Journals 2016 and before
Journal 270
December 2016
Featured Articles:
- Strategic Reports: room for improvement
- The board’s role in determining culture
‘The FRC published its Guidance on the Strategic Report in 2014. Given the ambition of the Guidance, it’s understandable that practice is still evolving to meet it. It takes time for companies to develop performance measures that can be reported externally. Those that don’t may find their investors are asking whether their strategic priorities really are embedded in the business.’
Matt Chapman
‘There was broad agreement on the importance of culture and the increasing and deliberate board emphasis placed upon it. But what was striking to us was the breadth of opinion and practice reflected in the views of our respondents, suggesting that there is still some way to go before the Board’s role in this area is fully established.’
Oliver Ziehn
Journal 269
November 2016
Featured Articles:
- Viability assessments: is practice living up to expectations?
- Proxy Season Review
‘The most insightful stress testing disclosures describe the specific stresses that the board considered rather than simply outlining the process it had followed. Similarly, specific descriptions of the mitigating actions considered in stressed scenarios, are preferable to the general statement that mitigating actions have been assessed that many companies make.’
Matt Chapman and Tim Copnell
‘Many companies are realising the advantages of engaging with shareholders in advance of meetings, but investors want qualitative, two-way discussions on remuneration, board composition and other governance related matters, not just a presentation of what to expect at the AGM.’
Cas Sydorowitz
Journal 268
October 2016
‘… short holding periods don’t imply short horizons. Even in 20 months (far from a flash of time), hedge funds can make improvements with long-lasting impact, similar to a consultant or turnaround specialist hired for a few months. Their short holding periods give them a sense of urgency, and the option to exit gives them teeth that can overcome managerial entrenchment.’
Professor Alex Edmans
‘Board committees are all too often working in silos and thus providing only limited support to corporate boards in plenary. The remedy does not need to be very complicated. In essence we are talking about opening up the lines of communication and recognising that expert input is important but it is even more important that expert questions are considered in a broad business context.’
Carl Sjostrom and Hans-Kristian Bryn
Journal 267
September 2016
‘Successful companies prioritise their self-interest (defined as all the capitals – human, intellectual, financial, natural, produced and social) in a way that contributes to their strength, resilience and ultimate longevity as a sovereign legal entity.’
Peter Tunjic
‘Most metrics are by themselves too one-dimensional and not aligned with the company’s risk appetite. Single measures such as Total Shareholder Return, Growth and Earnings per Share do not reflect the underlying risk profile nor do they necessarily reflect the long-term quality of the decisions that get made (and hence the quality of the earnings and cashflow).’
Hans-Kristian Bryn and Carl Sjostrom
Journal 266
August 2016
‘We asked our respondents what they consider to be the top three requirements for an effective board. We did not define “effective” but chose to leave the interpretation to the respondents. It is no surprise that experience, diversity and knowledge came at the top of the rankings; but it is interesting that transparency, commitment to the organisation and leadership also feature prominently.’
Tracy Gordon
‘It is therefore encouraging that many respondents’ companies back their values when a bribery risk is identified: there is no better way to demonstrate that bribery is unacceptable than rejecting a business opportunity or cutting ties with certain customers because of bribery concerns. In fact, 90 per cent of companies surveyed would reject a future business opportunity if there was an unacceptable bribery or corruption risk associated with it, and 72 per cent of businesses had already done so.’
Neill Blundell
Journal 265
July 2016
Featured Articles:
- Why organisations cannot thrive without purpose
- Cyber-security and boards
‘None of these solutions is easy to implement. Reorienting companies away from the decades-old focus on short-run profit towards purpose is a huge challenge. But it must not be shied away from – and conquering it is key not only for firms, but also for the success of the economy as a whole. Because the evidence is clear: To reach the land of profit, follow the road of purpose.’
Alex Edmans
‘What emerged from our research revealed something of fundamental importance. Because the most important criterion for an organisation to feel well-protected is not the size of the budget allocated to security or the specific technical strategy adopted but good governance and oversight. More specifically, a larger budget does not increase confidence. It is board buy-in that appears to be key to making a CIO feel confident about security.’
Vicky Maxwell Davies
Journal 264
June 2016
‘Much of the best practice guidance for Programme Boards has evolved from, and built on the disciplines of, project management and there are well established bodies of knowledge to draw on. But these tend to focus on ways of managing risk and controlling change in the delivery of the content of the programme – rather than the qualities and effectiveness of the board that is in charge of that delivery.’
Alex Cameron and David Archer
‘The investment managers and operating partners only start to step in if anything does not go to plan and key performance indicators clearly signal that the value creation process is behind the plan. This practice results in the fact that a disproportionate amount of time is spent on companies that are not performing.’
Dr Sabine Dembkowski
Journal 263
May 2016
‘Yet it is dependency on numerical measures for everything that caused reliance on ratings, built supply chains with little or lost liability and made a culture that can’t see beyond transactions – where risk is not something to be understood, just something to hedge.’
Baroness Bowles of Berkhamsted
‘In many [corporate governance failures] the ensuing investigations revealed that the corporation’s problems were not simply due to breakdowns in governance processes. Instead, they were symptoms of more deep-seated issues related to culture and dysfunctional dynamics in the boardroom which then contaminated the wider organisation.’
Judith Nicol
‘The best corporate reports go well beyond dry recitations of numbers and puffed-up executive pronouncements. They provide a window through which stakeholders can view the true workings of the business – its strategies, governance, the capabilities of its leaders, its past successes and failures and its vision for the future. They offer an opportunity to tell their company’s story with authority and credibility.’
Will Moynahan and Sacha Sadan
‘In my view, the human element is the common thread that links the remaining governance challenges, whether it be issues of individual behaviour or organisational culture. And that is why some of the tools we have relied on to make progress to date may be of limited use.’
Chris Hodge
Journal 261
March 2016
‘Corporate culture is more than something intangible, warm and fuzzy – it is accountability’s younger sister. It is hard data such as a company’s ability and willingness to link performance and remuneration, strategy and KPIs, report back on progress against targets, set future priorities, and its long-term thinking and planning, as well as its risk appetite.’
Anne Kirkeby, Black Sun plc
‘Given that management is the key enabler and driver of value creation it is quite surprising how little effort is presently put into the systematic development of executive boards. Should this not be one of the key tasks of chairmen and actually one they are measured on?’
Dr Sabine Dembkowski, Better Boards
Journal 260
February 2016
‘Audit quality is enhanced by a fully engaged audit committee. Set the tone and clear expectations for the external auditor, and monitor auditor performance through frequent, quality communications and a robust performance assessment.’
Timothy Copnell, UK Audit Committee Institute and KPMG LLP
‘I would like to suggest that the failure which so spectacularly manifested an aspect of itself in the Great Financial Crises of 2008 was a failure of governance, that this failure still exists at the heart of our free market system, and that it continues to be the main source of the main problem manifesting itself in a variety of ways …’
Saker Nusseibeh, CEO, Hermes Investment Management
Journal 259
January 2016
‘… instead of burying their heads and pretending their organisations are immune to scandal, boards must understand they are not only accountable for the effective running of their businesses, they’re ultimately culpable when things go wrong. They need greater visibility of what is happening at every level across their organisations and a robust means of holding senior executives to account.’
Alister Esam is the Managing Director and Founder of BoardPacks
‘Being resilient requires a solid cyber-security blueprint – but where should boards begin? For starters at the board level, cyber threats should be managed as an enterprise risk issue, not a technical issue. While in the short-term this will likely require some education, maybe even the appointment of a specialist, non-executive cyber director, it does not necessitate deep technical skill.’
Erin Nealy Cox is an executive managing director at Stroz Friedberg
Journal 258
December 2015
‘In practice it may be found that controls may make it harder for people to innovate, take personal responsibility or exercise common sense. The need for accountability might help qualities such as trust but it could also harm them. Boards must also ensure a suitable balance is struck between the desire for profit and the desire to avoid risk. In competitive sectors success depends on innovation but innovation is not possible without risk.’
Paul Moxey
‘In preparation for future campaigns, many activist investors are coming to London to engage in “Listening Campaigns” with many of the long-only, household name investors. Clearly the activist will have their own views on their specific target but instead of launching into their own discourse, they are more interested in hearing what other shareholders in the target view the company in question.’
Cas Sydorowitz
Journal 257
November 2015
‘Has corporate governance become a process of compliance with standard and external approaches, codes and models that seem detached from the practical process of business building and satisfying stakeholder interests? Some boards delegate the observance of codes – or doing just enough to justify ticking a box – to a corporate legal or company secretarial team, rather than think about better ways of operating, or how a board might add more value.’
Professor Colin Coulson-Thomas
‘The role leading institutional investors choose to play in the governance of listed companies in which they invest is principally driven by the nature and size of their holdings, significantly affected by diversification, and resourcing required for various stewardship activities at home and abroad. As such, it is ultimately a costs-benefits analysis, which also involves forming a view on the potential for free-riding.’
Dr Hans-Christoph Hirt
Journal 256
October 2015
Featured Articles:
- Corporate governance and small islands
- Improving the quality of reporting
‘In the last five years many islands have developed Corporate Governance Codes …. Many of these islands have learnt lessons from the OECD countries which have well-established Codes and so these new Codes have leapfrogged to the forefront of governance innovation. Examples include the Mauritian Code of Corporate Governance that contains guidelines for different sectors, scorecards, and international benchmarked data.’
