The Americanization of Board Governance [J.P. Morgan]

In the first episode of the Public Company Series podcast, host Doug Chia is joined by Chuka Umunna, Global Head of Corporate Governance and Sustainable Solutions at JP Morgan. Drawing on the opening chapter of the book Board Structure and Composition, they explore how global board governance practices are evolving under increasing shareholder pressure, regulatory scrutiny, and cross-border complexity.

Their conversation examines the “Americanization” of board governance, highlighting key differences between U.S., European, and other international models, including board structure, decision-making speed, stakeholder orientation, and independence standards. They also discuss why non-U.S. companies continue to pursue U.S. listings despite regulatory demands, how boards adapt their composition in response, and whether governance is viewed primarily as risk mitigation or a driver of value creation. The episode concludes with reflections on geopolitical shifts, board diversity, and the growing convergence of governance behaviors across jurisdictions.

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Transcript

EP 001 - JP Morgan (Chuka)

[00:00:00] Doug Chia: Welcome to the Public Company Series podcast, powered by OnBoard: giving boards the clarity, security, and insights they need to make better decisions and deliver lasting value. I'm your host, Doug Chia. This podcast series is designed to give corporate directors, executives, and governance professionals the insights and tools they need to build boards that are agile, resilient, and prepared for the future.

[00:00:32] Doug Chia: It's based on the book Board Structure and Composition, which is part of the Public Company Series published by JP Morgan and the New York Stock Exchange. My guest for today's episode is Chuka Umunna. Global Head of Corporate Governance and Sustainable Solutions at JP Morgan, one of the publishers of the book. Chuka's colleagues at JP Morgan authored the opening chapter of the book.

[00:00:59] Doug Chia: It's titled, [00:01:00] Global Board Governance Practices and Trends. Today, I'll speak with Chuka about some of the issues raised in the chapter. Chuka, welcome to the show. 

[00:01:11] Chuka Umunna: Thanks very much, uh, for having me on. Great to partner up on this. 

[00:01:14] Doug Chia: So I'll set the context for today's discussion, then we'll get into it. The rising influence of institutional investors and growing expectations from shareholders has led corporate governance to become more professionalized in recent years.

[00:01:32] Doug Chia: Some might even say that corporate governance has turned into its own industry as a result of these dynamics. After all, when challenges and demands outstrip one's capacity to meet them, it's inevitable to enlist outside advisors and service providers. And we see this happening equally outside the us, as in the US markets.

[00:01:55] Doug Chia: So the first chapter of the book written by Chuka's colleagues at JP [00:02:00] Morgan provides a sweeping overview of common trends in corporate governance from around the world. In this first episode of the podcast series, we are gonna look at the current challenges facing boards and their companies across the globe,

[00:02:19] Doug Chia: as boards in every jurisdiction are learning to adapt as pressure builds in an uncertain global economy. Checking the box with superficial governance just won't cut it, in an environment where highly demanding stakeholders see transparent and rigorous governance as illustrative of strong business management. Companies, both US and those based in other jurisdictions, and those who advise them, are facing these dynamics.

[00:02:51] Doug Chia: So with that, let's dive into it. The recent trend of non-US domiciled companies [00:03:00] listing on US exchanges has also driven the Americanization of board culture. This is a term that gets used in the chapter quite often. And so what does that mean, Americanization? 

[00:03:16] Chuka Umunna: I don't think it's a question. You've gotta be careful.

[00:03:18] Chuka Umunna: 'cause sometimes people want to go, well, is Americanization good or bad? Uh, and I don't think it's a question of of what's good or bad governance when you look at Americanization. Uh, I think it's more a question of looking at the different practices that you have as between the US, uh, and perhaps, uh, UK and Europe and, and, and other jurisdictions.

[00:03:42] Chuka Umunna: And essentially it comes down to being a difference in emphasis. So in the US historically, there's been a strong focus on shareholder primacy and engagement where, you know, essentially boards are agents of shareholders with fiduciary duties, um, shaped around that. And so the US [00:04:00] model, if you like, is characterized by a focus on shareholder engagement, obviously compliance with the SEC and stock exchange requirements.

[00:04:07] Chuka Umunna: Perhaps some might say a slightly more professionalized approach to board oversight and documentation. Uh, a bit more attention, uh, and, and discussion if you like, around risk oversight, litigation protection, of course. And that's not to say these aren't facets present in other jurisdictions, but, but as I said, it's a question of emphasis.

[00:04:26] Chuka Umunna: I think overall there is a feeling that, um, you know, boards tend to be perhaps even more rigorous commercially and relatively fast at decision making. You compare and contrast that to say continental Europe, where the regulatory and legal landscape is different in some respects, in the sense that yes, shareholder value and interest is quite core, but then there's more orientation around other stakeholders where the board has kind of got to not only think about shareholder interests, but it's [00:05:00] baked into some of the statutes and regulation that you've also gotta think about other stakeholders, like employees, who often would have

[00:05:07] Chuka Umunna: sometimes, uh, on continental Europe where you've got a two tier board structure, we can go into that in a bit more detail later, they may have employees who actually sit as worker representatives on the board. The evolution of our laws over in Europe have have led to boards having to take into account not just employees, but also customer interest, the interest of the societies in which, where your business plant or operation might be operating.

[00:05:33] Chuka Umunna: And then of course you have two tier board structures, certainly in continental Europe with a supervisory board separate from the, the, the management board. Uh, and there are other things like in, in Europe more broadly, the idea of, you know, chair CEOs is slightly, you know, frowned upon. Whereas obviously it's a much more common feature of the US system.

[00:05:53] Chuka Umunna: And I'd probably say that the European decision of making certainly on the continent is seen as perhaps longer, more deliberative. [00:06:00] You know, it takes, it's some time for decisions to be be made. And, and, and, and some might say if you, I mean personally I see UK as part of Europe, but if you wanna see it as separate to continental Europe, some might say that the, the kind of UK culture board culture sits in, in between those things.

[00:06:15] Chuka Umunna: So to go to your question, I mean, when people talk about Americanization and looking at it from a kind of non-US company perhaps seeking to list, then of course they're gonna have an eye on adopting more US style corporate governance. Uh, and as I said, you know, there, there, there are differences there.

[00:06:33] Doug Chia: In your experience working with these companies, do you see your clients having surprises when they start to get on a US board and they say, okay, look, I read all about this, you know, in terms of the, the differences, but being in the boardroom, I can really feel some differences that you just can't until you actually get there?

[00:06:59] Chuka Umunna: Well, I suppose [00:07:00] the relatively unsophisticated way of looking at this is, you know. It. There's much more of a rules-based culture. There's more bureaucracy in Europe and there is less, and there are less rules and requirements in the US. That that's a very simplistic way and it's wrong. And I think those that might think, well, there's more of a trend towards deregulation, making things easier for management teams, etcetera.

