corporate governance

2019 Governance Top 10

The following is my top 10 governance stories of 2019.

All of these companies or issues were discussed during my classes this year, and some also formed the basis of assessments and exam questions.

This list highlights that Good Governance is never a given and is an issue for for-profit,  non-profits and all industries.  Governance is an ongoing process that businesses, corporate leaders and directors fail to update and maintain at their own, and their investors and stakeholders peril.

10. Executive Pay

High CEO and executive pay was again a topic of regular discussion this year, with a new book arguing that the executive bonus culture and high pay are damaging the long-term interest of the company and also society[1], and Ryanair making headlines with the Say on Pay shareholder support vote of only 50.5%, criticised as granting Ryanair management ‘significant share options with no compelling justification.’ [2]

Image result for michael o'leary

Michael O’Leary of Ryanair

9. The WeWork IPO Fiasco

The debacle of the WeWork failed IPO, an office rental company masquerading as a tech company, included a high focus on the company’s corporate governance issues: no women on the board, insider dealings (CEO Neumann was privately buying property that he then leased to WeWork), family ties (wife Rebekah is co-founder, chief brand and impact officer), and multiclass stock structure that gave Neumann far more power than other stockholders, highlighting that governance issues do matter to investors.[3]Image result for wework logo

8. CEO Duality continues to decline

Boeing, Renault and AT&T are some of the companies this year that announced the splitting of the roles of CEO and Chairperson of the board.  German law strictly prohibits combining the roles and the UK Corporate Governance Code strongly advises against it, with the rationale that the board is strictly separate and independent from management and the combination dulls checks and balances. However, evidence is mixed on the impact on performance, and separation does not in itself guaranteed good governance.  However, the trend is clear, with 53% of S&P 500 companies separating the roles, the highest percentage ever, and up from 30% in 2005.[4]

7. Sustainable Business Education

Executive education is changing.  Where once the focus of leading MBA programmes was on profits, shareholder value, financially modelling and securing a six-figure graduate job in banking or consultancy, the shift to sustainable capitalism is increasing.  AMBA and PRME, international organisations that promote Executive Education, promote sustainability and responsibility as mandatory elements of business education. With Sillicon Valley and tech now a major destination for MBA graduates, practical skills on data, analytics, and coding are also increasingly on the curriculum[5].  Business schools were heavily criticised for their contribution to the 2008 financial crisis with their focus on profits and complex financial procedures.  Time will tell if this change in executive education will positively impact and contribute to a more sustainable capitalism.

6. Big Tech Accountability

The shine has gone off Big Tech.  No longer are investors accepting that profits can be earned ‘sometime’ in the future, as the viability of low-return tech firms such as WhatsApp, Uber, and Lyft are increasingly challenged (even China’s ubiquitous WeChat is not profitable). Mark Zuckerberg’s plea for more regulation for social media while it plans to continue collecting and generating revenue from personal data was widely ridiculed[6]. The EUs clunky, and despised by tech, GDPR has been a roaring success among consumers, who although they don’t really understand it or what it does, do clearly appreciate more regulation and limits on big techs access to their data.    The tide has turned in Washington and in Brussels against big technology firms[7]. After decades of letting them do more or less as they please, consumers are demanding action and political leaders have identified a political opportunity.

5. The Robbery of the Century – The Cum-Ex Trading Scandal

If you thought the 1MDB scandal was easy to follow[8], then the Cum-Ex Dividend Trading scandal that siphoned up to €55 billion from European public funds will be fine[9]!  In this complex series of transactions shares with and without dividend rights were quickly traded between various market participants just before the payout date for the dividend, allowing traders to reclaim double the taxes.  Multiple countries across Europe were impacted and have since deemed the reclaims illegitimate, but at the time of trades, this was less black and white, resulting in the court cases of 2019. One of the defendants in the German trial, Martin Shields, testified that the cum-ex trades were practiced on an ‘industrial scale’ and involved a vast network of banks, companies, brokers, lawyers and financial advisers.  The challenge for governments and regulators (and the judges in the court cases) is to be clearer on the differences between legal and illegal opportunities, and to impose fines and censure individuals and organisations for bad behaviour. This highlights the continued cultural issues in financial institutions where there is no clear victim of their actions.  Remind me again, how much are we still paying for the bank bailouts of 2008? [10]

And as we are coming closer to home . .

