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The Board of Extravagance

by Eugene Robin | Principal, Research Analyst

Here at Cove Street, we often wonder: what would it be like to sit on a public company board? What do people actually do? How do board members defend the rights of the shareholders they purport to represent? Are boards effective tools or just ways for those in the rarified air of society to mingle and get paid to go through the motions? Given our curious nature we endeavored to see if there was a workshop for novices without any board experience in order to educate ourselves on board functionality. What we found was instructive in a few ways.

The National Association of Corporate Directors (NACD) conducts a three-day course each year that offers to increase the attendee’s knowledge of a board’s core responsibilities and critical areas of director competency. Per the NACD’s website: “Attending NACD Director Professionalism makes a strong statement to stakeholders about your dedication to the highest standards of director professionalism and begins your path toward NACD Governance Fellowship—The Gold Standard Director Credential®.”

But here is the mental catch. This organization is teaching corporate governance for $4,995 at the beautiful Montage Laguna Beach, a resort where an “entry level” room runs $945/night. And we wonder why so many on public company boards seem to be in it for the paycheck rather than acting as representatives for the shareholders? The NACD’s choice of locations makes us continue to question the effectiveness of boards as they appear from a theoretical perspective. This is obviously a vast generalization, but one that is sadly difficult with which to find exceptions.

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