Dr Chris Pierce, Director of Education, Caribbean Corporate Governance Institute and CEO of Global Governance Services Ltd
‘Because smaller companies often struggle to attract a good level of analyst research, the annual report and accounts may present itself as the one genuine opportunity in each year for those companies to deliver good and clear messages to investors. Such opportunities should not be squandered.’
Edward Craft, Chairman, and Colin Jones, Deputy Chairman, of the Corporate Governance Expert Group of the Quoted Companies Alliance
Journal 255
September 2015
Featured Articles:
- Ireland – a ten-year governance journey
- CG statements: A case for change
‘In 2015, Ireland has two legacies of its recession caused by poor governance to carry into the future – the first is a very large national debt to work through for many years to come – the second is a widespread awareness of what good governance means, and its value, not just in the corporate world, but across society as a whole.’
Alan McDonnell, Principal, Good Governance Solutions
‘At present the rules fail investors and other stakeholders by not mandating greater transparency in relation to the senior executive body – at a time when boards are drifting further towards a purely supervisory role – leaving the reader with an increasingly incomplete picture. For UK plc to retain its reputation as offering the gold standard in governance, a new approach is needed … The extension of the corporate governance discipline to the senior executive body is not a radical expansion of the UK governance model, but an essential means of achieving its central purpose.’
Haydn Main, Head of Legal, EMEA, Renaissance Capital
Journal 254
August 2015
‘Yet this is not just about strengthening compliance. Ideally a company should strive towards a strong culture in which compliance comes naturally. In a customer services business, for example, the ideal culture is one where people provide a great service because that is the culture of the organisation, not because they are complying with policies that tell them to do so. Looked at this way, a strong culture can help a company deliver success.’
Peter Montagnon, Associate Director, Institute of Business Ethics
‘The issues of linkage and placement are tied up with the place of the Strategic Report within the Annual Report, which will also include, for listed companies, the Directors’ Remuneration Report, the Directors’ Report … and the Corporate Governance Statement … in addition to the financial statements and now lengthy auditors’ report. This is frankly all rather messy, and inevitably makes for a long read – difficult in the short period immediately preceding a company’s AGM. It may also detract from the Strategic Report’s intended status as the “top layer” of information for shareholders’.
Mark Cardale, Independent Governance Consultant and Author
Journal 253
July 2015
‘Constructive dialogue between investors and companies helps business leaders be the best they can be. Understanding investor views and concerns helps boards and management make better informed decisions. They are still free to make an apparently contrary decision when they believe that the outcome would best serve the interests of the company. And, more often than not, clearly articulated investors’ views and questions will influence company leaders’ thinking, particularly if they reflect a growing consensus.’
Larry Fink, Chairman and CEO, BlackRock
‘The key findings of this study illustrate how high-performing company secretaries ultimately help build trust, which results in good governance. Many company secretaries acknowledge that their individual discretion, freedom of choice, personal morals and ethics are important in positively impacting corporate judgement.’
Professor Andrew Kakabadse et al, Henley Business School
‘So translating technological advancements into business benefits is now a fundamental plank of strategy for pretty much any large customer-facing business. Like it or not, they are now technology companies, and that means that they require leadership teams with a deep understanding of what this entails.’
Dona Roche-Tarry, Managing Partner, European Board Services, CTPartners
‘Ownership needs to expand its agenda for the future. In the globalized world of commerce, effective and legitimate corporate functioning will require leadership from the business community and co-operation from governments.’
Robert AG Monks, Chairman, ValueEdge Advisors
Journal 251
May 2015
Featured Articles:
- Differential ownership rights
- Has the time of ‘behavioural governance’ come?
‘These guidance statements outline the importance of investors making effective use of voting rights at shareholder meetings, and to engage intelligently and pro-actively with investee companies on strategy, corporate governance and both financial and non-financial risks related to long-term performance. This in recognition of the fact that both companies and shareholders have a mutual interest in protecting and generating sustainable corporate value over the long term.’
International Corporate Governance Network
‘It’s important to stress that the factors described affect all participants in the corporate governance eco-system – regulators, academics and commentators are not exempt from bounded rationality, satisficing behaviour, heuristics, politics, making ethical judgements or the framing of issues in terms of the cultures into which they are entered. To enhance corporate governance beyond compliance a behavioural approach will be required from all.’
Christopher Bennett
Journal 250
April 2015
Featured Articles:
- Getting companies to invest long-term
- One evaluation framework for all boards?
‘… unlike a factory which is easily visible to investors, the fruits of intangible investment take several years to appear. Thus, a manager pressured to maximize short-term earnings may underinvest in his company’s future. This problem of “managerial myopia” is well-known, but proposed solutions are typically piecemeal. Instead, the problem is holistic – it depends on how managers are paid, how shareholders evaluate companies, and how regulators mandate corporate disclosure.’
Alex Edmans, finance professor at London Business School and Wharton
‘To explore the differences and similarities between sectors when it comes to board improvement we recently conducted a survey of over 100 board members and then brought invited guests together to discuss the results. … The headlines were pretty clear, whilst boards in the charity and public sector will have a different mission to a PLC board when it comes to their own operation: the setting of priorities, the way they make decisions, getting access to the right skills, and critically how they view their own performance improvement, there were far more similarities than differences.’
Alex Cameron and David Archer, Directors, Socia
‘Achieving good corporate governance undoubtedly requires an appropriate regulatory and legal framework and a sound knowledge of it. However, as long as organisations are run by human beings, those in positions of influence in organisations and those responsible for regulations will need to have a good understanding of behaviour and the factors that impact it.’
Christopher Bennett
‘… by requesting that risks be filtered and prioritised strategically, assessed and drilled down factually and rigorously to their true meaningful sources, and monitored at the source through risk appetite statements established on objective and measurable leading key risk indicators, directors can rest assured that they add value and enhance performance by focusing the board’s attention on the right risks and the right trends.’
Ghislain Giroux Dufort and Denis Lavoie
Journal 248
February 2015
Featured Articles:
- Creating an effective board with the right skills
- Does social responsibility improve corporate value?
‘Creating a board with a good balance of skills is one thing; ensuring it operates effectively is quite another challenge. An effective board must have the emotional intelligence to engage well with the business to determine whether the vision is working.’
Eddie Kilkelly, Managing Director, insynergi
‘Most studies find a positive correlation between CSR and measures of firm performance, such as profits. However, correlation doesn’t imply causation. It may not be that CSR causes a firm to perform better, but instead that firm performance causes CSR – only firms that are performing well can afford to spend money on its other stakeholders.’
Alex Edmans, Finance professor at London Business School and Wharton
Journal 247
January 2015
‘The ideal is a balance between innovation and risk; integrating the board’s thinking about “old” and “new”. Boards may wish to seek a mix of skills which will both agitate for change and engage with the core IT issues of legacy constraints, quality of service, data integration and cyber risk.’
Dr Stephen Page
‘It takes time to develop a new culture which needs to be accepted by all involved. We all know that senior leaders should live and breathe the values, and all processes and policies must reinforce them. Boards will need to put more time into their oversight of key elements such as the review of individual behaviours during the performance management process – “how” I have done my job as well as “what have I done”.’
Louise Redmond
Journal 246
December 2014
‘There are of course good reasons for SWFs to stay away from shareholder activism that is typically carried out by short-term and event-focused hedge funds. These include, but are not limited to, potential political sensitivities and regulation that is specifically targeted at SWFs. However, it seems difficult to defend a complete hands-off approach of SWFs in relation to the governance of companies in which they invest.’
Dr Hans-Christoph Hirt, Executive Director, Hermes Equity Ownership Services
‘A code of practice is not about creating a one-size-fits-all approach, or re-writing the rules to add another reporting requirement for companies, but to ensure that the purpose of [board] reviews is more in equilibrium between investors and companies rather than tilted towards management. Transparency with regards to the methodology undertaken is fundamental to this, albeit recognising that sensitivity around some issues may prevent full public disclosure.’
Sacha Sadan, Corporate Governance Director, LGIM
Journal 245
November 2014
‘… in years in which the CEO has significant equity vesting, he cuts investment in many forms – R&D, advertising, and capital expenditure. Moreover, in these years, he’s more likely to exactly meet or just beat analyst earnings’ forecasts – if the forecast is $1.27 per share, he reports earnings of $1.27 or $1.28. Indeed, the magnitude of the investment cuts is just enough to allow the CEO to meet the target. Thus, vesting equity induces the CEO to act myopically – to cut investment to meet short-term targets.’
Alex Edmans, Finance Professor, London Business School and Wharton
‘Stakeholders can be expected to have views that are contrary to those of management. In this way directors can not only cross check management reports on the known knowns, but also obtain different views on the known unknowns and expose themselves to becoming aware of the unknown unknowns. This is not possible in command and control hierarchies where contrary behaviour or views may not be tolerated.’
Dr Shann Turnbull, Principle, International Institute for Self-Governance.
Journal 244
October 2014
‘Quotas make numerical change happen. The law needs the market and the market needs a “nudge” from the law. The final aim is the quality of boards, the contribution boards add to the management of a company and their ability to create sustainable value for the stakeholders. Only a sincere and mature engagement of the market can ensure that the numerical change develops into value for stakeholders.’
Livia Amidani Aliberti, founder, Aliberti Governance Advisors
‘The scale of economic development is now so complex, significant and fast – even furious – that the region needs to embrace governance good practice with a heightened sense of urgency and commitment. No-one in the Gulf wants to see repeated the corporate collapses and value destruction which became the hallmark of the western economies during the financial crisis.’