[00:07:22] Chuka Umunna: When they end up on a board, find that actually the level of re regulatory scrutiny is quite high. The expectation for more formalized and transparent governance processes, governance processes is more prevalent. So you know, some of those things that might have been a little bit more ad hoc and informal, you know, there is greater formalization 'cause it's required of internal controls and certification.

[00:07:47] Chuka Umunna: And of course on, on both sides of the Atlantic, you know, there, there is a desire to see a certain independence on the board. But there are certainly, you know, in some respects the definition of what independent is, is stricter in a US [00:08:00] um, context. Um, and there are other things, you know, you, the, the, uh, a certain level of detail being needed in, in board minutes and then of course dealing with activist investors and the kind of level of engagement with US anchored investors tends to be a bit different.

[00:08:16] Chuka Umunna: So I think some of those things definitely have taken clients by surprise, who, you know, who have sought to move their listing, uh, to US or have, have gone down the avenue of Americanization, so to speak. 

[00:08:30] Doug Chia: I would imagine some of the Americanization is kind of the issues that boards face in the United States that are

[00:08:42] Doug Chia: of particular interest to US stakeholders or take on a different flavor. Um, you know, for example, people point to the difference and the attitudes around climate change and, you know, and that's not just societal, but in terms of the [00:09:00] regulatory approaches and I would think that that might catch some people off guard and that, that's just one example.

[00:09:08] Chuka Umunna: Well of course that is an interesting one because whilst obviously the trend is towards, well, relative to Europe, some might say, less disclosure, less demands around those topics, if you take climate in particular, if you are a US company that has a sizable revenue footprint, say in California, then you obviously have to comply not only with the federal regime but also the state regime.

[00:09:28] Chuka Umunna: And in California, obviously, you know, governor Newsom and others have been pursuing the agenda, which is more, certainly more similar to what you might might expect in a European context. Um, but undoubtedly there are differences. And although, you know, you take the European Union. Over the last 12 months or so, there has been a trend towards simplification that's quite different from deregulation, which is more of an agenda that has been pursued since the start of last year in the US. 

[00:09:56] Doug Chia: In terms of, you know, companies coming to the US [00:10:00] to list.

[00:10:01] Doug Chia: Obviously, you know, a lot has been said about the increased concentration in global equity in assets under management in the US as, as well as the rise of the passive asset managers. And a number of European companies have announced their intent to, for the US to be their main listing location. But you know, the popular theory in the United States is that the US regulatory regime for a public company is getting

[00:10:35] Doug Chia: so complex and so costly and burdensome that companies from other countries just aren't gonna wanna list here. Same argument for, for private companies going public. Do you see that? Is that, is that actually, you know, is actually a thing? 

[00:10:53] Chuka Umunna: No, it's not driving the, um, the discussion about moving your listing or your primary listing, at least to the US.[00:11:00] 

[00:11:00] Chuka Umunna: 'cause although, I mean you, you've, you've given a picture there that might suggest that US regulation is a deterrent. In the end the US remains very attractive to our clients because of its decaped markets, high liquidity, the, you know, the presence of, you know, those big passive, um, asset managers who, who do take a, you know, obviously do play a role on the governance side.

[00:11:23] Chuka Umunna: But to be honest, the big topic often driving this is the relative valuation gap between US and European listed companies. You know, where one of the factors that people you know, look at very closely is if I go and get a US listing, am I likely to get a, you know, a better multiple at the end of the day?

[00:11:42] Chuka Umunna: And it's not always the case that you will do, it's not always as simple as just deciding you want to go list in the us. 'cause obviously it depends whether it makes sense. And that's, you know, the, the extent of your revenue as a percentage of our overall revenue, which is, is derived from the US. But it's more those kinds of issues that we are finding are, are, [00:12:00] are actually driving that discussion more than the, the, the governance side.

[00:12:03] Chuka Umunna: The, I'd say the governance discussion then would be not a second order issue. It's obviously gonna be a factor taken into account when you're considering whether to move the listing. But it, I wouldn't say it's what's triggering that conversation. 

[00:12:15] Doug Chia: The non-US companies that are coming over to list in the US, are they adapting their boards or making any kind of, you know, structural or changes in composition as a result of that?

[00:12:30] Chuka Umunna: Yes. Um, they, they definitely are changing, um, their practice and thinking about composition and looking to individuals with cross-border experience and expertise and, uh, and of course those who have credibility with the US market, with US investors, and also, you know, those who, if they are to list in the US understand the regulatory expectations.

[00:12:54] Chuka Umunna: So there is a trend where people are thinking about listing in the US towards thinking about [00:13:00] pointing directors with US market experience, and also just to the extent that the, the, the board structures are, are not terribly aligned with the US corporate governance practices, thinking about reforms that need to be made.

[00:13:12] Chuka Umunna: So they are in preparation for potentially, uh, moving your primary listing to the US. 

[00:13:18] Doug Chia: And do we see the same thing going on with american companies or US companies that are really, you know, they're already called multinationals, um, but some, you know, some US companies, they, they generate more revenue and have more employees outside the US than inside the US.

[00:13:40] Doug Chia: And so do you see American companies and their governance practices somehow instead of becoming a, becoming less Americanized and more internationalized, if, if that's an actual term? 

[00:13:56] Chuka Umunna: Well, there, I think that definitely US boards in general are less [00:14:00] internationally diverse than their European counterparts.

[00:14:02] Chuka Umunna: Um, and they will not as frequently include, you know, foreign citizens on the board unless those folk have significant US market experience. And of course, the extent to which they do include people from a non-US background is gonna depend on the, the size and focus of their revenue and growth outside of, of the US.

[00:14:21] Chuka Umunna: I mean, in contrast, actually, European boards are more likely to, particularly of the, the larger multinational European companies are more likely to include directors from other jurisdictions. I do think though, Doug, we've gotta be careful in overplaying the, the differences because some would argue that whilst the rules and the constitution of our, our companies and boards may be

[00:14:44] Chuka Umunna: different and designed slightly differently, if you actually look at the behaviors in the face of investor challenge, activist campaigns, different risks, reputational risks that arise, the expectations of broader stakeholders, this and, and, and, and just the level of scrutiny [00:15:00] that you get as a board, which you didn't have before,

[00:15:02] Chuka Umunna: because, you know, you have lots of armchair journalists who can do their thing on social media in a way that they weren't and, and, and kind of put a microscope over what a board's doing, um, now in a way that they weren't before. I think in that sense the, the behavior and response to that there is, you know, an increasing convergence and of course local practices will persist.

[00:15:22] Chuka Umunna: There will always be some of those differences. I think the other thing is, is that, I think it's fair to say that the US government is not a static phenomenon, it's dynamic. And the US administration, although I think shareholder primacy continues to be a priority, the extent to which other actors can intervene and influence the governance, uh, and business decision making of a company, you know, that is under review.

