Member Reviews
Lilian N, Reviewer
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...
"... [O]ne who is conscious of the effects of decision-making, who will drill deeply into a corporation’s financials and culture, who will not shrink from confrontation, who will ask tough questions of the CEO when he or she veers off course or when the numbers include unexpected special write-downs... We need directors who do not miss board meetings and who, on their own time, visit the factory floors to ask workers what could be done to improve morale and productivity. We need directors on the all-important compensation committee who make sure the boss is paid well but not too well; and who listen but resist pressure from shareholders with self-serving agendas, or from proxy advisors, the media, and the gratuitous advice of those who impose one size-fits-all compliance solutions to governance practice."
At the core of this book, Ira argues that board members need to take more active role in the day to day management of the company. Granted they should not interfere with the management roles, but they should be more present and vocal when their companies experience both highs and lows.
He stresses that "boards of directors must see the capital markets for what they are today and act accordingly by curtailing their myopic interests for long-term corporate sustainability." He acknowledges that markets are self-correcting but in the long-term. In the meantime, directors and management will have to grapple with the livelihoods of their shareholders, employees, customers and their stakeholders. In The Activist Director, Millstein attempts to prescribe a means of being a more conscious director.
The author stresses that people should not be appointed or accept board positions because "it seems like fun" or because of the associated prestige and remuneration. Rather, they should consider that they will be regularly assessed on their performance including attendance. He even provides lists of questions towards the end of the book that prospective board members and those interviewing them should consider.
As a reader, I appreciated that the detailed insider's account of some of the high-profile incidents at companies such as General Motors, Drexel as well New York's 1970s fiscal crisis. Further, he does a good job in succinctly charting corporate governance in America while weaving in his personal story as well as article clips and pictures. Though Millstein explains the events in an accessible manner, it would help the reader with some knowledge of capital markets, especially in the North American context might have a greater appreciation of the book.
Millstein maybe idealistic in his prescriptions but I would argue that it is better to aim for the sun but land on the moon. Kenyan readers, particularly in the financial industry should pick it up because, at less than 300 pages, it still manages to deliver valuable lessons. Unfortunately, many perceive corporate governance as a box-checking exercise and fail to appreciate in its role in the grand scheme of (company) things. Kenyan readers will be familiar with the fates of Nakumatt and Uchumi supermarkets, Dubai and Imperial banks... need I go on? Given the various corporate governance issues that have plagued some of the influential brands in Kenya, The Activist Director would be a mirror to reflect on their actions and hopefully propel them in a more sustainable direction.
Lexi R, Reviewer
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 proposing 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 advocating 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.