Seamus Gillen, director of ValueAlpha
Journal 243
September 2014
‘What companies do in the next two years could impact on the whole of their procurement of both audit and non-audit services after 2016. Put simply, who a company uses now for a professional service in a subsidiary may affect who may audit them in, say, 2018.’
David Young and Lawrence Reed, Senior Advisors, Independent Audit Ltd
‘Many boards acknowledge the importance of a healthy corporate culture, both because of the role this plays in mitigating risk and because of the value to their franchise of a sound reputation. A healthy culture also reduces politics inside the company and makes for more engaged employees. Yet there is often a temptation to see embedding culture as largely a compliance exercise, whereas values actually go to the heart of what a business is and how it works.’
Peter Montagnon, Associate Director, Institute of Business Ethics
Journal 242
August 2014
‘While a European supervisory board separates some governance powers from those of management the conflicts remain because the management board is accountable to the governing supervisory board rather than being separately elected and accountable to shareholders.’
Dr Shann Turnbull, Principal, International Institute for Self-Governance
‘The most enlightened boards use the process to address sometimes longstanding issues or topics where an outside perspective is valuable, eg succession. In fact, some boards are using external evaluation more regularly than required by the Code.’
Alex Cameron, Director, Socia
‘Behavioural and organisational risks are important causes of reputational damage and of many well-recognised risks. However, boards cannot properly report until they have systematically identified and evaluated both the range of behavioural and organisational risks at work in the company and the extent to which they may give rise to principal risks including reputational hazard.’
Anthony Fitzsimmons, Chairman, Reputability LLP
‘Unless directors take the initiative to engage with investors, they are woefully unequipped to determine how aligned or unaligned they are with their investors. When issues go unaddressed, investor discontent escalates and results in either contentious engagement or a battle to throw out seated directors.’
Cheryl Gustitus
‘These reforms will go a long way to address investors’ concerns. However, there are fears that the flexibility afforded to mandatory rotation could adversely impact audit quality … allowing Member States options to either extend the mandatory rotation period or indeed shorten it, could create a patchwork of different regimes with companies using different auditors in different parts of the globe.’
Liz Murrall, Director of Corporate Governance and Reporting, Investment Management Association
‘Contrary to popular belief, Japanese shareholder rights are actually very strong, but we feel that seeking to assert those rights to impose change is not as productive or conducive to long-term value as working with the management to get better results.’
Ken Kobayashi, Director of Investment, TMAM-GO Japan Engagement Fund
Journal 239
May 2014
Featured Articles:
- The board’s strategic succession imperative
- Materiality – a new era of transparency and scrutiny
‘… succession needs a 20-year horizon not the limited three- to five-year horizon that spans a typical CEO’s tenure. Interestingly, organisations that have focused in depth on such matters have had long-standing CEO’s, stellar performance and a clear and deeper focus on their talent, providing both formal development, stretch assignments and exposure to the board.’
Helen Pitcher, Chairman, Advanced Boardroom Excellence
‘Crucially the new audit report disclosure means that investors and all other stakeholders will be able to make comparisons with levels at other similar companies in similar sectors. If it proves that levels which might be expected to be similar vary significantly then it should raise questions and prompt audit committees to seek justifications.’
Lawrence Reed, Senior Adviser, Independent Audit
Journal 238
April 2014
‘Our research suggests that some CEOs feel that non-execs have a tendency to use compliance as a personal safety net rather than as a means of maintaining best practice. There is a sense that while non-execs’ first duty is to the shareholders, they are sometimes perceived to be concerned principally in their own self-preservation.’
Dennis Kerslake, Mentor, Merryck & Co
‘In the executive group, CEOs need to bring options to a board with a genuine desire for more non-exec input to the decision, not just a fait accompli to be rubber stamped. There is nothing more frustrating or likely to damage relationships within a board as a group of non-execs who think that they are being manipulated or bounced into a decision.’
Julie Baddely, Chairman, Harvey Nash; SID, Greggs; Chairman, Sustain
Journal 237
March 2014
‘In some cases factories and depots have been closed down for more than a year, others have been forced to relocate due to the level of contamination. Sadly, in many cases the sheer weight of the financial fines, remuneration costs and inadequate insurance cover mean that the closures are permanent.’
Brian Back, Chairman, Environmental Innovations Ltd and Managing Director, Radio Data Networks Ltd
There has been a real focus on revisiting roles, responsibilities and process for the year-end reporting process. Preparers are also changing the content they put in front of the board. And boards are getting involved much earlier so that there’s more time for reflection, challenge and amendment.’
Elaine Forrest, Corporate Reporting Specialist, PwC
Journal 236
February 2014
‘Disclosure of ESG data has the potential to help address systemic challenges such as trust in corporations and the financial markets, the realisation of social justice, the achievement of environmental sustainability, and the efficient allocation of assets.’
Steve Lydenberg, partner in Strategic Vision, Domini Social Investments
‘As “universal owners,” we institutional investors are part of a constituency whose interests are most tightly aligned with stable and growing markets and well-governed institutions … Therefore, it’s critical that institutional investors participate as active owners of their portfolio companies, using their influence and their leverage to promote good corporate governance and effective functioning markets.’
Roger W Ferguson Jr is President and CEO of TIAA-CREF
Journal 235
January 2014
‘Recognising true board effectiveness is not just a matter of governance, important though that is, but of addressing boardroom behaviour at an individual and collective level.’
Helen Pitcher, Chairman, Advanced Boardroom Excellence
'Whilst much of the media comment on the EU proposals has been on NASs and auditor tenure, the draft legislation also includes other important provisions, including matters relating to competent authorities and auditor oversight and the reporting by the auditor to the relevant authorities of suspected irregularities with regard to the financial statements.'
Tim Copnell, Associate Partner, Audit Committee Institute, KPMG LLP (UK)
Journal 234
December 2013
‘Being on a board requires an understanding of your accountability. You have to know what’s expected of you, and to have something to offer. As a non-executive, you have to realise that what is advertised as a 30-day a year commitment can easily become an every-day responsibility if for example an acquisition is undertaken or some crisis happens.’
Sir Simon Robertson, Deputy Chairman and Senior Independent Director, HSBC Holdings plc
‘The [working group’s] conclusions were a very clear assertion of the value of a long-term, principled approach where, in the words of the Chairman, [James Anderson] investors “… must be consistently engaged rather than occasionally outraged”.’
Daniel Godfrey, CEO, Investment Management Association
Journal 233
November 2013
‘Corporate governance can act as a voice of sanity: we want companies to succeed – indeed, we have a duty on behalf of our clients to help companies be the best they can – and help now comes in many forms.’
Sacha Sadan, Corporate Governance Director, LGIM
‘Quite simply, the ability of the chair to lead in governance, as the CEO must lead in management, is a major determinant to the health of the board, its ability to partner with management, and the stewardship of investors’ wealth.’
David Anderson, President, The Anderson Governance Group
Journal 232
October 2013
Featured Articles:
- Non-executive trends in the UK
- Governing and directing: are they different?
‘So boards are really behaving like committees, over-emphasising the monitoring side of their role without sufficient insight into what is happening in the company. We can mess about with the demographics and structures of the board all we want, but I am detecting no change to fundamental performance, contribution and value add.’
Peter Whitehead, Editor, Financial Times Non-Executive Directors’ Club
‘Best practice in corporate governance produces too many “governors” focused on protecting value and not enough directors focused on creating it. Public companies have become over governed and under directed because corporate governance regulation and education is designed to ensure the “correct” board structure, process and composition rather than ensure “imagination, creativity, or ethical behavior in guiding the destinies of corporate enterprise”.’
Peter Tunjic, independent corporate advocate and commercial lawyer
Journal 231
September 2013
‘As part of their continuing education, chairmen should arrange systematic education for the board in the behavioural and organisational weaknesses that regularly lie at the root of unexpected reputational crises and failures in apparently sound companies. Our experience is that this gives board members valuable new perspectives that can help them to avoid avoidable disasters.’
Anthony Fitzsimmons and Rob Haslam, Reputability LLP
‘Non-executives used to help executive directors rather than check up on them like private investigators. They looked outwards for opportunities rather than inwards for abuses.’
Professor Colin Coulson-Thomas
Journal 230
August 2013
‘… if challenge at board level may only occur behind the veil of total anonymity one can reasonably assume that the board is lacking in one of its core duties: productive challenge to the executive. Such “tone at the top” also bodes ill for the culture of the company as a whole. Anonymous slander might thrive more than responsible challenge at all executive levels.’
Stilpon Nestor, Managing Director and Senior Advisor, Nestor Advisors
‘… [another] source of value in director independence comes from the psychology of the directors themselves. Directors who are able to speak up, to offer opinions, raise objections and stand in the face of perceived pressure can fundamentally alter the dynamic and content of board deliberations.’
David W Anderson, President, The Anderson Governance Group
Journal 229
July 2013
‘Although the UK remains at the cutting edge of corporate governance best practice in Europe, this position is being challenged by Australia, which has taken a serious approach to the governance of remuneration in recent years.’
Sean O’Hare, Partner, Human Resources Services, PricewaterhouseCoopers
‘Without adherence to a well defined and disciplined process – following a sequence from issue definition through to solution analysis and decision formation – there is a fair chance the ultimate decision taken will be flawed.’
Alison Gill and James Bagge, Directors, Bvalco
Journal 228
June 2013
‘We do believe those companies that have engaged with investors on an average level have better outcomes in terms of the quality of the voting, perhaps because it allows an analyst to have a broader picture of the checks and balances systems in the market and in the company.’