[00:15:47] Chuka Umunna: There are obviously moves to try and curb the influence of proxy advisors, particularly in relation to what, what some might see as kind of politically motivated shareholder resolutions. There's been an attempt to make it easier for [00:16:00] management team. Some people talked about management capitalism, which I think probably goes a bit too far.

[00:16:04] Chuka Umunna: But certainly giving management, um, greater influence to exclude certain shareholder proposals from proxy materials has obviously been, been introduced. And then a lot of the stuff around what used to be termed ESG, that rulemaking has been not just halted, but in some cases wrote back. So, so the, the, the, the, the kind of situation in the US is, is is moving.

[00:16:25] Chuka Umunna: So we've gotta be careful of drawing too many big kind of sweeping conclusions on what's going on at the moment. 

[00:16:31] Doug Chia: In terms of the American or US approach to corporate governance, a lot of it is about risk mitigation. And so things like diversifying the board is about kind of mitigating downside risks and kind of avoiding group think and these kind of things.

[00:16:50] Doug Chia: But you know, in the chapter of the book, your colleagues say that a lot of the times the belief from [00:17:00] companies in other jurisdictions is that changing the makeup of the board and structure of the board will unlock value as opposed to just minimizing downside risk. Do you see this actually kind of changing in the US as well?

[00:17:22] Chuka Umunna: There has been over, you know, the, the, the medium term, a recognition in the US that diversity can enhance board effectiveness and the risk management that you talk about. Although it's not necessarily purely viewed through the lens of gender, ethnicity, or personal characteristics, often skills, background knowledge that you bring to the table, and which I think increasingly is seen and more and more important particularly

[00:17:45] Chuka Umunna: as, you know, corporates have to grapple with AI and understanding that technology, etcetera. But I still think the, the picture you paint where the investment community is more focused on, you know, governance being a form of risk mitigation [00:18:00] than a direct value driver is still still persists. I mean, there is, we, we note in the chapter that in some markets there is some evidence, you know, research that some point to, to suggest that a link between governance and value creation and that it's more explicit.

[00:18:14] Chuka Umunna: But I think in the US it's still geared towards avoiding negative outcomes. And of course there's the whole litigation risk, which isn't quite so pronounced, I think, in European markets. So, um, I I, in that, in that sense, I don't think things have massively changed. 

[00:18:28] Doug Chia: You know, despite becoming these multinational companies, US companies have not made very many attempts, and that's putting it lightly for geographic diversity.

[00:18:42] Doug Chia: There are a lot of different theories of why that is. How do you look at that? 

[00:18:48] Chuka Umunna: I think that's, I think that up until now has been the case. I think it will be very interesting to see what happens going forward from here, because certainly [00:19:00] from a um, geopolitical point of view, we have seen geopolitics both amongst our corporate clients and our institutional investor clients, impact on decision more than it has for

[00:19:12] Chuka Umunna: a long time, and some might argue not just a generation but ever, and therefore actually having people from different geographies who understand the thinking and the geopolitical context, uh, particularly if you are a multinational company with, with a large footprint abroad, some might argue is now going to become even more important.

[00:19:33] Chuka Umunna: So, um, I think it's, it's gonna be, you know, very interesting to see whether the, the move away Some might suggest from a geopolitical standpoint, from the old liberal international rules based order, which the US was the primary mover on. Uh, and from a uni some might have argued a previously a unipolar world where, you know, US influencers preeminent, um, you know, [00:20:00] 30 or 40 years ago to, to a different world that we're in now, which is more diffused, is more multipolar if you are a company operating in that context,

[00:20:08] Chuka Umunna: you could argue that you're going to need people with, with more experience across different hemispheres, um, as we're becoming, you know, a more, you know, certainly big power plays in different hemispheres. So I think it'll be very interesting to see the evolution of composition on the US side and whether there, in light of what's going on, there's going to be a desire for a bit more geographical diversity than there was before.

[00:20:31] Doug Chia: I, I mean, my experience is that companies will try this and maybe they'll have like one director from Japan or from Germany and then they say, well, this, this isn't working for, you know, logistical reasons, time difference, travel, all that kind of stuff. And then as a result, the US company will say, okay, we'll have director, we'll we'll get some directors who have international experience like i.e. [00:21:00] they've worked abroad, they've been an, an expat somewhere, and then therefore they kind of understand these cultural differences.

[00:21:09] Doug Chia: Um, but to me it doesn't, it seems like that's not really a substitute for having a truly. Multinational board for a multinational company and certainly their management, the, you know, committees on the management level ha have people from all over the globe and they manage to somehow meet on Zoom or something like that.

[00:21:28] Doug Chia: So I think that's, you know, to me it's an interesting contrast. 

[00:21:32] Chuka Umunna: It is. And I think actually, you might have people who have international experience, but that's not a substitute for having your finger on the pulse for live events, which are having a real direct impact on your, your P&L. Let's just be honest about it.

[00:21:45] Chuka Umunna: And also with this is a post COVID environment. So whereas before we, you know, didn't habitually do meetings by Zoom and Teams and, and, and there was more of a antipathy to not doing things face-to-face. I [00:22:00] think now it's more accepted that there may be a certain number of board meetings where you will have people join in by Zoom and maybe there will be requirements that you are present for half the meetings and you can join.

[00:22:08] Chuka Umunna: So, so I think the, the change in the way that we work may mean that it's actually easier to get people with that experience. 

[00:22:16] Doug Chia: Yeah. I guess back to uh, non-US companies, the book chapter notes that in some countries the ambition to professionalize board governance is hindered by structural impediments.

[00:22:29] Doug Chia: And so what kind of structural impediments is that referring to? 

[00:22:36] Chuka Umunna: I already mentioned that there is a difference in approach in Europe, but there's the structural, if you're trying to move towards more of a US model, it's quite difficult in some, you know, continental European countries, 'cause you have a, a two-tier board structure, so you don't have, um, you know, one for a, where you've got management and the supervisory function kind of sitting in one place.

[00:22:58] Chuka Umunna: You've then got in [00:23:00] other jurisdictions, particularly emerging market jurisdictions, um, the absence of the kind of civil law frameworks that you have to embed, uh, certain governance rules. There are some jurisdictions where there's local requirements for board composition, you have to have a certain percentage of, of local citizens.

[00:23:15] Chuka Umunna: That's the case in some of the Middle East jurisdictions, um, where you have to have boards which are mainly composed of, of, of local citizens. And of course that might narrow your candidate pool. And then, you know, there may be political considerations which override merit-based appointments in certain, in certain jurisdictions as well. At Sub-Saharan Africa we see that. And so that's what we were getting at when we talked about some of those, um, structural impediments. 

[00:23:42] Doug Chia: Also, one potential obstacle to detecting new trends and practices in governance are the contrasting views that boards have in different jurisdictions on what the role of the board actually is.

