New Living Cases on Corporate Governance

Max Meier (61), a “humane” entrepreneur, succeeded his father as a baker in Appenzell, Switzerland, in 1987, and has over the last 33 years developed the family business an internationally successful group of companies renowned for its chocolate specialties.

Six months ago, he suffered a heart attack and asks you how he should confront the issues of board composition and management appointment.

This case addresses the challenge of leadership succession in a highly respected master’s program at a university in Australia. The director, who was also the program’s lead professor, was due to retire, and the distinctive nature of the program made it particularly difficult to find a suitable replacement. To complicate the challenge, the university’s central administration was not supportive of that master’s degree, whereas it achieved the highest satisfaction ratings in the university from students and enjoyed good support from industry; the director’s insistence on quality of educational experience resulted in tight control of student admission, fewer students, and lower revenue than competing programs.

A highly engaged group of students and alumni took on this challenge, working with the outgoing director to sustain impressive results over a 5-year period.

In the current age of innovative business financing opportunities available from fintech apps, social media crowdfunding sites such as Kickstarter, Indiegogo, and RocketHub, et.al., and friends and family private equity investors, start-up firms can strategically source their venture capital funds from many globally disperse organizations and individuals. As the firm in this case learned, the benefit of alternative investing sources comes with a critical hidden risk for corporate governance. After a financial restructuring, a typical Silicon Valley software start-up found itself with close to 300 external individual shareholders, some of whom had not been documented as accredited investors. The regulatory agency could decide that the prior actions of the founders and the decisions of the board had been prejudicial to the interests of the minority investors. The management of this small private company faced an atypical investor relations dilemma, before its initial public offering (IPO).

Social organizations play a very important role in ensuring social cohesion and well-being, but constraints on public expenditure mean fiercer competition for financial resources and greater difficulties in accessing these resources.

This case study is focused on CAJIL, a nonprofit social organization that, in this demanding context, is implementing a large-scale investment project. For this reason, CAJIL needs to reinforce the governance structure to assure investors and the implicated public institutions that CAJIL is capable of completing the project and responding to the management challenges associated with the increase in activity and complexity linked to this investment.

M-Tec is a high-tech computer company based in Geneva, Switzerland. Its shares have traded at values consistently higher than the listing price.

The recent acquisition of a rival business of equal size resulted in an additional, positive movement in the share price.

Despite the positive performance, however, a major challenge has arised at the board level.

Three directors opposed the acquisition based on their conviction that the purchase price was too high.

Two brothers founded the sport retail shop “Outdoor Champions.” The company strived on their exquisite personal expertise and hands-on business skills. After reaching retirement age, they faced a company direction and succession challenge typical of family businesses. They resolved it in a simple, authentic and unconventional way.

This chapter contributes to the university governance literature by analysing the living case of a foundation university. The case is supported by the agency and stakeholder theory and the shared university governance models, such as Academic-Business-Corporate (ABC) of University Governance and the Integrated New University Governance (reversed KISS framework).

What role can board of directors play in the strategy process of an SME? The case of “Light-Tech” (a luxury lamp producer) shows how. The chairman and several of the other directors had bad feelings about the issue of technology replacement. Contrary to the top management team, they were not convinced that the breakthrough of the new LED technology in the market was still far away. To address this issue, the board of directors—together with the executive team—performed a scenario analysis for about 3 hours. Then, the board requested the top management team to formulate a precautionary strategy which much better prepares the SME for the pessimistic scenario. Result: 2 years later, the pessimistic scenario reveals itself as reality. By performing a scenario analysis together with the top management team, the board of directors were able to play an important role as constructive sparring partners.

Many members of the supervisory and managing boards get an annual bonus not depending on the financial results. Collaborators usually do not receive such a bonus. More and more people are criticizing this policy. This case presents a discussion at a board meeting, wherein board member proposes a bonus for all collaborators of this company.

Michael Miller is the founder of a successful international high-tech company in the medical field. The total staff includes 3500 employees, 90% of which are outside Switzerland.

Miller’s company was successful in acquiring Phamtex International, another family-owned company. Miller offered the CEO position for the new merged company to John Kennedy who was the successful former CEO of Phamtex International.

Suddenly Michael Miller realized that he had no successor for John Kennedy in case of his leave.

The combination of owner and CEO roles can be both a blessing and a disaster. The success mainly depends on professional and personal skills of the person in charge. HR competence and financial literacy are compulsory for a CEO. It is reasonable to separate ownership and company’s guidance in case when the owner is insufficiently skilled in these areas.

The case describes challenges that commonly arise between board and management in not for profits (NPFs), specifically, (a) questions of strategy related to changes in funding; (b) questions of culture related to the informality of relations among board members, management, and staff; and (c) questions of authority related to the disparity in involvement between volunteer board and professional management. Based on a description of how these challenges played out in an international NGO, an analysis of what was needed to address them, and a presentation of recommendations that were successfully applied, the case provides boards and managements of NPFs a blueprint for how to build stronger collaboration and offers students of NPFs a model for study.

Gender diversity on boards has become accepted as an important step to increase governance, risk assessment, and innovative thinking for companies. However, the arguments of finding merit-based candidates, a narrow definition of the board skills matrix, and the desire to add “who you know” have proven to be lasting obstacles for many female board candidates. This short case highlights the importance of making a conscious effort to expanding board searches past the usual networks to lead to boards with better decision-making abilities by adding female board directors.

Company expansion shapes people’s lives by offering new opportunities in which to grow, contribute, and flourish; but company downsizing can have a lasting impact on their lives as well. How a tenure of employment ends is just as important as how it begins. Outplacement is the process of transferring talent and expertise from one company to another as a result of downsizing. When rapid strategic change requires companies to downsize quickly and at short notice, the dilemma arises of how to do so responsibly. At Swiss consumer health and beauty company NCI, Rene Renz was given less than 48 hours to develop and complete a downsizing process that would reduce headcount by more than half. His solution shows how responsible outplacement goes beyond tangible, numbers-related aspects by addressing intangible aspects, such as handling employee distress, and ultimately helping employees to embrace their future.

You are the newly appointed Vice President for Europe of Computex Corporation, a San Francisco-based computer manufacturer.

This morning you received a strange letter signed by six (out of ten) members of your sales force team in the recently established subsidiary, located in Gothenburg. They asked you to fire the General Manager of Computex Sweden “... who loses his temper almost daily...”

While accounting at first sight always seems to be about numbers only, in reality, it does heavily involve people and culture. Thus, also general management should be open to the respective issues, and not push it into a technical, sometimes even “nerdy” corner. Very often, discussions about numbers are in reality discussions about underlying business or cultural issues. In order to bring them up, the board needs at least one member (financial expert) who is on a level playing field with the CFO and the auditor and will not be distracted by (presumably) complicated technical questions.

Orthotec was a successful medtech company that had passed from the original founders to a new generation of owner-managers. In order to buy out the founders, the new owners were looking for a way to raise new capital for expansion as well. From among several options to select, the new owner-managers chose the private equity route. Conflicts soon arose with the new private equity investors joining the board resulting in a conflict that could not be resolved. Eventually, Orthotec was sold to a larger international company who closed the operation, thus leaving the initial aspirations of the company unfulfilled. Investors, management and employees all turned out losers in this conflict.

The Imtech case is about a Dutch listed company that tried a restart and failed at that restart.

A couple of spinning questions are in the case among which.

• Why did the supervisory board and the management board dynamics prevent from taking appropriate actions?

• Why did the decentral local entrepreneurial model fail and to what extend were missing Corp governance systems to blame?

• What should the supervisory board have done to mitigate their company and personal risks?