Paola Gutierrez Velandía and David Sherzer Gea, Georgeson (Spain)
‘… we found that an astonishing 77 per cent of companies within the FTSE 100 have pay programmes … as a result of ‘me-too’ pay plans which bear little link to individual company goals, targets or business plans. This is akin to remuneration committees driving along the road by watching what other cars are doing, looking through the passenger windows, rather than concentrating on the road ahead.’
Simon Patterson, Managing Director, Patterson Associates
‘Board balance has shifted dramatically … Today, half of all FTSE 100 companies have only the chief executive and finance director as management members of the board. In the FTSE 250 index, about two-thirds of companies have only those two officers serving as directors.’
Kit Bingham, Partner and Head of the Chair & Non-Executive Director Practice, Odgers Berndtson
‘According to [Brazil’s] major custodian of foreign investors, approximately 30 per cent of all voting instructions received are made void because of expired proxies. Additionally, the lack of a stamp can be used as the reason to contest a specific shareholder – usually the one that wants to vote against the Board of Directors’ decisions.’
Mauro Rodrigues da Cunha, CEO, AMEC
Journal 226
April 2013
Featured Articles:
- Governance, risk and performance
- Cyber risk – how should boards respond?
‘The behaviour of directors, their understanding of human nature and how they react to the actions of others is vital for effective governance, risk management and sustained performance.’
Professor Colin Coulson-Thomas
‘IT has historically been seen as non-strategic and often distant from the core business of the board, only called to report occasionally when there is a large business case, programme delay or service failure. Boardrooms often lack the skills to understand, assess and act on the important strategic issues that lie beneath technology discussions.’
Dr Stephen Page
Journal 225
March 2013
‘As the research also highlights, regulatory requirements have impacted the time left available to debate important issues and hindered the ability of non-execs to perform their roles effectively. In particular, many non-execs complained that they no longer have the same scope for strategic input as they did in the past.’
Dona Roche-Tarry, Managing Partner, European Board Services, CTPartners
‘We have already seen that the longevity of even the best companies and organisations is declining and that their demise is not only due to their over-exposure to negative risks, but also to their underexposure to the right types and levels of risk.’
Ghislain Giroux Dufort, President, Baldwin Risk Strategies Inc
Journal 224
February 2013
Featured Articles:
- Statutory audits – a divergence in views
- An abuse of the Stewardship Code?
‘The constant trade-off between audit price and quality will continue to be very finely balanced and shareholders will increasingly voice opinions. Overall, the current divergence in views between FDs and ACCs appears to reflect their different roles and priorities and be a useful counter-balance ensuring good governance and effective use of external auditors.’
Lawrence Reed, Director, Audit Review
‘It is the view of the author that until this issue is nailed … one has to fear that the ability of huge mining companies essentially controlled and operated outside the UK to ignore UK shareholders whilst enjoying the advantages of a London listing and recognition on a FTSE Index is an abuse of governance and especially an abuse of the UK Stewardship Code.’
Richard Smerdon
Journal 223
January 2013
‘When I make a decision to invest in a listed company which is still owned by a family, the big negatives are corporate governance and succession.’
Yasuaki Kinoshita, analyst, Nissay Asset Management
‘The failure of current laws, regulations and regulators to protect stakeholders arises because each relies on a top-down approach. The science of governance reveals that a bottom-up approach is also essential to regulate complexity.’
Dr Shann Turnbull is Principal of the International Institute for Self-Governance
Journal 222
December 2012
Featured Articles:
- ‘New leadership’ and environment management
- Death of the equity cult
‘… outside of the boardroom little, if anything, may happen unless practical steps are taken to share an environment management vision and ensure that people are equipped to implement it.’
Professor Colin Coulson-Thomas
‘It must at least be arguable (albeit mischievously) that the focus hitherto by the corporate governance ‘industry’ on equity protection has become marginal: The real game in town is bond protection.’
Richard Smerdon
Journal 221
November 2012
‘… a breach could also see directors potentially face criminal charges, alongside civil liability for breaches of employment and data privacy legislation. The commercial implications could also be significant, triggered by contractual disputes and litigation from customers and partners.’
Vijay Rathour, Vice President, Stroz Friedberg, London
‘Corporations prosper when the interests of stakeholders are prioritized according to their contribution to value. Not the other way round. If there is no value exchanged, or the value is systemically weighted to any trading partner the corporation will soon be traded into weakness, vulnerability and ultimately insolvency.’
Peter Tunjic, corporate advocate and lawyer, Melbourne, Australia
Journal 220
October 2012
‘… a key challenge for corporates will be to create an approach that offers a high level of integration with existing reporting systems, alongside the flexibility to accommodate future changes in standards and reporting. … Environmental impact is set to become an increasingly important part of corporate governance.’
Richard Tipper, Chief Executive, Ecometrica
‘… the expectations on how businesses conduct themselves have changed; the shift to moral capitalism is well under way. In this environment delivering sustainable business performance and protecting the organisation’s reputation are mission critical.’
Nick Hedley, Founding Partner, Hedley May
Journal 219
September 2012
‘A “rubber stamp” board can result in an organisation sleep walking to disaster. A thoughtful and reflective board that questions and has the courage to try better alternatives can be the best guarantee of continued survival and relevance in uncertain times.’
Professor Colin Coulson-Thomas
‘If companies are forced to tender external audit, how do they ensure the tender is not just a box-ticking chore but results in real value added to the organisation; and can tenders achieve the FRC’s ambition of better audit quality?’
Lawrence Reed, Director, Audit Review
Journal 218
August 2012
Featured Articles:
- Kay – repurposing the equity markets Part 1
- Kay – repurposing the equity markets Part 2
‘I would like to see the UK Prime Minister call in the relevant officials not only from the Department of Business, but the UK Treasury, and the Department of Work and Pensions and demand the development of a cross-departmental agenda to create the optimal conditions which will incentivise key leaders in business and investment to respond.’
Mark Goyder, Founder Director, Tomorrow’s Company
‘After all, as Kay has pointed out, the value of engagement flows to asset owners and it is only through increasing the performance of the underlying companies that equity investment becomes something more than a zero-sum game. Fund managers that remember this and refocus their delivery around that understanding will generate the most value for their clients. We must hope that they will be rewarded for it in the market for their services.’
Paul Lee, Director, Hermes Equity Ownership Ltd
Journal 217
July 2012
‘… instead of increased dialogue with shareholders it is likely that these proposals will result in less direct engagement with real shareholders and the rise of intermediaries – is this really what the Government wanted to see?’
Sean O’Hare, Human Resource Partner, PricewaterhouseCoopers plc
‘As soon as the chairman and CEO start singing off different hymn sheets and the NEDs are playing catch-up, the reputation and credibility of the board and organisation can rapidly dissipate and is hard to win back.’
Helen Pitcher, Chairman, IDDAS
‘Historically, shareholder involvement into boardroom affairs has been reserved for activist investors. But increasingly, we are seeing that the investment community at large wants to have the levers to hold executive leadership accountable for performance and corporate practices.’
Elizabeth Saunders, Americas Chairman of the Strategic Communications Practice, FTI Consulting
‘At its most fundamental, the board should see their role as defining the purpose of the business, and then ensuring that purpose is fulfilled.’
Belden Menkus, Director, MenKus & Associates
Journal 215
May 2012
Recruiting and inducting new members of staff can take time and be expensive in comparison with changes of support to enable more to be achieved from an existing team, especially those who are open to taking advice, prepared to learn from their peers, and willing to adopt superior practices.
A key responsibility of the chairman and the non-executive directors is to challenge the risk register defined by the management, to stretch the board to define its appetite, to continuously improve its maturity, evaluation and assurance processes to ensure management is held to account. There is a place for independent, external input to secure the required assurances for the board.
Journal 214
April 2012
‘The evaluation should be seen as an opportunity to step back from the day-to-day life of the board and think carefully about how it can be made more effective. Even in boards that are performing well, effectiveness can be improved. A thorough external review has an additional attraction: it is an objective signal to investors that the board is committed to the highest standards of performance.’
Helen Pitcher, Chairman, IDDAS
‘Effective boards need as wide a range of experience as possible. It would be a pity if lack of knowledge of the governance frameworks in each sector prevented greater and more productive interchange of executives and non-executives from one world into another.’
Lynne Berry, OBE, Senior Visiting Fellow, Cass Business School, Deputy Chair, Canal and River Trust
‘Women in the voluntary sector are trying to break through a glass silo rather than a glass ceiling. The women we are talking about are extremely experienced at both executive and non-executive level on public and voluntary boards. Between them they have run some of the largest organisations in this country, but the corporate sector has been slow to recognise the relevance of their skills.’
Lynne Berry, OBE
… the goal posts keep moving and are becoming harder to see. Value creation depends on which shareholder the board listens to. A share trader’s idea of value is different and even opposed to that of a shareholder who plans to hold their shares indefinitely. In addition, the practice of share lending is making it hard to know who the real shareholder is.’
Peter Tunjic, corporate adviser and lawyer
Journal 212
February 2012
‘What marks out exceptional chairmen is not procedure, structure or even chairing skills, but engaged and informed board leadership.’
Sir Roger Carr, Chairman, Centrica plc, President CBI
‘Far from viewing reputation as an intangible asset whose link with corporate value is uncertain, we should see reputation as a strategic asset which can be managed, and leveraged, to create tangible business benefit. Good boards understand this, and it is absolutely no coincidence that well-governed companies often enjoy good share price performance as well as a strong reputation.’
