93. Subsidiary governance

SCRIPT There are SOOOO MANY subsidiary corporations out there. And they can come in all kinds of wacky flavours – not-for-profit subsidiaries of for-profit corporations, for-profit subsidiaries of not-for-profit corporations, publicly-listed subsidiaries of privately-owned companies, and so on… Even though corporate governance has been a household term – so to speak – for a few decades, subsidiary governance gets basically no attention at all. There are some experts out there for sure, but they’re usually governance professionals inside huge complex multinationals with, like, a million subsidiaries. In other words, they might be too smart by half to be helpful to a run-of-the-mill subsidiary. With most subs, it feels like you have to go back to the absolute basics, like “should we just have the same directors on the parent and subsidiary boards?” and if not, “do we want independent directors?” “Do we want to split the chair and CEO positions?” and if the boards ARE in fact the same “should we even hold separate parent and subsidiary board meetings?” We’ve talked already about the complexity of taking a multi-stakeholder view of governance, and it’s an even trickier question if your company is mostly or entirely owned by another corporation. Trickier still if the PURPOSE of your corporation is fundamentally different from your parent or shareholder. I have no overarching point or provocative question here. I’m mostly saying that subsidiary governance is a weird and wonderful under-explored frontier.