In the October 2025 Private Company Director “CEO’s Letter” column, Bill Rock made a compelling case that “shareholder clarity creates lasting value.” He argued that a board cannot govern effectively if it is forced to guess what the owners want. Whether the goal is generational preservation, specific liquidity thresholds or aggressive EBITDA growth, shareholder objectives must be the “North Star” of the private boardroom.
But as any veteran director knows, clarity is only the beginning of the journey. Once the shareholders have defined the “what,” management must propose the “how,” and the board must ratify that plan and track its progress. It is in the tracking — the moment where the theory of strategy meets the reality of results — where we often find ourselves echoing William Shakespeare’s warning in All’s Well That Ends Well:”Oft expectation fails, and most oft there where most it promises.”
In the private company world, the “promise” is that our lack of public-market quarterly pressure allows us to stay focused on the long term. The “failure” occurs when that lack of pressure turns into a lack of accountability, and a “comfy miss” becomes the standard operating procedure.
The Three-Way Hand-off
To avoid the Shakespearean trap of failed expectations, we must be disciplined about the “hand-off” among three distinct roles:
The shareholders set the objectives (the “what”). They define the destination.
Management sets the strategy and tactics (the “how”). It is management’s job to propose the path to that destination.
The board ratifies and tracks (the “So what?”). The board acts as the fiduciary architect. They ensure management’s strategy aligns with the shareholders’ objectives.
Defining the Bar of “High Performance”
Before a board can ask the “So what?” question, they must first agree on what “high performance” actually looks like. Bill Rock often poses the question, “How do we define high performance in a private company?”
While public markets prioritize simple total shareholder return, private firms require a more disciplined, mandate-driven definition: High performance is executing a plan that delivers exactly what shareholders expect, when they expect it and without taking more risk than they’ve authorized.
Breaking down this definition reveals the four essential pillars of a high-functioning private firm:
- Execute the plan. High-performing organizations translate business strategy into concrete operational plans and results. The board’s role is to ensure these plans are competitive and properly resourced.
- Deliver the objectives. This requires deep engagement to uncover what owners truly want, whether it is maximizing profits, increasing dividends or preserving a multigenerational legacy. Success is defined by meeting these primary interests.
- Respect the timeline. Performance is tied to the owners’ specific investment timeline, such as preparing for a sale, transitioning to the next generation or achieving growth milestones within a set period.
- Manage the risk. This centers on risk appetite— the level of risk an organization is prepared to accept to achieve value. High performance involves operating within pre-established thresholds, ensuring leadership does not gamble with stability beyond what the shareholders have agreed to.
The Havoc of the Sacred Cow
Beyond strategy lies the cultural obstacle of the “sacred cow.” These are the legacy products, outdated processes or “untouchable” personnel preserved simply because of their historical or emotional connection to the owners or founders.
These legacy assets and roles do more than just consume cash. They wreak havoc on the organization’s planning and direction. When a sacred cow is allowed to bypass the standard rules of performance, it creates a “shadow strategy” that contradicts the official one. This inconsistency poisons the internal culture, signaling to the rest of the company that shareholder objectives are secondary to personal sentiment. When a board refuses to audit these “un-discussables,” it is choosing internal harmony over its fiduciary duty to deliver results.
Diagnosing “Corporate High Blood Pressure”
When strategy and tactics are disconnected from ultimate objectives, the organization can develop a state of corporate high blood pressure. This is a condition where the organization is burning energy and capital, yet failing to convert that effort into sales velocity, improved margins or sustainable cash flow. It is characterized by intense internal activity — busyness for its own sake — that fails to result in overall profitability because the work is being applied to the wrong levers. Underperformance of this type is a systemic rot that becomes the baseline for the organization, eventually hollowing out the company’s competitive position.
The Rot of the “Comfy Miss”
The breakdown usually happens in the “tracking” phase. When a company misses a shareholder objective, the board often accepts well-reasoned explanations, such as citing market headwinds or the heavy front-loaded costs of digital transformation. While these may be valid, the board’s duty is to determine when a “reason” becomes an “excuse.”
When a miss is allowed to linger without consequence, the damage is profound:
- The incentive paradox. The 2025 Private Company Board Compensation Survey, from Private Company Director and Compensation Advisory Partners, shows that 37% of boards now receive long-term incentives (LTIs). However, the even more significant shift is in management LTIs, which are increasingly utilized in private firms to drive performance. If these plans are tied to objectives that are consistently missed, the “wealth creation” promise evaporates.
- The flight of the A-player. High performers thrive in environments of accountability. Research from Deloitte Private’s inaugural “Global Family Business Insights Series,” released in October 2025, suggests that “A-players” are the first to leave when they perceive a tolerance for low performance at the top, especially when their own financial upside is obliterated by systemic strategic misses.
- The valuation decay. Chronic underperformance is a slow-motion destruction of wealth. By the time shareholders realize the “promise” isn’t being kept, the company may have lost the market position it spent decades building.
Who Asks the “So What?”
In privately held companies, we must be clear-eyed about the reality of power: The controlling shareholders make the hiring and firing decisions for the CEO, the board and often key members of the leadership team. However, this doesn’t absolve the board. If management consistently misses shareholder objectives, the board’s role is to act as the “early warning system.” We are seeing a professionalized private boardroom where directors are increasingly willing to reject an annual plan that is structurally incapable of reaching the destination defined by the shareholders’ primary goals.
Beyond the Shrug
Bill Rock’s call for clarity regarding shareholder objectives is the foundational prerequisite for any functional governance framework. But clarity regarding the owners’ vision is merely a wish list if it is not backed by a rigorous mechanism for accountability. Boards must move beyond the “polite shrug” at the end of a missed quarter or year.
We must be willing to warn the shareholders when the “promise” is at risk. If the answer to a collection of missed objectives is always “we’ll try harder next year,” then we aren’t a board; we’ve abandoned our role as fiduciaries in favor of being comfortable observers — witnesses to the slow erosion of the very value we were seated to protect.
The “So What?” Diagnostic
If your board is trapped in a cycle of “comfy misses,” use these five questions to break the silence:
- The definition check. Do the shareholders, board and CEO share a written definition of “high performance” based on expectation, timeline and risk?
- The culture check. Are bad habits becoming the internal standard? (Look for a steady decline in sales paired with high overhead, an unquestioned creep in fixed costs or a shift toward seniority-based promotions over actual merit. When turnover starts rising throughout the company, it’s often a sign that high performers no longer believe the “promise” is being kept.)
- The sacred cow audit. What are the “un-discussables” in our boardroom? Are we protecting a legacy department or an underperforming leader at the expense of shareholder value?
- The incentive alignment. Are we paying out bonuses for “effort” while management’s LTIs are being obliterated by missed primary growth or liquidity objectives?
- The strategy rejection. When was the last time this board sent a management plan back to the drawing board?