A Brief Reaction to a Small Part of “Assessing Silicon Valley Corporate Governance Measures” Article

The Recorder recently ran an article discussing Fenwick & West’s corporate governance study.  I believe F&W produces these annually, and they are excellent resources for anyone interested in the up-to-date information about corporate governance practices, particularly for Silicon Valley companies.

However, there was an interesting statement at the beginning of the article:

“When companies are seeking to establish appropriate corporate governance  policies, they often look to model themselves after those titans of industry in  the Standard & Poor’s 100.”

Well . . . sometimes.

More often, companies will look to the companies that:

  1. they deem somewhat comparable to the themselves; and
  2. they aspire to be.

Typically, that will include prominent companies in their industry, which may or may not include companies in the S&P 100, 500, Pick-A-Number.  They also account for size and complexity and other factors.

For many companies, the governance practices of the S&P 100 will be far too complex and have far too many processes and procedures to have any value.  There will often be fewer people in the decision-making process, fewer layers of bureaucracy and the fewer issue-specific policies for smaller companies.

That said, the F&W studies tend to be extremely valuable, and I plan to spend a good part of the weekend reading the new one.  I hope your weekend is better than that.