William P. Lauder (left), executive chairman of The Estée Lauder Companies, discusses corporate governance issues with UD's Charles Elson. (Image Source: University of Delaware)
8:55 a.m., Nov. 4, 2013--When Estée Lauder founded her business in the mid-1940s, it was all in the family; the company sold cosmetic and beauty products directly to salons and hotels.
Fast forward five decades and her children and grandchildren took over the family business. But when they decided to open it to public investors, one of the first things they had to do was address the corporate governance.
“By going public we accomplished a couple things long term,” said William P. Lauder, executive chairman of The Estée Lauder Companies. “First of all we cleaned up the internal corporate governance structure. No longer were board meetings also known as Thanksgiving dinner.”
They also grew the company with attention to public investors, but were careful to maintain a long-term attitude toward investing.
“We needed to learn how to manage in this environment,” said Lauder. “Our management team was really expert at our business but not this one aspect.
Avoiding “fashion” of the moment investment decisions based on a short-term focus was one of the key drivers for the family in deciding upon a dual class structure, said Lauder, or one in which the public has shares with less voting power.
To shed light on how such a controlled structure can influence the board and governance of a company, Lauder fielded questions from Charles Elson, director of the John L. Weinberg Center for Corporate Governance, during a Distinguished Speakers Series event held Tuesday, Oct. 22, on the University of Delaware’s campus in Newark.
“Because of its sunset provisions, among dual class structured companies, The Estée Lauder Companies is one of the best," said Elson, “so the question becomes how does the governance structure play in to this highly successful operation?”
Read the rest of the article
at The University of
Delaware's website.
William Lauder is
The Estee Lauder Companies' chief strategist. He is in charge of expanding the
Company's international exposure and maintaining ELC's status as one of the
leading beauty and fashion conglomerates worldwide. Check out this blog to learn more about ELC's leader and how he has
managed to keep the company on top.