[00:23:58] Doug Chia: And you alluded to this [00:24:00] earlier, but you know, maybe expand upon that in terms of the fundamental split between how companies in Europe and the US look at the role of the board itself. 

[00:24:15] Chuka Umunna: I think in the US it goes to shareholder primacy. In the end, the board is a servant of the shareholders ultimately, uh, and is, is laser focused on that and shareholder value, hence the focus on the commercial strategy.

[00:24:30] Chuka Umunna: So they're concerned with that. They are concerned with risk mitigation, anything that threatens that, litigation risk. They will have a focus on the strategic direction in the extent to which that strategic direction delivers good total share shareholder returns. There tends to be a closer working relationship with management.

[00:24:49] Chuka Umunna: Um, and as I said, um, earlier, you, you, you sometimes have CEOs also being the chair as well. In Europe it's more diffuse. You sometimes have these two tier [00:25:00] board structures with the supervisory board having a monitoring role over management. And, and, and they're being under the law requirements to have different interests represented on this, um, the supervisory board like this, like the employees.

[00:25:12] Chuka Umunna: So there is that greater focus on, on, on the stakeholders. And that's not to say that there isn't a concern for some of those kind of risks, but, you know, the, the, the, it's more kind of like an oversight, if you like, of what the management team is doing and, and whether they're promoting the, not just shareholder interest, but the greater good as as well.

[00:25:33] Chuka Umunna: Now obviously I'm, I'm generalizing 'cause there's different degrees of this in the European context, say the UK culture and uh, framework is closer to the US uh, setup that I described. And, and whereas on continental Europe, it's, you know, there's some, uh, jurisdictions there like Germany, etcetera, which, which are somewhat some somewhat different.

[00:25:52] Chuka Umunna: Um, and then, and then you've of course, you know, you look at some of the, the other, uh, markets in the Asian markets, you've [00:26:00] got, uh, boards that are more closely tied to maybe a family or state interest. I mean, particularly in the Middle East and African markets, we see that in each region you do have unique legal, cultural and economic contests that, that, that will shape the, the governance.

[00:26:15] Chuka Umunna: But there, there definitely is a, you know, and there continues to be a, a, a difference on the fundamentals, certainly between, you know, the, the US and European markets. 

[00:26:25] Doug Chia: And so outside of US and Europe and the UK, say the Middle East, Oceanic region, Asia, what are you see any kind of specific difference that, that would kind of stand out to somebody?

[00:26:40] Chuka Umunna: I mean, the obvi, the obvious one, um, in, in the, um, states that I referred to where. Um, often the state or the family will have an interest. The obvious one is independence. Do you have a, a board both overall, but amongst the, the, the, the nets who could truly be considered to be [00:27:00] independent? And then of course, if you look at some of the European requirements, um, uh, you know, there's later this year in, in 2026, there's gonna be a requirement that a certain percentage of your nets are, are the underrepresented sex women?

[00:27:14] Chuka Umunna: Or, or, and there's a, another requirement on the board overall. You know, they're not necessarily going to meet those, um, thresholds in some of the emerging market, um, jurisdictions. And, and if you are looking to attract global investors, then they want, they want you to comply with the standards, which are considered to be the kind of premium standards that the investors expect, the big global investors, which is shaped very much how by, by, by their views of what they see in, in US and Europe.

[00:27:46] Chuka Umunna: Um, and so that, that tends to be how it, it, it, it plays. 

[00:27:51] Doug Chia: Yeah. One interesting thing that I've seen, and I'm not an expert in kind of comparative governance here, but you know, the concept of [00:28:00] independence. In the US we focus very much on directors being independent from the company, independent from management.

[00:28:10] Doug Chia: And in other jurisdictions, you know, like in South America, they look more at the independence of the directors from each other. And, and part of that is because the, the dominant shareholder, the controlling shareholder has more people on the board, um, than, than in the US we're normally used to seeing.

[00:28:30] Doug Chia: And like you said, you know someone representing the state as well. 

[00:28:34] Chuka Umunna: That's right, that's right. I think that I, I, I mean a good, another good example is sometimes it defers across the European markets, but the employee representative, some might see the employee representative being independent of management, different interests, um, but in other contexts, you can't be independent if you're an employee on a board as well.

[00:28:54] Chuka Umunna: Um, and in the, in the US there are certain rules around that as well. So people find it weird that [00:29:00] there's discussion about the difference, about independent, but it comes down to definitions and there and there are different thresholds. 

[00:29:06] Doug Chia: Yes. In, in the US there's been, uh, kind of the prevailing view that the boards are there to serve the shareholders, particularly. A couple years ago we had the 50th anniversary of Milton Friedman's famous, uh, article in the, in the New York Times magazine where he said, you know, that the essentially that, that kind of established the shareholder primacy. And ever since then it's been like gospel.

[00:29:36] Doug Chia: And then a couple years ago, uh, in revisiting this, we stomped on his grave and said, no, no, no, this is all wrong. Stakeholder theory is really the way to go. And then that largely died down. And I think that we're back to shareholder primacy in the United States. But, you know, what makes me curious is why isn't this the predominant [00:30:00] view outside the United States too?

[00:30:02] Doug Chia: I mean, you know, the public companies outside the United States have shareholders. Uh, they look, you know, they're concerned about the stock price. So wouldn't, you know, you would, one, would think that the same dynamic is true, that kind of focusing on, you know, the shareholder or really the stock price is the one thing that at the end of the day, a board should be concerned about?

[00:30:29] Chuka Umunna: Well, I think, I think this is where, um, uh, to, to reiterate what I said earlier, we, we shouldn't get over obsessed with the difference in the constitutions, the frameworks, and the rules, because often the behavior is closer than you would imagine because of the de demand for good total shareholder returns by investors.

[00:30:53] Chuka Umunna: And I mean, look, we, we see that playing out across European energy companies when people look at their [00:31:00] multiple, certainly in the oil sector of some of the big European oil and gas majors relative to the, the US oil and gas majors, you know, in, in the end, just two years ago, they were all, um, highlighting their transition bonafide days,

[00:31:16] Chuka Umunna: how they were going to move from being big integrated oil majors to, you know, more broadly diversified, integrated energy majors with renewables being a big component to that. That, of course, hit up against the shareholder returns, which people were demanding at the same time as that transition, and there's been a snapback to a focus on making sure that you deliver the returns for shareholders.

[00:31:38] Chuka Umunna: And in that sense, mirroring the kind of behaviors of boards in the US in spite of the different, um, regulatory, um, frameworks. So to some extent there has been, um, um, some might argue a move away from what we saw in the US Business Roundtable statement in 2019, which some have held up as that bastion of stakeholder, [00:32:00] a peak of stakeholder, stakeholder-ism in the US.

