As informative as the Executive Compensation Database may be, the key metric is the correlation between total remuneration and corporate performance (i.e. metrics of shareholder objectives.)

The executive can justify a higher remuneration if the executive can deliver above the minimum shareholder metrics, and vice a versa.

Looking at remuneration as an absolute number (e.g. the executive with the highest or lowest rem) is frought with danger if not assessed in a corporate performance context.

As an example:

Company X has earned for its shareholders a 10% ROI. On that basis, this ranks relatively low compared to other companies. The executive's rem is based on industry standards and is, in this example, $1m.

What bearing on the executive's rem are the following two scenarios:

A. When the executive took over, ROI was 15% and the executive has been responsible for an erosion of shareholder benefit. Is the executive still worth $1m?

B. When the executive took over, ROI was negative and the business was on the verge of insolvency. The executive saved the company and returned it to profit. Is the executive's rem worth more than industry standard?

Therefore executive 'worth' can only be assessed in context.                 

The challenging of HR colleagues should be on the same basis as the challenge of all aspects of corporate operations.

I have frequently seen CEOs and Chairman impose on an organisation a strategy, initiative or focus that could not be justified by pragmatic analysis of claimed benefits promised. What happens is that the individual in question, through his or her power, imposes a direction (without objective evidence of benefit) and everyone has to toe the line - and inevitably they don't have the "clout" to challenge the proposal - an inevitable career limiting action.

It's not that talent management strategies should not be used (or any other strategies for that matter) but that they should be assessed for the benefits they can provide the organisation. Unfortunately, too many guru theories are adopted without question and without an understanding of their appropriateness or their impact on organisational objectives and shareholder benefits. I have (literally) seen billions of dollars of shareholder funds in my client organisations being fritted away through unquestioning (but well-intentioned) actions and initiatives.

In one particular listed client, the CEO was "hot" for talent strategies and methodologies and had invested tens of millions of dollars in legitimately developing them. He retired and the new CEO, who was financially oriented, cut all those programs thus "wasting" the investment already made. Had the strategy been assessed for "evidence of benefit" then either the program would not have been commenced due to lack of evidence of benefit, or once started, would not have been terminated because of the demonstrated evidence of benefit.

The AGM and its "demise" has less to do with the AGM, per se, than it has to do with the growing powerlessness of shareholders.

For shareholders, the tragedy and frustration is that directors and managers (with the best intent) have taken upon themselves the role of proxy-owners, rather than as agents of those owners. They make decisions about and for the corporation that takes on risk and debt that owners must carry, while simultaneously the agents are being rewarded against KPIs that they themselves engineer.

This is not the fault of the AGM, but rather the fault of all parties in not getting the relationship between owners and their agents correct. Self-interest, arrogance, gutlessness and stupidity are often to blame.

As long as agents are allowed to choose the outcomes that the corporation strives to deliver to shareholders, then shareholder frustration and activism will continue.

The only way to "fix" the relationship between owners and agents is to ask owners what they want from their investment along the dimensions of value (what they value in their investment in the company), benefit (how they want their benefit and its quantum), growth (what do they want to see grow), and risk (what do they consider as risk).

If you ask owners of a listed company these questions, then you will get four bell-shaped curves which represent the entire "shareholder metrics" for that registry. It is then up to directors to interpret and filter those metrics for the company's context, industry, capabilities, etc and to then determine the corporation's Mission statement or statement of purpose.

These corporate metrics should be incorporated into the company's Annual Report. Investors (new owners) will be attracted to those corporations whose metrics reflect their own investment objectives.

It is then the role of the corporation and its agents to deliver those metrics. Management can be as entrepreneurial and strategically adventurous as it needs to be to achieve those metrics provided is remains within the content of those metrics (i.e. does not exceed its "risk" parameter, achieves its "growth" requirement and delivers its "benefit" requirement while protecting and enhancing its "value" definition.)

Of course, the KPIs against which agents are rewarded MUST reflect the core corporate metrics determined by the board - and not those engineered by the agents.

For those who would like the research evidence supporting this approach, I refer you to my book "Corporate Crap: Stupid management myths that destroy shareholder value" (Fairfax Publishing).

