You are the CEO of a large organization. Say there’s a decision (we will call it decision #1) on which you cannot fail, i.e. if you don’t deliver on it, then you are losing your job, period. Your current board of directors is aligned with you and wants to pass decision #1 as well. However, you also have to deal with a group of activist shareholders who don’t necessarily see decision #1 as key but insist on passing another decision (decision #2). To make matters a bit more complicated, in a few months, the group of activist shareholders may have an opportunity to join the board and even take control of it. Approvals on any decision have to be approved by the board first and then ratified by all the shareholders in a full shareholder vote. Finally, every year you, the board and the shareholders have to agree on employee payroll, short of that, employees don’t get paid (you are always getting paid, however).
Knowing that decision #1 will be voted by the board, it seems logical that there is a win/win for all parties. The deal would be to insist on decision #1 being voted by the shareholders if you accept to implement decision #2. Your current board is also aligned with this.
Situation 1:
You do the “decision #1 for decision #2" deal. This was an easy deal, as the zone for an agreement existed in plain sight. You did your job. You are a stud. End of story.
Situation 2:
You don’t suggest the “decision #1 for decision #2” deal to your board or shareholders. You don’t move at all and miss an opportunity to show everyone, including your employees that you know how to make deals. That’s mistake #1.
The shareholders (that are not on the board) then decide to react and go see the board and signal they would vote on decision #1 if the board approves decision #2. The board thinks it makes sense and takes it upon itself to present the win/win deal to you, the CEO. They do, but you decline. Your rationale is that you can get 1 without giving in on 2, even though you know that the board may change soon and if so would not vote positively on decision #1. That’s mistake #2.
Time passes, there’s no deal on decision #1 or decision #2, and unfortunately for you, the group of activist shareholders were able to join the board and even take control of it. Your position has worsened! However, there is a glimmer of hope, as the board reshuffle is not taking place for another month. Are you seizing that opportunity and put back the “decision #1 for decision #2” deal on the table now, even if you might not be able to get decision #1 all the way? You should, in fact, you must, since your alternative to a no-deal will become horrible in a month. But you don’t. That’s mistake #3.
In fact, you approach the activist shareholders at a public shareholder meeting and threaten them that if they don’t give you 100% of decision 1 ASAP, then you will vote no on the payroll for employees in 2 weeks, and in fact, you would be happy to do so. That’s mistake #4. Why is this your biggest mistake? The optics of voting no on employee payroll are obviously awful, but worse, why would the activist shareholders play ball now, when they know they will have more leverage in just 1 month? In fact, you would have been better off just not putting the payroll on the negotiation table. Indeed, you now have to vote no on the payroll, which you do. Employees are not getting paid and are mad at you, your current board is disappointed, and the activist shareholders are now waiting for the board reshuffle to get a better deal than they could have hoped for just a few months ago. It’s a mess. You should be fired!
You have guessed it. Decision 1 is a $40B budget for a wall on the southern border. Decision 2 is the protection from deportation and creation of a path to citizenship for the DACA dreamers. Your current board is the GOP. The activist shareholders are the Dems. And the CEO is Trump, the guy who wrote the art of the deal.
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