[00:32:03] Chuka Umunna: Um, I think some might say there's also been a bit of a snapback from that in, in Europe as as well. I mean, of course this kind of stakeholder way of operating is nothing new in Europe by the way. Um, you know, particularly on the continent, you've got places like Germany and some of the Nordics, they've had this system of co-determination where you very much seek to have all the stakeholders involved in the business decisions.

[00:32:26] Chuka Umunna: It's not just set by the management team and the board and then negotiated with say, the employee trade unions afterwards. You, you, you actually have those trade unions involved in the discussion as you go along. And when I, in a previous life, I, I used to be in charge of the business and corporate governance policy for the current governing party in the UK and we, we looked at whether to adopt co-determination and commit to doing that.

[00:32:50] Chuka Umunna: Um, uh, you know, around 2015 and speaking to some of the businesses and other stakeholders, one of the points of [00:33:00] discussion there was actually you have the different system, not necessarily 'cause it makes your life easier as a management team or necessary 'cause it strengthens the hand of a trade union in that particular situation.

[00:33:11] Chuka Umunna: But what it does is provide more of a, a framework for making business decisions. Having the argument, if you like, before you finalize the decision instead of finalizing the decision, then having some big round or strike after. Now in the end, we didn't, we didn't commit to that. We, we didn't believe it was necessarily the right thing.

[00:33:30] Chuka Umunna: Um, but, but I think it illustrates how. You know, this stakeholder thing that we saw in the Business Roundtable in 2019 was in, it was quite revolutionary in US terms, but actually it was the rigor, some would've argued in a European context. 

[00:33:43] Doug Chia: Yeah. And I, I think that's right. Um, in the US it was seen as this, you know, kind of mind blowing concept and all of a sudden Larry Fink is talking about this too, but I, I think, yeah, the reality is that there was nothing new.

[00:33:56] Doug Chia: It wasn't anything new in the United States either. It [00:34:00] just got overtaken by the Milton Friedman way of thinking. Um, which, you know, people like me thought it was unfortunate, but, but I, 

[00:34:10] Chuka Umunna: I think, I think just going back to that, the Business Roundtable statement I think was really interesting. 'cause different people talked about it and came at it in different ways.

[00:34:17] Chuka Umunna: And our CEO was chairing the business Roundtable at the, at the, at the time. And he has always argued, he's never stepped away, jamie's never stepped away from this, the concept of shareholder primacy, but he was like, for us to be able to deliver the right returns to our shareholders and to do the best job for our clients and our customers, we've got to be a healthy, efficient company.

[00:34:39] Chuka Umunna: And so he didn't actually see, um, thinking about how you are organized, your governance, your employees, how you interact with the communities in which you operated. He didn't see that as being mutually exclusive vis-a-vis shareholder value. Now, others, I, I mean obviously I'm more in favor with what Jamie was saying than the other, um, CEOs on the [00:35:00] Business Roundtable at the time, but

[00:35:01] Chuka Umunna: others have tried to kind of put more of a political bent on that statement. Whereas I think for us it was just more, more of a common sense thing in, in, in a way. And we, we were always clear that it was never going to detract from, from the primacy of the shareholder. 

[00:35:15] Doug Chia: Yeah. I, I mean, at that point, you know, I, I think things had not gotten as politicized then, um, as, as it did a couple years later and, you know, so you talked about your boss.

[00:35:26] Doug Chia: My, my ultimate boss at the time, uh, was Alex Gorsky a couple years before that. I worked for J&J for a long time and, you know, he was one of the primary authors, uh, of that kind of revised statement, if you will. And a lot of it reflected the Johnson and Johnson credo, uh, which had this exact same structure of, you know, customers or the primary, then employees, then communities, and then if you do all that right, the shareholders will [00:36:00] do just fine.

[00:36:01] Doug Chia: And that was a concept that basically was etched in stone for the company in the 1940s. At the time when the person who wrote it, he was the largest shareholder in the company. And so I think a lot of people, at least in in the community I was in, said, look, this is nothing new. We've been doing this since the 1940s.

[00:36:25] Doug Chia: It's just now it's become popular. But it didn't quite last. But anyway, we could talk forever about that. But you know, back to, uh, you know, what you were talking about with co-determination and these two tier structures that you see in certain jurisdictions like Germany, um, and the Nordic countries. In the US we have people saying, well, why don't we just adopt that, that, that seems to make a lot of sense?

[00:36:54] Doug Chia: And part of it is having employees actually be on the [00:37:00] board, which seems anathema in the United States, but you have high level policymakers like Senator Elizabeth Warren and Senator Bernie Sanders actually trying to write this in to legislation. It never goes anywhere. But the question is, look, if it can work in Europe, in Germany, can it work in the United States?

[00:37:24] Chuka Umunna: Well, as I said, I don't think it's, I mean, we don't have a house view on that, no. Um, but I don't, I don't think co-determination is a panacea. And as I said, I mean, I think it's sometimes being misunderstood 'cause there can be the same level of friction and disagreement between the management and workers with, under a form of co determination as there can be with the, the kinda more vanilla way of operating that you, you, you, you have in UK or, or US.

[00:37:49] Chuka Umunna: It's just often the, the row is less public with co-determination than it is when it's not, when it's not there. Um, but it doesn't mean that you don't have really [00:38:00] difficult disagreements and negotiations, um, with people on the other side with entrenched positions. I think in the US I mean, it's certainly where, you know, I think in spite of some of the changes that are going on at the moment, shareholder primacy is still

[00:38:13] Chuka Umunna: elevated. I think in that sense there are still legal, cultural, practical barriers to, to implementing co-determination in the US and I think there would be concerns about board effectiveness, alignment of interest, the potential for increased conflict. I think you have to get through all of that before you can arrive at a place where it's possible, which is why, you know, I believe that senators Warren and, and, and, uh, Sanders, you know, it will be very hard for them to command a majority for what they're trying to do as a result of that.

[00:38:44] Chuka Umunna: And just on their own side, frankly, nevermind. Um, on, on, on the other side of the aisle. 

[00:38:50] Doug Chia: It's kind of an extreme pivot to all of a sudden say, well, employees need to be on the board if they, if you want employee voice getting to [00:39:00] the board. But I think there are other, there are kind of intermediate steps that that could be done.

[00:39:05] Doug Chia: Another problem, and I looked into this, is this has been done in the US. But the last time it was done in terms of let's have an employee on the board was at General Motors, and they took the head of the labor union and put that person on the board. Subsequently, that head of the labor union was embroiled in a massive, you know, scandal, corruption and, and had to leave obviously.

[00:39:30] Doug Chia: And, you know, it's kind of like, okay, that wasn't such a great first try at this. And I think that that might've set things back. But let's, let's move on to, uh, you know, the, the mix of, uh, mix on boards of sitting CEOs and retirement CEOs, and we see that, you know, because the job is getting so demanding that a CEO really,

[00:39:58] Doug Chia: it would be hard for that [00:40:00] CEO to be running their own company and sit on multiple other boards. Um, so the answer is, okay, let's find some retired or maybe recently retired CEOs who can, who have the time to, to sit on a number of boards. But in the chapter, you point out that this isn't necessarily the case, so you don't see this trend in the tech sector and other, you know, high growth types of sectors.

