Bill McNabb: Talent, Strategy and Risk. How Investors and Boards Are Redefining TSR.
Welcome to the Boardroom Governance Podcast. I’m your host, Evan Epstein. In this episode, I talk with Bill McNabb, the former Chairman and CEO of Vanguard, the world’s second largest mutual fund manager with over $7 trillion in AUM. Bill currently serves as a board member of UnitedHealth Group and IBM, in addition to several other PE and VC-backed private company boards. Bill is the author of the book "Talent, Strategy, Risk: How Investors and Boards Are Redefining TSR", along with his co-authors Ram Sharan and Dennis Carey (2021). In their book, they argue that since TSR (total shareholder return) cannot keep the short and long term in balance, boards should focus on a different kind of TSR—talent, strategy, and risk—because decisions and actions around these factors, more than any others, determine whether or not a company creates long-term value. The book seeks to redefine the board's agenda and explains how to: 1) Build and incentivize the right leadership team, 2) Help leaders take a longer view and communicate it to investors, 3) Refresh board composition and create diversity to meet the new challenges, 4) Keep major risks, such as cyberattacks and sexual harassment allegations, front and center, and 5) Analyze the business through the eyes of a shareholder activist. In this podcast, we talk about many of these issues including Bill’s thoughts on how to create a capable board, redesigning board committees, how to reduce information asymmetries between management and the board, and the importance of engaging with investors. We also address the rise of Chief Human Resources Officers, lessons from private equity boards and shareholder activists, the latest trend of delegation of voting power from large institutional investors to beneficial owners, and his take on ESG and corporate purpose (shareholders and stakeholder value). If you like this show, please consider subscribing, leaving a review or sharing this podcast on social media. You can find all the show notes on the website boardroom-governance.com and please feel free to subscribe to the Boardroom Governance Newsletter at evanepstein.substack.com