Image result for football association ireland4. The Football Association of Ireland (FAI)

Restated accounts for 2017 & 2018, unexplained director’s loans, lack of financial experience on FAI board, questions on expenses, millions in losses and more.  Former CEO John Delaney’s power over the FAI is well recorded [11] and an example of managerial hegemony.  However, there are more players and parts to this football drama.  The final report on the FAI is still to be written, as are the amended and updated accounts and the future of the FAI is in doubt.

3. Image result for datalex ireland

Datalex first alerted the market of suspected accounting irregularities in January 2019, sending its shares tumbling.  Founded and headquartered in Ireland,  Datalex, makes software for airlines to sell tickets and other services to passengers.  It subsequently confirmed that revenue and earnings for the first half of the last year had been overstated.  As 2019 rolled on things got worse, with its shares suspended in May as the company failed to publish its 2018 results. The results when finally published in early September, showed it made a net loss of €44.8 million[12].  The accounting issues arose primarily from a single customer account, Lufthansa, where the project ran over time and budget, but Datalex had booked its service revenue. Dalalex auditors, EY, reported it to the Registrar of Companies for failing to keep adequate accounts. Lufthansa also cancelled its troubled contract in September.

2. Women on Boards

First the good news: in the US, women corporate directors hold a record 20.4% board seats in the US for the first time in 2019[13], and the lack of gender diversity, that is, a wholly male board, was one of the recognised red flags in the WeWork IPO debacle (see No. 9 above).  In Ireland there is still much work to do, with the government target of no all-male boards by the end of 2019 missed.  Irish companies with all male boards include Datalex (see No. 3 above).   One positive development for gender balance is that there are no longer any all-male boards among the Iseq 20 group[14].

And finally on a positive note. . .

1. The Purpose of a Company is changing . . . for the better

My No. 1 reflects the increasing debate since the financial crash and bailouts of 2008 on the purpose of a company.  In August 2019, the Business Roundtable, a US association of CEOs, redefined the purpose of a corporation to promote ‘an economy that serves all’. While acknowledging that individual companies serve their own corporate purpose, the bosses ditched the decades-old orthodoxy that increasing shareholder value should be the only objective, and that companies should also look out for the interests of customers, workers, suppliers and communities, and aim to increase diversity and protect the environment.[15] With ever more pressure on companies from shareholders, employees, suppliers, customers and other stakeholders, to play their part in addressing issues such as climate change, human rights, and inequality, this is a pragmatic corporate response to external pressures and a positive one for all our futures.

H a p p y   N e w   Y e a r !



[1] Smithers, A. (2019). Productivity and the Bonus Culture. Oxford University Press, USA.

[2] Beesley, T., Powley, T., Thomas, D. (2019, September 19).  Half of Ryanair investors fail to back pay report. Financial Times. Retrieved December 29 2019, from

[3] Pisandi, B. (2019, September 25). WeWork fiasco may have startups rethinking their governance structures before heading for public markets. CNBC. .   Retrieved December 29 2019, from

[4] Sahadi, J. (2019, October 31). Should CEOs double as board chairs? Increasingly S&P 500 companies are saying no. CNN Business. Retrieved December 29 2019, from

[5] The Economist (2019, November 2). The next business revolution.  Retrieved December 29 2019, from

[6] Zuckerberg, M. (2019, March 30). The Internet needs new rules. Let’s start in these four areas. Washington Post.  Retrieved December 29 2019, from

[7] The Economist (2019, October 5). The tech offensive.   Retrieved December 29 2019, from

[8] Wright, T., & Hope, B. (2018). Billion Dollar Whale: The Man who Fooled Wall Street, Hollywood, and the World. Hachette Books.

[9] Smith, E. (2019, October 14). A landmark German tax fraud case could ripple through the finance industry. CNBC. Retrieved December 29 2019, from

[10] Hancock, C. (2019, October 2). Was it worth paying €41.7bn to bail out Irish banks? Irish Times. Retrieved December 29 2019, from

[11] Houston, R. (2019, September 29). Delaney departs – End of the most colourful FAI career. RTE. Retrieved December 29 2019, from

[12] Irish Times. (2019, September 19). Datalex investors are in for the long haul. Retrieved December 29 2019, from

[13] 2020 Women on Boards (2019).  Gender Diversity Index.  Retrieved December 29 2019 from

[14] Slattery, H. (2019, August 12). Irish listed companies set to miss target for gender diversity on boards. Irish Times. Retrieved December 29 2019 from

[15] Business Roundtable (2019, August 22.) Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’.   Retrieved December 29 2019, from

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