Home and away

News about what seems like an ages-old debate about stakeholderism versus shareholders.

A couple of profs, from Oxford’s Saïd Business School and the Radzyner Law School in Israel, say directors are more likely to be “shareholder” focused if their cultural backgrounds “emphasise other-regarding values” or those that stress egalitarian values.

Also, “directors who grew up outside their firm’s home country are consistently more stakeholder-orientated than local directors.”

And here’s the conclusion: “If directors’ orientations are shaped more by deeply held values and cultural heritage than by formal duties or demographic traits, then legal reforms—such as mandating specific board characteristics or rewriting directors’ duties—may have limited effectiveness.” That’s going to be news to campaigners for reform in the UK.

A slice of the PIE?

If you chair an audit committee, it may be worth watching a project launched this week over at the Financial Reporting Council (FRC).

Watchdogs there have kicked off an initiative that will help develop the “capability and quality management” of small audit firms as they seek more audit business among “public interest” companies.

FRC chief executive Richard Moriarty says his team is looking to develop firms who want to deliver “high quality” and “safeguard the public interest”.

“Small firms have told us [that] to do this, they need time and space to build capability in the PIE market itself.”

He adds: “Our new Scalebox Programme intends to meet this challenge head on and help the FRC look closely at what proportionate oversight of smaller PIE audits looks like.”

But be warned: “Accountability for improvement will, however, rest firmly with the audit firms themselves and a condition of remaining in the programme is that we see progress over time.”

Going for gold

Opinions don’t come more succinct or brutal than this one. Veteran business profs, Jeffrey Sonnenfeld and Stephen Henriques, both at Yale University, have taken aim at the massive $1trn pay package being discussed for Tesla chief exec Elon Musk.

Musk, you will remember, joined the Donald Trump administration as head of the cost cutting agency DOGE. Tesla sales have been falling and the company now, for the first time, has less than 40% of the electric vehicle market.

Pondering the massive pay deal despite the sales slump, Sonnenfeld and Henriques write: “the proposed scheme is ludicrous not only in terms of the highly aspirational 12 milestones that would unlock the benefits, but also in terms of good governance practice.”

And then there’s this nugget: “The centrality of the chief executive to the success of the company is far more symbolic in the eyes of tech bros that it is substantive in the eyes of the average customer.

“In fact, as of late, he has been the most detrimental factor to the Tesla sales pipeline, which is on track to fall for the second year in a row.”

But the savaging is not just for Musk. They sink their teeth into Tesla’s board too. “The board is suffering from what political scientists and psychologists call ‘groupthink’, psychiatrists label folie à deux, social workers call ‘codependence’, and normal people recognise as an infatuation with charismatic, cultish powerful figure.” Oof!

Candid on camera

According to Nasdaq, remote meetings are “reshaping boardroom” culture—at least in the US.

Among the changes, remote gatherings have softened the formalities that once ruled board meetings and this has, apparently, led to “more spontaneous and candid discussions”. And it’s now easier to involve board members located in far-flung places.

But, Nasdaq says, it means directors are expected to be “tech savvy”, responsive to short notice meetings and prepared for ultra transparency.

All of this brings new opportunities and but also a need for new skills and strategies. “The board of 2025 is not just virtual,” the Nasdaq report cries excitedly, “it’s visionary.”