europe, we have a problem! · 2012. 10. 11. · europeÕs growth problem! source: ft global 500...
TRANSCRIPT
Prof. Dr. Erik P.M. Vermeulen
With A Focus on Boards
Beyond Shareholder Value: Corporate Governance and Corporate
Venturing
Europe, We Have a Problem!
Europe, We Have a Problem!Second
Europe’s Growth Problem!
Source: FT Global 500 2010: Energy, Oil & Gas Producers, and Financial Institutions are excluded
<190021%
1901-195031%
1951-197515%
1976-201033%
FT Global 500 (2010) Companies divided according to
formation date
FT Global 500 (2010) Companies incorporated during the period 1976-2010 divided according to
region
US41%
RoW41%
EU13% Japan
6%
559002
1976278968 270644 212318 208358
207376 185155 185123 181774 181390
170685 167601 165415
1975 1911 1892 1962
1867 1983 1837 1938 1886
1849 1886 1998
FT Global 500 2012Market Values at 30 March 2012 in $m
1 4 5 9 11
12 15 16 17 18
23 24 25
Corporate Governance?
Pre-seed
EUR 0.1M
•Proof of concept•Patent
Seed
EUR 0.5/1M
•Business plan•Prototype•Company creation
Start-up
EUR 1/5M
•Team in place•Product development•Market introduction
Growth
EUR 5/25M
•Staff growth•Sales traction
IPOEUR 25/150M
•Corporate structure•Marketing and sales investment
Established Expansion Mature
Early stage
Growth
Revenue
Cash flow
•Own capital•3Fs•Government•Business angels•Incubators/accelerators
Local venture capital/family offices
(International) Venture capital
Non-listed Listed
Corporate Life Cycle
Source: Dow Jones VentureSource/Preqin
0
6
12
18
24
30
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q120
2000
4000
6000
8000EU Number of IPOs IPO Amount Raised EU IPO Amount Raised US
Corporate Governance & IPOs
US IPOs Naamloos 1 Naamloos 2
Number of IPOs
Amount Raised US$ M
0
5
10
15
20
0-25 25-50 50-100 100-200 200-500 500-1000 >1000
Number of Companies per range of Market Cap (as per 14 September 2012)
Source: Morningstar, Financial Times, Dow Jones VentureSource, Preqin
Corporate Governance Matters!
Number of Companies
US$ M
Alternext AIM NASDAQ Global Select NASDAQ Global Market NYSE
0
5
10
15
20
0-25 25-50 50-100 100-200 200-500 500-1000 >1000
Number of Companies per range of Market Cap (as per 14 September 2012)
Source: Morningstar, Financial Times, Dow Jones VentureSource, Preqin
Corporate Governance Matters!
Number of Companies
US$ M
Alternext AIM NASDAQ Global Select NASDAQ Global Market NYSE
0
10
20
30
0-50 50-100 100-200 200-500 500-1000 >1000
Number of Employees (as per 14 September 2012)
Number of Companies
0
3
6
9
88
5
9
Board Size
0
2
4
6
8
66
3
8
Independent Directors
High Low Average Median
Irrelevant?
High Low Average Median
Focus on Principal-Agent
Third Party is Chair
Former VC is Chair
Founder is Chair
CEO is Chair
Board Chairs
0
3
6
9
88
5
9
Board Size
0
2
4
6
8
66
3
8
Independent Directors
0
5
10
15
0
4
0
14
Women on Board%
High Low Average Median
Irrelevant?
High Low Average Median
High Low Average Median
Focus on Principal-Agent
Focus
Information
Board Dynamics/Culture
Procedures
0
18
36
54
72
90
5654
29
88
“Insiders”
Board Dynamics: Experience
High Low Average Median
Business Related
Former VCs
Founders%
0
18
36
54
72
90
5654
29
88
“Insiders”
0
20
40
60
80
4446
13
71
Outsiders%
Board Dynamics: Experience
High Low Average Median
High Low Average Median
Business Related
Former VCs
Founders%
Other Industries
Finance
PE/VC
Business Related
0
20
40
60
80
4446
13
71
Outsiders%
Board Dynamics: Experience
High Low Average Median
Other Industries
Finance
PE/VC
Business Related
PharmaHealthcareCleantech
Board Dynamics/Culture?
Board Dynamics
Board Diversity
Education Experience
Engagement
Compensation Shareholdings
Company Specific
Knowledge
Av. Time on Board
Create an Entrepreneurial Environment!
Boards Actively Contribute to Innovation!
Corporate Venturing Models
Source: GlobalCorporateVenturing
High tech start-up
InnovationCycle - Various
Innovation Models
CV Deals 2011-2012
6
IBM Smartcamp
14
2
2
-
1
26
20
8
2
121
3
16
27
ExamplesEducation Experience Av. Time on Board
9 YearsBusiness-Finance: 20%
Science-physics, math, etc.: 70%
Engineering: 50%
Marketing, Sales: 0%
Public Sector, Academics: 20%
Engineers: 20%
Arts, Sports, Media: 0%
Legal: 0%
Finance: 10%
IT: 30%
VC, Investments: 20%
Emerging Markets: 10%
Health: 0%
Social Responsibility: 10%
Entrepreneurs: 90%
Indepent Male Directors40%
Independent Female Directors20,0%
Executive Directors40,0%
Board Dynamics/Culture Matters!
Corporate Governance = Sector Related
Board Dynamics/Culture Matters!
Corporate Governance = Sector Related
What Can We Expect For the Future?
Board Dynamics/Culture Matters!
Scales back certain governance and disclosure requirements for five years
Longer phase-in periods for new or revised financial accounting standards
Exemption from requirement to hire an independent auditor to attest the internal
financial controls
Exemption from “say-on-pay” votes
Answers to the JOBS-Act
13%
It is time to re-direct corporate governance
discussions & research!!!
Thank [email protected]