by Fred Fuld III
The book, Governance Arbitrage: Blowing Up the Public Company Governance Model to Maximize Long-Term Shareholder Value by Henry D. Wolfe is an interesting take on how publicly traded companies can improve shareholder value by improving their board of directors.
Does anyone remember the corporate raiders from years ago, such as Carl Icahn? They were looked on as the bad guys, at least by corporate management. However, their goal was not to just change the board of directors, their ultimate goal was to make that change in order to fully realize shareholder value.
Wolfe recommends that corporations use the private equity governance model for boards of directors, which would increase the value of the board and thereby increase the performance of the business, with the ultimate result being a growth in shareholder value.
Probably the most important chapter in the book is Chapter 5 Director Selection, where he describes how directors need to be chosen not only for their thinking-like-an-owner mentality but also for their investor sophistication.
If you want to know how the performance of a publicly traded company can improve and long-term shareholder value increase, I recommend you read Governance Arbitrage.
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