Seamus Gillen, part-time Director of Policy, Institute of Chartered Secretaries and Senior Adviser to the Reputation Institute
Journal 211
January 2012
‘A board should not be fearful of an external evaluation process. Evaulation, if well shaped and properly “socialised”, will provide the board with the opportunity to view itself in the context of its own challenges and respond to those challenges in a measured and strategic way.’
Helen Pitcher, Chairman, IDDAS
‘There is an expectation among the shareholder community and its advisers that the results of the votes and the information received in connection with related shareholder outreach will be taken into consideration when companies make future executive compensation decisions. Whether and how companies do so, and how shareholders subsequently react, will play out over the next couple of years.’
Amy M Wood, Associate, Cooley LLP
Journal 210
December 2011
‘A hard core of companies still provide minimal information, and it may take the introduction of regulatory oversight to change this. However, while tougher regulation may improve compliance, shareholder engagement is critical to effecting a long lasting strong governance culture,’
Simon Lowe, Chairman, The Grant Thornton Governance Institute
‘The trouble with accounting, performance measurement and risk control … is that they treat companies as if they are mechanical. They assume broadly that they are machines which, for a certain level of inputs, will deliver a predictable level of output. But the greater truth, particularly in the modern era where talent is the big differentiator, is that companies are collections of people, and they are as much biological as mechanical.’
Anthony Hilton, City Editor, Evening Standard
Journal 209
November 2011
‘Bringing together a group of outstanding individuals can result in an assembly of good people rather than an effective board. Whether or not their potential is leveraged, and how they perform, will depend upon a number of factors, including the quality of board chairmanship.’
Professor Colin Coulson-Thomas, Chairman of Adaptation, Bryok Systems and Cotoco
‘The complexity of the investment chain often militates against effective engagement – a barrier reinforced by a lack of transparency. And there are obstacles preventing even the most well-intentioned of investors from exercising their powers and responsibilities effectively.’
The Right Honourable Dr Vince Cable, UK Secretary of State for Business, Innovations and Skills
Journal 208
September/October 2011
Featured Articles:
- The new corporate governance landscape
- The importance of a total value perspective
‘Good corporate governance is not a luxury. It is a pre-requisite for sustainability.’
Olivier Guersent, Head of Cabinet of Michel Barnier, Commissioner Internal Market and Services of the EC
‘At root, value in an enterprise emanates principally not from tangible assets but from satisfied customers. From there it flows to other stakeholders. There is a point of equilibrium at which the flow of value is optimised for all stakeholders.’
Paul-Andre Rabat, Founding Partner, Corporate Value Associates
Journal 207
August 2011
‘Directors who serve as a loyal supporter of the CEO have been in demand, when the emphasis should have been upon curiosity and courage – the curiosity to question and the courage to challenge.’
Professor Colin Coulson-Thomas
‘… there is a distinction between the pluralist share registers of the vast majority of London Listed companies, for which the UK Corporate Governance Code is designed, and the increasingly common phenomenon of FTSE 100 listed closely controlled overseas mining groups for which the Code does not yet provide adequate governance solutions.’
Richard Smerdon
‘What is clear to me, both from the report and working with boards, is that the framework for how a board challenges and makes their decisions is rarely agreed and designed; it is often left to chance, individual preferences and quirks, which has the potential for a dysfunctional chaotic approach.’
Helen Pitcher, Chairman, IDDAS
‘There are intensely personal relationships behind the decision for chairmen, CEOs or other board directors to join or leave a board. A well-managed succession process will leave directors feeling valued and the organisation feeling confident and well led. Alternatively it has the potential to be the reverse.’
Alison Gill, Bvalco
Journal 205
June 2011
‘While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law. We expect this trend to continue, and these final rules map out simplified and transparent procedures for whistle blowers to provide us critical information.’
Mary Schapiro, Chairman, Securities and Exchange Commission
‘Why wouldn’t your organisation want a robust adequate procedures framework to protect its assets in any event?’. We see them as an intrinsic component of any good, corporate governance regime and which should already be in place.’
Sterl Greenhalgh, Partner, Forensic and Investigation Practice, Grant Thornton UK LLP
Journal 204
May 2011
‘When analysing the better performing banks and financial services companies, the report found they had fewer directors, a higher percentage of female directors and more independent directors.’
Mark Spinner, private equity partner, Eversheds LLP
‘Whilst prudent board members recognised that cautious financial risk management involved sacrificing some opportunities to generate short-term profit, they were often overridden by senior executives … [who] were confident they could manage their way out of any short-term negative outcomes, and the potential rewards if they were successful were just too tempting to forgo.’
Professor John Board, Dean of Henley Business School at the University of Reading
Journal 203
April 2011
‘This is not about aiming for a specific figure and is not just about promoting equal opportunities but it is about improving business performance. There is growing evidence to show that diverse boards are better boards, delivering financial out-performance and stock market growth.’
Lord Davies of Abersoch
‘It is interesting to note [in many of the interviews with FTSE 100 Chairmen] the importance they attach to the ability to understand and interpret human behaviour in the boardroom: something to which Sir David Walker makes particular reference, observing that “Boards and board behaviour cannot be regulated or managed through organisational structures and controls alone…”.’
Peninah Thomson, Director, FTSE 100 Cross Company Mentoring Programme
Journal 202
March 2011
‘Where there is a risk committee, attention obviously needs to be paid to the relationship with the audit committee. There is a danger of overlap or – of greater concern – of issues getting missed entirely as each considers it to be the other’s responsibility.’
Stephen Haddrill, Chief Executive, Financial Reporting Council
‘A great annual report is a window to see through – not a screen to hide behind. It is not simply valuable as a snapshot in time, it has been, and can be, a catalyst of change.’
Roger Carr, Chairman, Centrica
Journal 201
December 2010
Featured Articles:
- Governance Guidance for unlisted companies
- It’s never too late to learn: Part 1
The global financial crisis has reminded us that it’s nearly impossible to find a “silver bullet” in the form of laws and regulations to improve board performance. That leaves the private sector with a major responsibility to improve board practices through, inter alia, implementing voluntary standards. This is particularly the case in unlisted companies, where the long-term success of the company, including its strategy depends on an effective board.’
Fianna Jesover, Senior Policy Manager, Corporate Affairs Division, OECD
‘The financial crisis has challenged the assumptions underpinning national and global political-economic structures. People are questioning core beliefs about the efficiency of markets … and the ability of intelligent, informed, self-interested people – owners, directors and managers – to define their risk tolerance, wisely chart and choose among risk-calibrated strategic options, and accept the consequences.’
David W Anderson, President, The Anderson Governance Group.
‘There is no going back to the facile boards and dormant owners of the past. The system of corporate leadership is now firmly tripartite: owners, directors and managers, each with unique perspectives, roles and expectations. Stakeholders in our society, with their own enhanced sense of place and power, are watching.’
David Anderson, President, The Anderson Governance Group
‘If the [Stewardship] Code is to carry credibility, disclosures need to have some substance and not be just bland statements of support. … A basic principle should be that the statement should be of a quality the investor would like to see if it was made by an investee company.’
Peter Montagnon, Senior Investment Adviser, Financial Reporting Council
‘Corporate narrative reporting [should] tell the company’s story in a balanced and coherent way. It should give shareholders the information they need, so they can hold directors to account and be effective stewards for the business.’
Edward Davey, Business Minister
‘Nominating a director candidate is not the same as electing a candidate to the board. I have great faith in the collective wisdom of shareholders to determine which competing candidates will best fulfil the responsibilities of serving as a director. The critical point is that shareholders have the ability to make this choice.’
Mary L Schapiro, Chairman, Securities and Exchange Commission
Journal 198
August 198
‘We hope this paper will lead to a full discussion within the profession about what audit firms need to do to ensure that auditors are appropriately sceptical in practice and how companies and others can facilitate this in the interests of investors and other company stakeholders.’
Richard Fleck, Chairman Auditing Practices Board
‘For regulators the starting point should be that we want the firm to have a culture which encourages individuals to make judgements and deliver the outcomes we want and that at all times we want an undertaking to act with integrity. The regulators focus should therefore be on what an unacceptable culture looks like and what outcomes that drives.’
Hector Sants, Chief Executive, Financial Services Authority
Journal 197
July 2010
‘Disclosures made by institutions under the Code should assist companies to understand the approach and expectations of their major shareholders … Pension funds and other owners may not wish to become directly involved in engagement but they can make a significant contribution by, for example, mandating their fund managers to do so on their behalf.’
Baroness Hogg, Chairman, FRC
‘Directors and investors both know they are in a new era of governance, yet the implications for their roles and interactions are not yet fully appreciated. Shareholder engagement deserves director attention both for the potential for getting it right as getting it wrong.’
David Anderson, President, The Anderson Governance Group
‘Provision for annual election of the chairman and other board members should introduce welcome additional encouragement and discipline to both shareholders and board members in seeking to promote the best possible long-term performance …’
Sir David Walker
‘Diversifying the board is about adding dynamic conversations, avoiding the “check-the-box” mentality, and recognising that business in the twenty-first century is a global game.’
John Chiang, California State Controller
Journal 195
May 2010
‘We hope increasing numbers of investors will provide feedback on how informative they have found companies disclosure, and what more can be done to strengthen the dialogue which high-quality disclosure makes possible.’
Seamus Gillen, Director of Policy, ICSA
‘To be sustainable, a business has to have regard to the longer term value provided to all major stakeholders, particularly customers.’
Paul-Andre Rabate, Founder and Managing Partner, Corporate Value Associates
`In jurisdictions where issuers can only find out who owns their shares at the time of an AGM or ahead of announcing a corporate action, the mere act of conducting a broker search alerts the market that something might be happening and can cause a distortion in the market.’
