The link between board composition and financial performance
According to Parmi Natesan, CEO, Institute of Directors in Southern Africa:
“Research shows what most shareholders probably instinctively know: that the experience, expertise and ethics of board members directly affect the quality of their investment in the company.”
“The MTN case provides an example of how board changes can impact the market. Shareholders should bear this in mind, and ensure that boards not only have the right skills, but also that well-thought-out succession and rotation plans are in place.”
One research paper into the correlation between board composition and financial performance of listed companies concludes that “board structure does play an important role in influencing firm performance. There is practices a need to monitor and practice the different elements of a corporate board to ensure good corporate governance practices are upheld.
“The conclusion is inescapable: boards play a critical role in a company’s ability to achieve its goals and produce value for shareholders, and there is a link between board composition and financial performance…”
Let us remind ourselves when choosing managers and partners.
Sue started to become uncomfortable with Peter and Thando’s approach around 4 years ago. She raised her concerns at various meetings and eventually things became acrimonious in the boardroom. That is when Peter and Thando removed Sue as a director….
I cannot but reflect on what we need to do to move forward. With this in mind, I cannot but recall how challenging life has been as an entrepreneur. I also cannot but be mindful that because of my profession, the legal side was much easier – but what if had not been an attorney? I could not help but think of Ben.