I am happy to discuss with anyone how they can establish metrics for their corporation and/or investments.

The argument that "startup board governance has not kept up with the pace of innovation," is problematic for the following reasons:

1. There is a difference between the nature and context of the corporation, and the role of the board that governs it. In relation to start-ups, the corporation goes through enormous change and capability as it ramps up to sustainability and maintainable profits. However, the Act, and particularly the Act in relation to it's corporate obligations and those of directors, essentially and generally do not change, regardless of the corporation's context, maturity or size. Therefore to suggest that "governance" needs to evolve at the same pace with the organisation's context is somewhat misleading since the Act doesn't evolve therefore "governance reuirements are relatively fixed" particularly compared to the hyper-growth of some corporations.

2. The issue isn't so much (as I see it) that start-up governance per se isn't evolving; but rather that directors and managers are failing to understand the evolving nature of the relationship between shareholders, managers and directors. This is not an easy path and many stumble along it: some directors are too remote and aloof (acting like top100 directors) when what is needed is much closer involvement to guide more practically the activities and directions of staff and the corporation. Simlarly, but to the opposite extreme, some directors get too "close" when in fact they should act more "remotely" and start nuturing management to use more appropriate processes and procedures (and have the guts to make certain decisions)  and the corporation through to adoption of "traditional" board/CEO/management relationships, procedures and processes.

3.  The causes of this dilemma varies. Sometimes it is the well-meaning "fault" of directors. Sometimes it's the chairman, sometimes its the shareholders and sometimes it's management. More often than not, particularly in start ups, it a combination of all of these - particularly when shareholding, executive directorship and management overlap and are rolled into one or a few people and when they can't separate one role from the other.

4. My experience with about 50 start-ups, is that the cause of the problems generally rest with the founder/CEO who fails to understand the board requirements and who has controlling equity and can thus sack Chairman and / or directors. There is a big difference between a start-up enterprise and an established small company - generally the latter has an evolved and bedded-down governance structure (more than merely a nascent one).

5. Sometimes a start-up appoints a known chairman who brings the company credibility but the chairman's skill rests within substantial enterprises, and not with start-up ventures. Failure to tell the difference between the needs of both are common.

6. On nearly all the start-ups that I have been involved in, the call on directors is often more intensive than in larger corporations. This is for three reasons: the corporation at start-up doesn't have the internal skills to resolve some issues; the corporation doesn't have the financial resources to hire external consultants to solve some issues; the CEO (most often) is the "inventor" of the business and is good at whatever he/she "invented" as the rationale for the business, but lacks the broad corporate skills inevitably needed to grow a business on all operational and strategic dimensions. Thus with a dearth of internal skills, directors are called upon to engineer a response. In the larger corporation blessed with more resources and skills, directors are more often required to adjudicate the recommendations of others, rather than engineer solutions themselves.

Directors (and managers) who fail to understand the evolving relationship of each party in the corporation's evolution will inevitably step on someone's toes and / or cross the line of appropriateness.

I think the future of corporate governance lies in the following areas:

1. Acceptance of directors and managers as agents of the owners of corporations - and not as proxy-owners.

2. Acceptance that the purpose of the corporation is to serve its owners.

3. Establishment of two-way communication with shareholders, not merely one-way as at present.

4. Directors becoming more accountible to shareholders for the corporation's ability to satisfy the owners' objectives. Cessation of "blaming the managers" culture of the board.

5. Greater transparency of the corporation's objectives and of operational decisions to achieve those objectives.

6. Due to the increasing crescendo of shareholder activism, a greater focus on shareholders: particularly on establishing shareholder metrics and therefore, on fulfilling them.

Governance matters a lot because it deals with the WAY corporate business is done and the WAY it is reported and over-sighted. Shareholders who are distant from the information and processes of the business must "feel comfortable" about the processes of the business otherwise they perceive risk, which is in turn a risk for the business - thus good governance gives those shareholders "comfort".

As important as governance is, it is NOT about essence or content of organisational outputs, but 'merely' about process. A corporation that adheres to the governance principles is still able to "deliver' poor outcomes - and from that shareholders are more at risk and more upset - and the fodder for the shareholder activist movement.