In the Boardroom with the Shareholder Spring

By Lucy P. Marcus
May 4, 2012

In this edition of “In the Boardroom with Lucy Marcus,” Axel Threlfall talks to Lucy about the “Shareholder Spring.”

If the past couple of weeks of annual general meetings (AGMs) around the world haven’t sent a strong signal to boards about the way investors and other stakeholders are feeling, it is hard to know what will.

Remuneration levels for CEOs and members of the C-suite have been a hot button issue for Barclays, AvivaUBS, Citigroup, AstraZeneca, Shell and other companies. In meeting after meeting, investors stood up to challenge remuneration committees about their decisions and decision-making process. Stakeholders also asked some pointed questions about corporate social responsibility. With Apple and Foxconn on their mind, they asked about a wide spectrum of areas from global working practices to wages to conflict minerals.

Board members ignore this shift at their own peril.

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“60 Minutes” studied “Three Cups of Tea” and Jon Krakauer investigated it. In it, Mortensen said that he was lost and that he stumbled onto a village where he later built a school as he descended from climbing K2, but his porters dispute that he was lost and others said that he first visited the village a year after climbing K2.

From a review of the book on Amazon: “I read this book just a few weeks before the scandal broke. I loved the story and am glad to see children being educated. And yet some things just didn’t add up….

“International development is a challenge, and there is a long history of failure. The main problem is, how do you translate donor money into resources that get to the right people at the right time in the right form? It always seems like 90% is either wasted directly (mismanagement, bribes, etc.), or gets siphoned off to pay for things that aren’t used or not wanted. A lot of this is political: local leaders resist being upstaged and have their own priorities and face-saving motives, while the philanthropists insist upon doing it “our way” because “we know what’s best”.

“Three Cups of Tea makes it sound like Greg Mortenson has single-handedly solved these problems. Hence the questions that arose when I read the book. Could it really be that a village would be completely unanimous in support of new school, and with such universal, thumping excitement? There weren’t any political toes being stepped on? Was there really no suspiciousness or even apathy among the villagers? Would a villager really approach Mortenson to have a broken bone set (Mortenson is a nurse), when this sort of ‘technology-free medicine’ is exactly the sort of thing, like midwifery, that less developed cultures maintain quite a good grasp of? Given how hard it is to get a doctor to work in rural but accessible areas in N. America, how could teachers be recruited to work in these new schools in tiny villages, which take days to get to and where the local language is different? How could he know the schools were being built in the right place? Why would his Taliban abductors have had an 1979 issue of Time magazine on hand: why would it have been taken to backwoods Pakistan in the first place and why would it have been kept in storage for 20 years, until the chance kidnapping of an English-speaking American? Using only force of will, would an excitable taxi driver really have been able to singlehandedly get Mortenson moved to the front of the line for Mother Teresa’s casket visitation (by far the most preposterous anecdote in the book)?

“Basically, I concluded that the book is inspirational, but also a grand mix of political and circumstantial implausibilities. Originally I hoped this was mostly due to the publisher and co-author’s embellishment. However…

“Krakauer has just published a thorough 70-page challenge to Three Cups in a free PDF at the Byliner website, called ‘Three Cups of Deceit’. Many of Mortenson’s stories are challenged by about a dozen witnesses in Krakauer’s critique. What is remarkable is that aside from maybe one or two of them (Krakauer himself among them, who comes across as a bit snotty), the witnesses themselves have nothing to gain from telling their stories–they’re not going to get ratings, glory or money from telling their point of view.

“The story that emerges is sad. The testimony suggests that CAI’s funds are mismanaged by Mortenson, who spends too much money on himself and his book tour and publicity, and who resents the attempts of his American staff to evaluate what has worked and not worked in his overseas building projects. And that’s the crux of the problem: Mortenson is allegedly building schools that are in the wrong place, where no one will use them; when they are in the right place, Mortenson’s organization is not paying for teachers to staff the school.”

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