Susan Henderson and Michael Kempe, Members of the T2S Transparency Working Group
Journal 194
April 2010
‘In our view the annual report is the primary window through which a company showcases its attitude to governance. If a company fails to take this opportunity in such a public document, we consider it reasonable for the stakeholders to conclude that this reflects the underlying culture of the organisation.’
Simon Lowe, Head of Business Risk Services, Grant Thornton
‘The importance of engagement with shareholders, and also with proxy advisor agencies, well ahead of time is also stressed underlying the importance of investor engagement, which is so much part of the current consultation on the Stewardship Code.’
Susan Henderson, Company Secretary, Smith & Nephew
‘… judgements are overly obsessed with “market prices”. Such prices are, by their nature, defined at a particular moment in time based on a particular, and often small, transaction at the end of trading at the close of the valuation date.’
Lord Myners, Financial Services Scretary
Journal 193
March 2010
‘[The Code makes some] productive efforts to improve audit firm governance, however the true value will only become apparent once the Code is implemented.’
Marc Jobling, Assistant Director of Investment Affairs, Association of British Insurers
‘Complementing the discrete oneon-one meetings already held, these shareholder council meetings would serve as a venue for shareholders to express views not only to the chair and non-executive directors but also to their investor peers.’
Catherine Lawton, Nestor Advisors Ltd
‘It would be a real advantage if some institutions better co-ordinated their governance units with those managing their portfolios.’
FTSE 250 Chairman
‘[good governance] depends critically on the abilities and experience of individuals and the effectiveness of their collaboration in the enterprise. Despite the need for hard rules in some areas, this will not be assured by overly specific prescription that generates box-ticking conformity.’
Sir David Walker
‘Climate change won’t slow down just because the economy does. The problems of waste, obesity, the depletion of the world’s natural resources and poor working conditions in third world factories won’t go away either. So, if we believe that doing our bit to tackle these issues is the right thing to do then we have to stick to our principles. Our customers have long memories – if we fold under the first sign of pressure they won’t forget it.’
Sir Stuart Rose, Executive Chairman of Marks and Spencer
Journal 191
October 2009
Featured Articles:
- Stricter governance rules from SEC
- Effective communication on compensation
‘The most fundamental way in which shareholders can ensure that directors remain accountable to them is through the director election process.’
Mary Schapiro, Chairman, SEC
‘There is nothing more disconcerting for institutional investors than a compensation adviser taking over the discussion because the remuneration committee chairman does not fully grasp the intricacies of a pay plan.’
Simon CY Wong, Managing Director, Governance for Owners
‘We are very pleased to see that the Walker Review not only gives strong emphasis to the role of the board in setting the company’s risk appetite … but also that appropriate boardroom behaviours have been identified as a key element of best governance practice.’
David Wilson, Chief Executive, ICSA
‘What we have seen are examples of “group think” where, at their worst, boards are content to tick boxes instead of individually and collectively taking responsibility to challenge and systematically “audit” strategy in the interests of shareholders, customers and other stakeholders.’
Paul-Andre Rabate, founder and managing partner, Corporate Value Associates
‘The need for effective monitoring and internal controls is therefore about to increase further.’
Catriona Munro, partner, Maclay, Murray & Spens LLPSolutions
‘Part-time non-executive directors will never be able to prevent all corporate governance breakdowns. But it is encouraging to see that audit committees have been reassessing what they do and how they do it with the aim of minimising the risks to a company and, by extension, to its investors and shareholders.’
Tim Copnell, Director, KPMG’s Audit Committee Institute
‘The global economy needs more than a quick fix. It needs a fundamental fix. …Continuing to pour trillions of dollars into fossil-fuel subsidies is like investing in sub-prime real estate.’
UN Secretary-General Ban Ki-moon
‘Unless we can come up with something stronger than assurances and undertakings, we might not be able to prevent a severe swing to an over-regulated market – governments, regulators and markets will demand this.’
Jonathan Lewis, Chief Executive, Governance Integrity Solutions
‘We strongly believe that future efforts should largely go into improving the effectiveness of the existing provisions of the Code, rather than radical reform.’
Alan Scott, Deputy Secretary and Director Corporate Governance, BT
‘Presently, Japan appears to be confronting an existential crisis on corporate governance because even as it discards the traditional model, it does not appear ready to embrace a new one.’
Simon CY Wong, independent adviser and Adjunct Professor of Law, Northwestern University School of Law
‘Many directors simply aren’t asking the right questions – or indeed, any questions. The recent failure of the banks demonstrates that only too clearly.’
David Wilson, Director, Policy and Strategy, Institute of Chartered Secretaries and Administrators
‘At any number of major international banks board executives as well as those in senior management were (at least notionally) holders of a significant number of shares granted through stock and restricted share plans. Yet they still bet the shop.’
Michelle Edkins, Managing Director Governance for Owners
‘Our message is very clear: directors’ remuneration must be clearly linked to performance and should not reward failure.’
Charlie McCreevy, Internal Market & Services Commissioner
‘All of us involved in remuneration need to ensure that rewards reflect truly sustainable performance and are not a short-term mirage. First, because it’s the right thing to do. Second, because it is always better to embrace change than to have it forced upon you.’
Sean O’Hare, Partner, Reward and Compensation at PricewaterhouseCooopers
‘…more widespread use of external valuation will no doubt be driven by investors who will be looking for hard evidence of well-run boards in an uncertain economic climate.’
Simon Osborne, Joint Head of Board Evaluation, ICSA
‘The fact that over £3bn was raised through secondary issues last year is a reflection of long-term investor support for AIM companies, even in difficult market conditions.’
Martin Graham, Director of Equity Markets & Head of AIM
‘If banks are too big to be allowed to fail, they should not be put into a position whereby their activities could cause them to fail.’
Robin Johnson, Partner, Eversheds
‘In our experience, conducting engagements in private and on a confidential basis is essential to be effective and to build a sound relationship with the company. The JEC’s approach aims to allay the wariness of Japanese companies in relation to engagement with shareholders.’
Toshiaki Oguchi, Representative Director, Governance for Owners, Japan
‘In fact, through our research with investors, many have made the point that the last place to look for failings in governance is the governance section of the annual report.’
David Phillips, Senior Corporate Reporting Partner, PricewaterhouseCoopers LLP
‘Financial services are a complex global network. They need global solutions. The FSA may have been asleep during the American subprime mortgage disaster, but what exactly could it have done had it been awake?’
Paul Connolly, Head of Policy and Strategy, Serco Consulting
Journal 184
February 2009
‘The Banking crisis has exposed failings across the board. Corporate governance will not be the only aspect of corporate and regulatory life which will need to change. What was clear from our review was that time is needed to reflect on what makes sense rather than rushing to regulate.’
Philip Dunne MP, Chairman APPCGG.
‘Any [non-executive director] who feels they haven’t got enough power is on a dysfunctional board and either needs to step down or work with the chairman to get it right.’
Peter Waine, Hanson Green
‘More than ever, transparency and clear proactive shareholder communication will be essential to the success of AGMs in 2009.’
Viviane Joynes, Associate, HQB Partners
Journal 183
January 2009
‘While the long-term effects of this global crisis will take some time to manifest, it is crucial for investment professionals to be thinking ahead so as to develop and implement winning strategies that add value for their clients in an increasingly unpredictable and competitive marketplace.’
Carl Hess, Global Head of Investment Consulting, Watson Wyatt
‘I want Europe to adopt a leading role in this area. Our proposal goes further than the rules which apply in other jurisdictions. These very exciting rules are necessary to restore the confidence of the market in the ratings business in the European Union.’
Charlie McCreevy, Internal Market and Services Commissioner
‘We have put in place the most astounding array of palliatives the world has ever seen – a fantastically intricate system of regulation, an early warning system via BIS committees, a highly developed set of risk mitigants, such as collateral and set-off and netting. We have insolvency rescue statutes in virtually all important jurisdictions. Yet all this did little to stop the present debacle.’
Philip Wood, Special Global Counsel, Allen & Overy
Journal 182
December 2008
‘There are a lot of people on the operations side of the business with quite wide delegated powers whose behaviour and activities are not being examined at all through the usual reporting cycle.’
Dr David Ladipo, partner and co-founder, Lintstock
‘If the directors cannot see what’s happening in the business and are not getting good information, they won’t know what questions to ask. If the risk-management processes are not organised in a clear and methodical way, then a handful of part-time non-executives don’t stand much chance of overseeing them.’
Richard Sheath, director and co-founder of Independent Audit
‘At the end of the day, mainstream and activist investors play different but complementary roles. Provided that there is a general alignment of interest, the relationship between them may even prove to be symbiotic.’
Simon Wong, Adjunct Professor of Law, Northwestern University School of Law
‘It will not necessarily be easy for public boards to implement all these recommendations. In particular, making significant changes to the time expected from non-executives has important implications for board composition, whilst the question of the optimal remuneration structure requires broader debate with key shareholders.’
Michael Reyner, Partner, MWM Consulting
‘With increased regulation on the horizon, investors are requiring this information to better understand the creditworthiness of companies in their portfolio and how climate change might affect their profitability.’
Paul Dickinson, CEO, Carbon Disclosure Project
‘There is no insurmountable legal obstacle to boards and shareholders engaging in constructive dialogue on governance matters, including executive pay policies.’
Millstein Center for Corporate Governance and Performance, Yale School of Management, Policy Briefing No. 2
Journal 180
October 2009
‘If complexity in corporate reports is allowed to increase unchecked, there is a significant risk that they will cease to be useful for their primary purpose – communication with stakeholders.’