[00:40:29] Doug Chia: Um, and so what, what do you think is going on there? 

[00:40:33] Chuka Umunna: Great question, actually. I'm, I'm always amused about this idea that, that NEDs are gone into retirement because usually, you know, the really, um, kind of, uh, top tier NEDs will have, you know, three or sometimes four, um, roles. Um, and maybe they'll have one chairship, there'll be a sit on another board.

[00:40:52] Chuka Umunna: Um, or the, the, the lead independent director, you might say, in the us and then maybe they have another one. And, and to me, frankly, they don't seem to be very [00:41:00] retired at all to me. Um, but they just want to apply their skills and experience in a, in a different way and perhaps not have the executive responsibility, but they're still very, very active.

[00:41:09] Chuka Umunna: I think, look, in, in technology and high growth sectors are, what we find is that young founders, they do often prefer to appoint board members with similar professional experiences looking at it from a sector point of view. But they might also prioritize, I'm trying not to say it, but I'll just say youth, uh, and current industry knowledge over traditional long range expertise just 'cause the, the speed at which everything is moving.

[00:41:33] Chuka Umunna: I mean, look, you know, take open AI. I'm not commenting on their corporate governance, but they're just a very young company, for example. This can sometimes result certainly before a, a company is thinking of going public to a board with less public company experience and, and a, and a different approach to governance, which then needs to slightly recalibrate when that client is looking to potentially go public.

[00:41:57] Doug Chia: I agree with all of that. I also, what I [00:42:00] also see is that in these high tech and growth sectors, part of the role of the board that we talk about is, you know, for networking purposes and, uh, you know, relationships. And it seems like it might even be, you know, somewhat u utilitarian or transactional that different companies have CEOs on the board for this kind of a reason in terms of it makes good business sense for this person to be on our board.

[00:42:29] Doug Chia: Uh, you know, in this person specifically. And companies in those sectors also have a slightly different conception or a more loose conception of independence, um, and conflicts of interest. So 

[00:42:45] Chuka Umunna: it can be, it can be really challenging from them because where you lack that traditional governance expertise, it can be really quite tricky to align with market and investor expectations.

[00:42:56] Chuka Umunna: And, and, and also actually, definitely I think [00:43:00] networks are important for those, um, you know, growing quite infant companies, but they also are going through growing pains, uh, where the management team and personnel that got them to that stage, maybe they've, you know, they've gone through the different seed rounds and finally become what you'd think of as a growth, a growth equity play.

[00:43:19] Chuka Umunna: But to get to the next level, they may not not have in the management team the right mix of skills, um, to take them to the next phase of their, of their, of their growth and their journey. And that's where actually a board with, with some. A bit more traditional expertise can be helpful to enable you to deal with some of those growing pains.

[00:43:38] Chuka Umunna: 'cause I've certainly seen, you know, both, um, dealing, you know, with companies in that space, um, as, as a, as a banker, but also as a corporate lawyer. The, the adjustment process as you go through that growth can be really painful. And I've seen actually now having sat on some tech boards myself, um, so there, there, there [00:44:00] isn't necessarily like, you know, this is where you need to look at the board in aggregate because, you know, having a mix of somebody with a traditional skills, but who has an understanding of your sector, your industry and your technology,

[00:44:11] Chuka Umunna: but of course, people are anchored and keep you true to what you are doing from an innovation point of view. You might find that in one person, but you, it, it's really when you look at the, the skills and the background and experience of the board and aggregate where this is an important consideration.

[00:44:26] Doug Chia: I've also heard some say that look, these younger high growth companies, they are concerned primarily about financing and it's about, yeah, raising funds so they can operate and grow. And some of these highfalutin corporate governance concepts, you know, they, they're just not there yet. Or, you know, we can't have all the niceties of corporate governance that you would like us to have.

[00:44:57] Doug Chia: You know, you, you best practice, [00:45:00] you people who, who are really always pushing best practices. So I don't know if you've seen kind of that mentality at all. 

[00:45:08] Chuka Umunna: Well, one thing I would perhaps cite is it usually where, where the rubber hits the road on this stuff is, is, is often, you know, as I alluded to, when that company's thinking of going public.

[00:45:20] Chuka Umunna: Um, and, and a good example actually of of, of how it can create flashpoints is the situation that we've had in Europe, particularly in the UK frankly over the last couple of years, where you've got companies in that space of which, you know, the, the UK stakeholders wanna have more tech companies listing on the, the UK exchange.

[00:45:40] Chuka Umunna: Um, but then they find that you've got an investment community here who doesn't live like, you know, or hasn't historically been a big fan of dual class share structures which afford certain preferential voting rights to founders. And I think there's been an acceptance now that there has to be a bit of meeting of minds in the middle, [00:46:00] uh, hence the various listing rule reforms and other corporate covenant reforms,

[00:46:04] Chuka Umunna: to take that off the table as a kind of deal breaker in terms of whether a company comes to list here. And so, on the one hand, on the part of the founders and the people started the company, they often to go through adjustment. I think the, the, the public markets in Europe, which have been struggling to, you know, uh, attract as many, um, initial public offerings as the, as the US,

[00:46:26] Chuka Umunna: um, and then there's lots of reasons, um, for that. But they, there's an acceptance on their part that they're gonna have to change their behavior, change their, their, their rules if they want to get more of the new up and coming tech companies choosing to, um, list here. 

[00:46:40] Doug Chia: Let, let's just jump back to the, um, diversification of, uh, a US board, you know, geographic diversification.

[00:46:50] Doug Chia: And so we talked about how it hasn't been a trend in the past. Maybe it will become more of a necessary trend in the future, but [00:47:00] uh, US companies have a way of recruiting board members, and we talked about some of the surprises when a non-US national gets onto a US board. What are some of the mistakes that you've seen in terms of a US company recruiting or maybe trying to onboard someone from outside the US?

[00:47:26] Doug Chia: I mean, I, I think that might be some of the, the, the source of, of not failure, but kind of avoidance of this. And so what have you seen there? 

[00:47:37] Chuka Umunna: Boards sometimes underestimate the importance of cultural fit. Um, and I think the need for directors to understand the home office culture and expectations, for example.

[00:47:50] Chuka Umunna: And I, I mean, I think that the, of course, the challenge with a lot of US companies is that just because of the size of the US market and the importance of the US market to so [00:48:00] many S&P 500 companies that, you know, it's in, in some senses there is gonna be a bit more of a domestic, um, focus and a tendency to appoint people with US market experience.

