board oversight and accountability and where the author was called in to clean up the mess. In the last formal chapter Millstein returns to deeper discuss the desired profile of a director. In this section the author adds a number of checklists for interviewing and choosing potential activist directors. These are immediately useful as they as a complement to more practical issues, focus on integrity, courage, intentions etc. Finally, a short written biography in an appendix binds together the previous events.
Even though Millstein’s story told clearly depicts the benefits of breaking the hegemony of the managerial capitalism without accountability to owners that long was the norm, Millstein is not pleased with the state of current owners. There are wolf packs of activist hedge funds and increasingly power is concentrated to index funds or relative performance funds that have few incentives to look to the long-term development of companies. Too many CEOs cave in to the demands of the myopic market and passive directors dare not protest. As long as the company earns money they don’t want to rock the boat.
The solution to this mess and the protection from the market is in Millstein’s mind a board centric cultural revolution. He advocates so-called activist directors who know the business and its finances in depth, who are fully engaged and can act as partners to the CEO in strengthening the long-term competitiveness of the company and by this benefit the shareholders over the long-term. At the same time the activist director must protect the shareholders’ money by preventing the CEO from venturing on foolish projects. More compliance issues should be delegated to committees to free up time for the board to discuss strategy.
Only part of the change can come from board practices. The other part must come from the institutional owners who too often have little experience in managing corporations and thus are ill equipped to search for new directors. During his career Millstein has worked to improve the communication between board directors and institutional investors and to help the latter to find their role as owners. With the increasing power of institutional owners comes a societal obligation to look beyond one’s own portfolios and work for the benefit of the business sector and the economy.
Most change is small and gradual but at times there are large, dramatic breakthroughs that over decades tips the balance from the CEO to the board and shareholders. The most attention-grabbing event described in the book is the board revolution in GE where Millstein was instrumental. A string of CEOs were running the company towards the abyss while keeping the board in the dark. It was seen as betrayal if independent directors discussed issues without executive managers present. In the end the board revolted to save the company, sacked CEOs and as one of the first firms wrote their own corporate governance guidelines.
It would surprise few if a text by a lawyer was winded and complex. The opposite is the case here. Perhaps the book is a bit two-pieced as part memoirs, part pamphlet on corporate governance, but if you want to understand how today’s practices developed and why they need to develop further Millstein’s book is perfect.
In the first chapter the author paints a bleak picture of today’s stock market. He then provides a solution in a board centric imperative. In chapters 3 through 9 noteworthy events during Millstein’s long career are presented. Most of these are disasters due to lack of board oversight and accountability and where the author was called in to clean up the mess. In the last formal chapter Millstein returns to deeper discuss the desired profile of a director. In this section the author adds a number of checklists for interviewing and choosing potential activist directors. These are immediately useful as they as a complement to more practical issues, focus on integrity, courage, intentions etc. Finally, a short written biography in an appendix binds together the previous events.
Even though Millstein’s story told clearly depicts the benefits of breaking the hegemony of the managerial capitalism without accountability to owners that long was the norm, Millstein is not pleased with the state of current owners. There are wolf packs of activist hedge funds and increasingly power is concentrated to index funds or relative performance funds that have few incentives to look to the long-term development of companies. Too many CEOs cave in to the demands of the myopic market and passive directors dare not protest. As long as the company earns money they don’t want to rock the boat.
The solution to this mess and the protection from the market is in Millstein’s mind a board centric cultural revolution. He advocates so-called activist directors who know the business and its finances in depth, who are fully engaged and can act as partners to the CEO in strengthening the long-term competitiveness of the company and by this benefit the shareholders over the long-term. At the same time the activist director must protect the shareholders’ money by preventing the CEO from venturing on foolish projects. More compliance issues should be delegated to committees to free up time for the board to discuss strategy.
Only part of the change can come from board practices. The other part must come from the institutional owners who too often have little experience in managing corporations and thus are ill equipped to search for new directors. During his career Millstein has worked to improve the communication between board directors and institutional investors and to help the latter to find their role as owners. With the increasing power of institutional owners comes a societal obligation to look beyond one’s own portfolios and work for the benefit of the business sector and the economy.
Most change is small and gradual but at times there are large, dramatic breakthroughs that over decades tips the balance from the CEO to the board and shareholders. The most attention-grabbing event described in the book is the board revolution in GE where Millstein was instrumental. A string of CEOs were running the company towards the abyss while keeping the board in the dark. It was seen as betrayal if independent directors discussed issues without executive managers present. In the end the board revolted to save the company, sacked CEOs and as one of the first firms wrote their own corporate governance guidelines.
It would surprise few if a text by a lawyer was winded and complex. The opposite is the case here. Perhaps the book is a bit two-pieced as part memoirs, part pamphlet on corporate governance, but if you want to understand how today’s practices developed and why they need to develop further Millstein’s book is perfect.
November 21, 2017
One of the major issues that emerged during the 2007/8 global financial crisis was corporate governance and sustainability. Given his vast law experience in advising organisations at various governance levels, Ira Millstein compiled lessons that he has garnered in his illustrious career in this memoir, The Activist Director.
He defines an activist director as...He defines an activist director as...read more
He defines an activist director as...He defines an activist director as...read more
January 28, 2024
Great reference for corporate governance and what an activist director should be.
February 5, 2017
This is an informative and detailed account, including a professional perspective on many high profile corporate disasters.
The author writes with authority and from personal experience which gives the book great credibility.
The challenge to be an activist director is a good one, although you could say what he is prosing is obvious it hasn't always been achieved.
If I was being picky I could argue that "activist" is too strong - what he is really proposing is engagement. An "activist investor" is challenging/ disagreeing with the board and is looking for specific change, whilst an "engaged investor" is involved and interested, but not always in conflict - the same distinction could be made for directors. That said "the engaged director" doesn't make as good a book title!
It's not a quick read, but it is interesting.
I received a review copy of this book.
The author writes with authority and from personal experience which gives the book great credibility.
The challenge to be an activist director is a good one, although you could say what he is prosing is obvious it hasn't always been achieved.
If I was being picky I could argue that "activist" is too strong - what he is really proposing is engagement. An "activist investor" is challenging/ disagreeing with the board and is looking for specific change, whilst an "engaged investor" is involved and interested, but not always in conflict - the same distinction could be made for directors. That said "the engaged director" doesn't make as good a book title!
It's not a quick read, but it is interesting.
I received a review copy of this book.
June 3, 2017
Readable memoir from a leading light in corporate governance, with guidelines for boards that are surely worth shooting for, although perhaps overly idealistic. I wrote about it here: https://www.strategy-business.com/art...
Displaying 1 - 5 of 5 reviews