Melanie Kerr, Complexity Project Director, FRC
‘As we enter very difficult economic waters, the chief executive will be looking for better people around him in governance roles. The very best chief executives will not only require vision and integrity, but will also need a top notch governance team.’
Nick Hedley, Head of the legal, governance and risk practice at Whitehead Mann
‘There is a dangerous asymmetry: the economic impact of decisions made by individual banks is very much greater than their degree of accountability to the people affected.’
Philip Whiteley, Human Capital Forum
Journal 179
September 2009
‘The rise in the participation of pension funds in class actions shows that they have become more effective in monitoring their entitlement to settlements and in holding their agents to account. In the current economic climate we expect the trend of increased shareholder litigation to continue.’
David Paterson, Head of Corporate Governance, NAPF
‘The perpetuation of these payments encourages unethical corporate behaviour with enormous current and potential damage to the health of global commerce.’
Frank Vogl, co-founder and current Board member of Transparency International
‘This much is clear: shareholders believe that companies are better off when they are engaged in dialogue with directors. Shareholders are more informed, co-ordinated and determined. They are speaking to directors and expecting a dialogue. They are, after all, the owners.’
David W Anderson, President, The Anderson Governance Group
Journal 178
August 2008
‘The last thing we need is someone coming in, buying big stakes and then not acting as owners.’
Robert A G Monks, Shareholder Activist and Corporate Governance Advisor
‘The pay as scaled fees perspective opens up the possibility of simplification of top management pay.’
David Shammai, Senior Consultant, People Services, KPMG LLP, UK
‘Companies must be able to respond quickly to requests for authorisation, or they might find their directors resign rather than risk being in breach of duty.’
Danielle Harris, Professional Support Lawyer, Corporate Department, Maclay Murray & Spens
‘The need to unlock the talents of all – to create a truly representative workforce – is even more crucial at a time of economic uncertainty. The issue is not whether business can afford to diversify, but whether it can afford not to.’
Brendan Barber, General Secretary, TUC
‘Our study counters the continuing myth that cheap debt and costcutting are the principal drivers of PE success.’
Simon Perry, Global Head of Private Equity, Ernst & Young
‘It is true that not every management board chairman makes a good supervisory board chairman but it is also true that external candidates fail. It is the supervisory board’s responsibility to select the best-qualified candidate.’
Gerhard Cromme, outgoing Commissioner of the German Corporate Governance Code
‘There is still more to be done and we, by that I mean all regulators, must make sure that the regulatory environment remains flexible and current to the needs of the global financial sector.’
Charlie McCreevy, EU Internal Markets Commissioner
‘I firmly believe that companies with active and involved shareowners are more valuable than those without. I reject the notion that equity investors can get all the protection they need from the processes of law and the requirements of regulators.’
Peter Butler, Founder Partner and CEO, Governance for Owners
‘There is a risk that investors, in taking very public stances in opposition to non-compliance, are undermining the explanation element of the Code, and not fulfilling their role in the dialogue and debate which it requires.’
Paul Lee, Director, Hermes Equity Ownership Services Ltd
‘The FRC believes that this Opinion is an important confirmation that the concept of ‘true and fair’ is a key contributor to the integrity of financial reporting in the UK.’
Paul Boyle, Chief Executive, FRC
‘Old practices in Japan must be changed with aggressive force or Japan is going to be left behind the global competition.’
Yuji Yamamoto, former Financial Services Minister
Certain types of risk, such as liquidity, were until recently either not considered or felt to be too remote a risk to worry about.
Paul Moxey, Head of Corporate Governance and Risk Management, ACCA
Journal 174
April 2008
‘We should be planning now for the next ten years, not congratulating ourselves on how far we have come in the last ten.’
John Griffith-Jones, Co-chairman of KPMG Europe
‘The Corporate Governance Board has learnt from its experience of the first years with a Code in practice. The proposed revised Code is smaller and simpler without relaxing the criteria for good corporate governance.’
Hans Dalborg, President of the Swedish Corporate Governance Board
‘In a bull market, everyone can look like a genius and teams almost lead themselves. It’s when times are tough that real leadership – both at the management and boardroom level – becomes vital.’
Peter Waine, Partner, Hanson Green
‘As hedge funds become mature, institutions demand the same level of service as they get from traditional fund managers. They require the same kind of reporting, governance and transparency.’
Eric Scheurer, Head of Planning, Man Group
‘Once we issue something, tell us what you think, have we got it right or would you rather see something different? Basically we need to tell it as it is and that is going to be the key.’
Sir David Tweedie, Chairman, International Accounting Standards Board
‘Those appointed to discharge their statutory and fiduciary duties repeatedly failed to do so. Inaction by the gatekeepers, left the field open to the untrammelled rapacity of imperial CEOs.’
Sir Adrian Cadbury
Journal 172
February 2008
‘We have looked closely at the narrative to explore whether companies truly reflect their changing circumstances or merely repeat the same practice, year on year.’
Simon Lowe, Head of Business Risk Services, Grant Thornton
‘Candidates are often attracted to privately-owned firms which, unlike listed companies, can pay their non-executive directors in shares, as well as cash.’
Grace Borrelli, partner, CTPartners
There should be little surprise that over 80 per cent of CFOs in the research said that ensuring an ethical culture is more important to their companies now than it was five years ago.
Paul Moxey, Head of Corporate Governance and Risk Management, ACCA
Journal 171
January 2008
'The focus on executive rewards isn't going away and companies that get their reporting right will benefit from better relations with their investors and avoid uncomfortable moments at AGMs.'
David Phillips, senior corporate reporting partner, PricewaterhouseCoopers
'Some poor boards are blessed with what Napoleon wanted for his Generals to be born with, "a lot of luck". Understanding what success means for an appraisal can help to make sure poor boards don't run out of luck and that good boards get better.'
Sir Andrew Likierman, Professor of Management Practice in Accounting, London Business School
'A comprehensive induction, that covers all aspects of the company's operations and introduces a new director to management levels below the executive team, is an essential element of allowing a new director to contribute fully from the first board meeting.'
Peter Waine, partner, Hanson Green
Journal 170
December 2007
'This increase brings a considerable addition to the talent pool and it will be interesting to monitor how long it takes for these women to emerge from the pipeline and into female executive director roles.'
Ruth Sealy, Cranfield School of Management
'With the rise in shareholder activism and the growing level of hedge fund ownership, trying to minimise opposition to key resolutions at your shareholder meeting is now more important than ever. Understanding which resolutions failed last year, both in your own market and across Europe will help you plan for the next meeting.'
Cas Sydorowitz, Managing Director, Georgeson, Europe
'Inviting executive feedback promotes transparency and a sense of accountability. Directors are seen to lead by example by requesting feedback on their performance.'
David Anderson, President of The Anderson Governance Group
Journal 169
November 2007
‘I am pleased environmental reporting by FTSE listed companies has improved since our previous study in 2004. However, I am disappointed and concerned that most lack rigour, depth and quantification.’
Barbara Young, Chief Executive of the Environment Agency
‘[Boards] will welcome a period of relative calm in the world of corporate governance to allow them to bring leadership and strategy back to the top of the agenda.’
Carol Arrowsmith, Head of Remuneration, Deloitte
‘The survey showed that nine out of ten audit committee members felt that they had improvements to make in the oversight of IT risk issues. This is a worrying trend given that organisations are now so dependent on IT.’
Tim Copnell, Director, KPMGs Audit Committee Institute
Journal 168
October 2007
‘The decline of the executive director is quite extraordinary and is primarily a result of corporate governance guidelines which require half the board to be independent.’
Carol Arrowsmith, Head of the Remuneration Team, Deloitte
‘All of the best practice standards and advice in the world will not compensate for a poor chairman.’
Peter Waine, Partner, Hanson Green
‘Narrative information needs to be presented in a logical format and key information required by legislation should be easy to find. Unfortunately at times information was hidden amongst PR copy or did little to enlighten shareholders.’
Nicola Collins, Manager, The Audit Committee Institute
Journal 167
September 2007
‘It is only by examining the issues in public forums that financial markets will be able to assess real risks to long-term shareholder value and be better able more effectively to allocate their vast resources in ways that mitigate the threats of global climate change.’
Roger Adams, Executive Director, Technical, ACCA
‘... there was a sense that (western corporate governance standards) were an attempt to impose western standards and values on people. Now they see it as sound financial sense.’
Jamie Allen, Secretary General, Asian Corporate Governance Association
‘It is often unrecognised that individual companies can enact for themselves robust shareholder democratic initiatives in the absence of a legislated solution creating rules for all.’
David Anderson, President of The Anderson Governance Group
‘For smaller companies, it is clear that a listing on AIM, rather than being a stepping stone to the Official List, is often an end in its own right.’
Mark Lister, Corporate Finance Partner, PKF
‘... the broader corporate stakeholder and corporate responsibility agenda has stimulated growth in the use of non-financial measures in bonus plans alongside those more traditional measures focused on financial and shareholder return.’
Duncan Brown, PricewaterhouseCoopers LLP
‘Unless corruption can be held in check, capital investment, especially across borders, incurs far higher risks, which means investors demand a premium and issuers must pay more to obtain funding.’
Karina Litvack, Head of Governance & Sustainable Investment, F&C Management Limited
Journal 165
July 2007
‘[The study] showed that there is no clear macro-economic evidence demonstrating a negative effect of deviations to the “one vote, one share” principle.’