[00:48:13] Chuka Umunna: Um, so when you are bringing in somebody from Europe, they're gonna obviously have to be able to work with that. Um, and there might be a very good reason that you're bringing somebody with a kind of European background, particularly if you're looking to diversify and expand your revenue base. But I think you're gonna need an individual that, that that can work with the, if you like, the US corporate governance culture, uh, and not try and change it, not try and resist it, but, but, you know, work within the, the construct.

[00:48:43] Doug Chia: Let's talk a little bit about the influence of private equity. In the book chapter, it says, private equity firms are playing a pivotal role in shaping investor perceptions of corporate governance, including [00:49:00] significantly influencing the growing emphasis investors place on good governance. To me, that's not the same, um, uh, philosophy, you know, or, or that, that's not exactly what I tell people.

[00:49:17] Doug Chia: That, that private equity firms, they're coming from a different mentality of what corporate governance is based on the structure and just, you know, the, the whole idea of private equity. So, you know, how, how do you look at that as the case that that private equity is, is a major force in shaping governance, uh, in more of the good governance way.

[00:49:41] Chuka Umunna: I actually used to, I used to be a, uh, NED for two preeminent, um, private equity firms on one of their portfolio companies here in Europe, which is one of the biggest software SaaS companies, um, in, in, in the UK. So I have a bit of experience of this and, and had definitely observed, [00:50:00] um, the journey the private equity industry has gone on.

[00:50:03] Chuka Umunna: So, you know, one of the private equity firms for whom I sat as a NED on this board, one, one of the initiatives they, they had introduced, and this was a few years ago before I, I joined JP Morgan. Um, but whereas previously all the directors that they had on their boards were generally the dill captains, the, you know, the gp, um, staff, so to speak.

[00:50:25] Chuka Umunna: They were building a bigger and bigger cohort of NEDs who were not employees of the private equity firm, but had different outside experience to bring to bear on the board. And yes, they had an eye on the port code board being public market ready, as in when they sought to exit. But they also felt it was important to have greater diversity of thought on the board, challenging people who, who primarily have kind of come from a financial services background.

[00:50:56] Chuka Umunna: Um, and sometimes you would have the, the [00:51:00] original founder still on the board as a director, but there wouldn't often be many other people without financial services expertise. And increasingly for the, the, this particular private equity firm, they thought that was insufficient and would lead to insufficient challenge to decision making and, and too much of a uniform view and approach.

[00:51:19] Chuka Umunna: So as a matter of running the PortCo more effectively, um, and ensure it's more productive and produces better returns, and then ultimately you can get the best multiple on exit, they saw having that independence, uh, that you more often associate in the public markets present in the board was, it was important.

[00:51:42] Chuka Umunna: And, and so certainly I, through my own personal experience, have seen that change. And also more generally with our, with our clients, our financial sponsor clients definitely increasingly prioritizing governance in their portfolio companies, making sure that there is that element of independence. Um, often [00:52:00] appointing external CEOs even at the, at the early stages.

[00:52:04] Chuka Umunna: Um, and, uh, I think that, that there was just a feeling that that actually leads to a more healthy company and better outcomes in, in, in the end. So that big gap that was previously seen, I mean, there still is a gap obviously in terms of disclosure requirements between the public and private markets. It's become less pronounced.

[00:52:21] Chuka Umunna: I mean, it's still there, but definitely less pronounced, I would say certainly for the bigger, the bigger firms, you know, and the, the size of Port Coast now is obviously 

[00:52:28] Doug Chia: Sure. I guess people would say kind of the maturity. Um, you know, another, I, I guess part of the way I interpret, uh, you know, what this, what the chapter says is, you know, the concept of good governance isn't just, you know, kind of structures and practices and policies and these kind of things.

[00:52:49] Doug Chia: I think the basic, um, or one of the basic things about good governance is just having directors who are prepared and paying [00:53:00] attention. And it seemed, I, I would think that private equity directors are more prepared because they have something, they have an institution behind them that's essentially helping them prepare to be a good director,

[00:53:19] Doug Chia: whereas your typical independent director on a US company, it's just them. They don't have any kind of staff or anything behind them. And some of these retired folks, uh, they have, you know, Google and a large language model, um, AI tools as their backup. Do you see that? Or is that really not some, am I kind of overstating that?

[00:53:43] Chuka Umunna: I don't think you're overstating that. I think there's definitely a, a picture there that I recognize. Um, but I just, you know, when I used to speak to, um, our CEO, the CEO of the PortCo that I sat on the board for about his experience in terms of [00:54:00] accountability and scrutiny by a, you know, sponsor dominated board relative to what he would face dealing with the public markets.

[00:54:09] Chuka Umunna: It certainly, I mean, commonly sometimes think it's, people would say it's harder to deal with public market investors, your top 10 investors, whereas he was like, actually they're more demanding, more is acting my, you know, financial sponsor directors representing the owner on the board, uh, and more activists than I would ever find my in, in the public markets.

[00:54:32] Chuka Umunna: And yes, I mean, they've got the, the, the institutional benefit of, of, of all that, all that comes with being part of the sponsor. And of course, these sponsors have often their own in-house consultancy teams who are pouring over the minutia of all the different operations within the business in a way that you wouldn't get in an investment stewardship team or, uh, uh, you know, with a port portfolio manager on the public side.

[00:54:54] Chuka Umunna: Um, so it's, it's not necessarily, you don't necessarily get an easier ride as a management [00:55:00] team, uh, in, in the private space. 

[00:55:02] Doug Chia: You know, one debate that goes on in the United States is over this idea of specialist directors, um, and bringing on, you know, stakeholders will say, well, you're in this industry, but you don't have

[00:55:17] Doug Chia: enough people from that industry or kind of a sub category of the industry or, you know, they say, well if, if cybersecurity is becoming such a challenge, shouldn't you have someone with cyber expertise on the board? And this, this debate goes back and forth. It's, it's shown up in, in some regulatory, uh, proposals as well.

[00:55:44] Doug Chia: Is this also, does this same debate over specialists versus generalists go on outside the United States? 

[00:55:52] Chuka Umunna: Oh yeah. I mean, look, this debate is global. Um, and you know, this concept of independent directors and the need for [00:56:00] specialized expertise, they're well established concepts, but the definition of specialist and the criteria for that expertise, that can obviously vary by, by, by country and industry.

[00:56:10] Chuka Umunna: And I think that, you know, the, the long and the short of it is, there's no one size fits all answer on this. The skills and expertise required is gonna depend on the company's industry. Its stage of development. We talked about that journey of growth and its unique needs. Um, but I think the board's gotta really clearly define what, when you talk about specialism or what, what does that mean for their context and ensure that the director selection aligns with the, the context and the strategic priorities of the company.

[00:56:41] Doug Chia: But I guess in the US it's the, the dominant view by far is that specialist directors that's seen as kind of not, not just a good thing. Um, and generalists are, are far more preferred, uh, in the international markets, is [00:57:00] that also the case? 

