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CL-002 - 80% Content Width
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CL-002
Notes - To navigate today’s highly politicized business environment, corporate board members must understand the origins of the debate around “woke capitalism,” also known as stakeholder capitalism.
- Business Roundtable Redefines the Purpose of a Corporation to Promote “An Economy That Serves All Americans”
- Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum
- Woke Capitalism on the rise and running into resistance
Notes - See also the animated videos from our partner Shmoop for light-hearted, memorable explanations of each term.
Board of directors - governing body of a company, whose members are elected by shareholders to set strategy, oversee management, and protect the interests of shareholders.
Five Principles of Finance
A dollar today is worth more than a dollar tomorrow
Risk and reward are related
The market as a popularity machine vs a weighing machine: be long-term greedy
Cash is king
An agent must hold the interests of his client above his own
Fiduciary - a fiduciary acts on behalf of its client, putting his client’s interests ahead of his own, with a duty to preserve good faith and trust
Blue Chip - named after the highly-valued poker chip, this term refers to companies that are considered high quality and highly valued
Arbitration - the adjudication of a dispute outside of the formal court system
Directors & Officers Insurance Coverage - a policy that protects the members of a board and certain corporate officers from personal liability (and potential bankruptcy) in the case of a lawsuit in connection with their services as a board member or corporate officer.
PS-041
What's At Stake
Corporate board service can be a lucrative and desirable career; the rewards come with significant responsibility and risk. For CPR board members, an imploding stock price combined with technical disclosure violations in audit filings has opened the door for activist investors to sue the company, claiming fraud. Board members are named personally in the suit. Leading up to the lawsuit, CPR CEO Raj has focused corporate attention on a broad range of stakeholder initiatives and neglected his duty to the shareholders. Politically aligned board members supported this shift in focus, while others were too passive to voice their concerns. Tensions are high. Company lawyer, Reynold, explains the reality of the situation: the company is in significant trouble, but the board members aren't likely going to jail.