[00:57:01] Chuka Umunna: I think it depends really. Um, and I think ultimately you're probably going to need a decent mix of the both of, of both those, uh, generalists and specialists.

[00:57:10] Chuka Umunna: And it's gonna really depend on on, on the sector you're operating and also like your geographical, um, footprint as well. Again, I think it's what does the board as a whole bring? Does it, does it have sufficient specialism in aggregate and ability to deal with all the other issues that could come up, um, in, in the composition that it has?

[00:57:33] Chuka Umunna: You're not gonna get it in one person. I think that's very unlikely. But when you look at the team, does the team deliver what, what, what is needed? That's the question. 

[00:57:42] Doug Chia: We'll talk about something big here. Um, or very big, at least the, especially these days, which is global upheaval, globalization, geopolitical risk.

[00:57:54] Doug Chia: So I'll, I'll just read a, a portion of the chapter, it [00:58:00] says, in the era of globalization, geopolitical risk has emerged as a critical concern for company boards. Companies will look for steady hands, prioritizing the appointment of experienced leaders who have navigated similar challenges in the past.

[00:58:17] Doug Chia: Consequently, there may be a decline in the appointment of first time directors with boards favoring external CEOs or individuals with substantial senior level perspective. But that brings up the question of how can a board introduce fresh perspectives without compromising on experience? If, if you know, you look at it that way, 

[00:58:43] Chuka Umunna: I think you've got you it's balance really.

[00:58:46] Chuka Umunna: Um, and sorry, a risk of repeating myself on this one in particular. I think it's a good illustrator that, that you need to look at the board in aggregate as opposed to one individual. Um, but particularly I think if you are a company that's in, [00:59:00] is operating across a number of jurisdictions, you, you, you know, obviously there will be a benefit in having directors on your board who have some experience of dealing with government, uh, the different, um, public policy demands or various players in a particular market,

[00:59:18] Chuka Umunna: um, and there are particular issues where this is particularly pronounced when you're dealing with supply chains, um, AI and the, the, the regime governing that cybersecurity. Um, uh, maybe, you know, you, you, there's M&A that has a national security implication for a particular market. So I think the key is to ensure that across the board you've got the breadth to address those issuers and the range of risks, um, and that you don't just have one single area of expertise where you can tick the box and say, yes, we've got what we need there.

[00:59:55] Chuka Umunna: Um, I just think that we are living in a much more complex world. [01:00:00] It's a multifaceted, some might argue Multipolar world is, is is more complex in that sense. Um, centers of power are more diffuse. And so if you are running a company across the globe, you're gonna have to have a board that that knows how to, to, to navigate choppy waters.

[01:00:21] Chuka Umunna: Um, that's gonna be particularly important going forward. 

[01:00:24] Doug Chia: And do you think folks, with that kind of experience from government, you know, the foreign policy community or military experience, is that a way to get it? Um, and I don't know if you see this outside the United States, certainly you see some of it here and part of it is there's def 

[01:00:45] Chuka Umunna: Yeah, I think definitely Dema demand for directors who have some of that experience has definitely increased because of the geopolitical tensions and landscape that companies are facing at the moment.

[01:00:57] Doug Chia: Another reason, or probably, [01:01:00] you know, the traditional reason to have, uh, folks from government, military, etcetera, especially in some industries, is because of their ties, their influence, their, their preexisting relationships helping the company. And there's controversy around that of course. Is that, are there same dynamics outside the United States?

[01:01:23] Chuka Umunna: Well, I would say that you've got to be very careful because as a board member, you've gotta, you know, be careful about conflicts of interest. So I think isn't, it's not a question necessarily of access, it is more a, a, a, a question of insight and understanding, uh, which can help inform the strategy of the company and also be of assistance to the management.

[01:01:48] Chuka Umunna: Um, I think that is a better way to think about it than, than thinking about a particular director getting you access. Um, I think one of the things you have [01:02:00] to be particularly mindful of is, is conflicts of interest and reputational risk. I would kind of reframe it and, and think about it more in terms of somebody who has insight and understanding about the way people are making decisions, why they're making decisions, or timing the context, etcetera.

[01:02:17] Chuka Umunna: But it's not necessarily about that person being able to just pick up the phone and speak to a, a public official, an elected public official, 'cause that can carry its own risk if it's not done in the right way and in compliance with all the local laws and, and, you know, anti-bribery and corruption regulations, etcetera.

[01:02:34] Doug Chia: I, I mean, the way I look at it is that, you know, some people say, well, why should, you know? Why would you have like an admiral on your board when you're not a defense contractor? And I say, well, look, the. The board member should probably be someone who has run a large organization and maybe a large complex organization.

[01:02:57] Doug Chia: And if you look at a senior military official or [01:03:00] government official, that's, you know, that's what these people deal with. And so for military, some of times it's, it's almost like a corporation if they're dealing with supply chain or if they're leading supply chain, uh, chain teams. And, and then in government, you know, some of the people are, you know, they, they've actually been at the governing position as opposed to just kind of a legislating position.

[01:03:26] Doug Chia: Um, and so I think people don't really look at that or understand that, that that's part of the skillset that comes from being in that, those positions. 

[01:03:38] Chuka Umunna: Yeah. Public sector, so definitely public sector folk have often run huge organizations, and that's not always well appreciated. Um, and often, um, I mean obviously, you know, you don't quite have the same profit motive, um, and incentives involved, but, uh, increasingly in these fiscally constrained times are having to, they're being asked by their political masters to do more [01:04:00] with less.

[01:04:00] Chuka Umunna: Um, and that in itself gives you a certain experience. 

[01:04:04] Doug Chia: Alright, well that's probably a good place to wrap up. So thanks so much for joining us for this great discussion. 

[01:04:12] Chuka Umunna: Thank you very much for having me and great to collaborate with you. 

[01:04:15] Doug Chia: So that concludes the very first episode of The Public Company Series podcast, powered by OnBoard.

[01:04:23] Doug Chia: I'd like to thank Chuka Amunna, Global Head of Corporate Governance and Sustainable Solutions at JP Morgan, one of the publishers of the book, for sharing his insights. And I encourage you to read the opening chapter of the book, uh, entitled Global Board Governance Practices and Trends. Uh, it really sets out the context for what's to come in the rest of the book Board Structure and Composition, which is part of the Public Company Series published by JP Morgan and the New York Stock [01:05:00] Exchange.

[01:05:00] Doug Chia: And you can read and download the entire book at www.nyse.com/pcs. To learn more about OnBoard, visit www.onboardmeetings.com. For additional resources and episodes to come visit www.publiccompanyseries.com and don't forget to subscribe to receive all new episodes of the Public Company Series podcast and rate us and leave a review.

[01:05:32] Doug Chia: I'm Doug Chia, and we'll see you next time.