Charlie McCreevy, EU Commissioner for the Internal Market and Services
‘Strong corporate governance cannot make bad companies into good ones, but can make good companies better.’
Peter Waine, Partner, Hanson Green
‘Most of the issues people discuss with regard to hedge funds and corporate governance are not hedge fund issues per se. Rather, they are fundamental issues in our capital markets and regulatory schemes.’
Jon Lukomnik, Managing Partner, Sinclair Capital LLC
‘Our findings suggest that certain companies, even large ones, may be receptive to fundamental change. Electronic participation, in one form or another, should be explored further.’
Jon Edis-Bates, Principal Consultant, Edis-Bates Associates
‘Previously we didn’t have a clear picture of how this issue affects European listed companies and whether it has an impact on their economic performance.’
Charlie McCreevy, EU Internal Markets Commissioner
‘This research not only demonstrates the importance of the audit but also the trust that people, particularly investors, place in the results.’
Michael Izza, Chief Executive, ICAEW
‘Despite mounting evidence of the importance of tracking nonfinancial performance data, the global survey shows that actually putting it into practice remains a problem and much work still needs to be done.’
John Meacock, Deloitte Managing Partner, NSW
‘The swift and radical strategic questioning recently directed at some companies by hedge funds and other active investors has clearly caught their Boards off guard.’
Dr Phillipe Haspeslagh, Paul Desmarais Chaired Professor of Active Ownership, INSEAD
‘Cutting down the numbers of executive directors, who should rightfully be debating their issues at the executive committee level, restores the board to its rightful role.’
Peter Waine, Partner, Hanson Green
‘Any market where as few as four firms account for 98 per cent or so of the work, as is the case for the FTSE 350 audit market, is one which risks becoming unhealthy by limiting choice and the challenge to keep improving market quality.’
Jim Cleary, CEO of Grant Thornton UK LLP
‘Many companies find it extremely frustrating when they put in place new measures and processes to comply with institutional governance requirements, only to find there is little or no response from investors.’
Carl Sjostrom, partner in KPMG’s Performance & Reward practice
‘Reducing financial risk can have a very clear impact on corporate governance.’
Harald Will, founder and CEO of ACL Services
Journal 161
March 2007
‘This report shows that despite the meanderings of government many companies have taken on much of what was included in the OFR and taken positive steps towards greater narrative reporting.’
Mark Goyder, Director, Tomorrow’s Company
‘Given the potential size of annual bonus payments it is important to ensure that performance targets are appropriately stretching.’
Bill Cohen, Partner and remuneration specialist, Deloitte
‘There has to be a level playing field for all companies - and no procedural barriers should be put in the way of each and every shareholder finding their voice at an AGM.’
Cas Sydorowitz, UK Managing Director, Georgeson
Journal 160
February 2007
Featured Articles:
- Board composition does matter
- Remuneration - the missing link to strategy
‘Our study shows that a persistent imbalance in board composition tends to go hand-inhand with a reduced ability to create value.’
Peter Montagnon, Director of Investment Affairs, ABI
‘Investors are becoming increasingly concerned that there is a widespread failure to link remuneration structures and performance to the actual strategy of the business.’
Nicola Collins, Manager, Remuneration Committee Institute
‘There is a real tension here between engagement and assurance on the one hand and independence and perspective on the other.’
Mark Goodridge, Chief Executive, ER Consultants
‘We hope that more and more companies will regard good narrative reporting as a means by which they can achieve transparent and open communication with their shareholders.’
Ian Mackintosh, Chairman of the ASB
‘The Survey shows a general endorsement of the Combined Code with pleasant surprises such as the unexpected benefits of Board Evaluation.’
Peter Waine, co-founder and director of Hanson Green
‘Our experience is that auditors, shareholders and finance directors will have different perceptions, all of which need to be addressed.’
Peter Butler, Founder Partner and Chief Executive Officer, Governance for Owners
“The strong performance of UK businesses is a significant contributor to bigger executive bonuses and suggests that the continued move towards ‘pay for performance’ is having a positive impact.”
Sue Bartlett, senior executive reward consultant, Watson Wyatt
“While it’s important for organisations to conduct evaluations on a regular basis, they face real risk if they identify changes needed but don’t make those changes.”
Catherine Bromilow, partner PricewaterhouseCoopers, US leader of its Corporate Governance Group
“Corporate governance and its enhancement is crucially dependent on a mutual interest of investors and companies to improve the status quo.”
Heinz-Joachim Neubürger, former CFO Siemens AG
Journal 157
November 2006
“The vagueness of the implementation timetable is to be deplored, and a close eye will have to be kept open to spot statutory instruments implementing parts of the Act over the next two years.”
Richard Smerdon, Corporate Governance expert
“A rising stock price, as we have painfully learned, does not necessarily mean an effective board.”
Siri Marshall, senior vice president, general counsel and secretary for General Mills
“The challenge for directors will be to instil sound, top tier leadership development practices deep within their corporations.”
Michael W Howe, Ph.D., executive associate, LeaderSource
Journal 156
October 2006
“FTSE 350 companies are striving to achieve the boardroom equilibrium recommended by Sir Derek Higgs, but not in the way many people expected.”
Carol Arrowsmith, head of the remuneration team, Deloitte.
“Short-termism cuts across an enterprise and results in management actions - including reductions in research and development, and the foregoing of strategic investments - all in order to make the quarterly number.”
Dean Krehmeyer, executive director, Business Roundtable Institute for Corporate Ethics.
“The business world is changing rapidly, the speed of communication is as fast as light and we live in a society where the public’s trust in company directors, rightly or wrongly, is at an all-time low.”
Richard Anderson, partner in RSM Robson Rhodes LLP
Journal 155
September 2006
“Companies in the UK, and across the world, are continuing to chase the Holy Grail of better linking pay to performance. A fierce war on talent means that attracting, motivating and retaining the best people is essential to corporate prosperity.”
Tom Gosling, executive compensation partner, PricewaterhouseCoopers LLP
“Investors have long perceived that emerging market companies have relatively poor governance attributes, and our research shows that for the most part perception is reality.”
Gavin Anderson, CEO GovernanceMetrics International
“Any suspicion on the integrity of auditors also reflects negatively on the integrity of company directors whose accounts auditors check.”
Dr Shann Turnbull, Principal, International Institute for Self-governance
Journal 154
August 2006
“The challenge is to leverage the skills and competencies of the whole board to address forward-looking growth issues.”
Tom McGrath, Global Managing Partner, Client Service & Accounts, Ernst & Young
“In order to prosper into the future, global companies must contribute to solving the issues that the world faces today.”
John Manzoni, Group Managing Director & CEO, Refining and Marketing BP
“Shareholders need intelligible disclosure that can be understood by a lay reader without benefit of specialised expertise or the need for an advanced degree.”
Christopher Cox, SEC Chairman
“The indications are that companies have learned some vital lessons from the past cycles, and are applying them now to improve their due diligence, deal management and the integration process.”
Éric D’Amours, Towers Perrin
“Companies are resentful of the extra burdens that have been placed upon them, and are asking that those burdens be justified.”
Anne Simpson, Executive Director, ICGN
“Today’s typical CEO knows that he will remain in office only as long as performance for investors is acceptable.”
Alan Gemes, Booz Allen Hamilton
Journal 151
May 2006
“Financial markets tend to focus too heavily on short-term results at the expense of long-term and non-traditional financial fitness factors that could affect a company’s bottom line.”
Denise Nappier, Treasurer of the State of Connecticut
“Europe’s diversity, its pluralism, and its ability to internalise wider social and environmental impacts are distinctive assets, but they can cripple as readily as they can empower.”
Maurizio Zollo, Professor of Business Strategy, INSEAD
“In this new world of risk management, companies are working to achieve superior returns for shareholders: which also happens to be the surest way to keep the corporate governance box-tickers at bay.”
Richard Anderson, partner, RSM Robson Rhodes LLP
Journal 150
April 2006
“If there were greater transparency in the conclusions of audit inspections, audit committees would be able to appoint auditors based on hard facts.”
Michael Cleary, managing partner Grant Thornton
“Perhaps the major achievement for shareholders is the demonstration that international co-operation between institutional investors gets results.”
Michael O’Sullivan, President of ACSI
“Publicly traded companies and even private companies should take note that attention to reputation factors matter now more than ever.”
Judi Frost Mackey, SVP, Hill & Knowlton US corporate and financial practice
“It certainly appears that directors are recognising shareholder concerns more quickly and examining these important issues.”
Gavin Anderson, CEO, GovernanceMetrics International
“It is important that there be a regulatory pause to allow this new approach to auditor independence time to prove its worth to users of audit reports.”
David Devlin, President, FEE
“Our only hope is that the whole sorry mess gets bogged down in indefinite consultation.”
Terry Arthur, Visiting Fellow of the Institute of Economic Affairs
“Expert input will be important in preparing the strategy for EU company law and corporate governance in the coming years. Our future action must ensure that EU businesses are properly run and competitive.”
Charles McCreevy, Internal Market and Services Commissioner
“Chairmen often have to be prepared to stand back and have courageous conversations with their board members.”
Susan Bloch, partner and head of Thought Leadership, Whitehead Mann
“Organisations that understand this need for leadership at many levels and then develop this capacity for leadership through learning, development and empowerment of their people will be the organisations that prosper.”
Tom Lawton, Partner and Head of Listed Company Service, RSM Robson Rhodes
“Companies and investors alike believe there have been improvements in the corporate governance of listed companies and tell us that the relationship between boards and their main shareholders is more constructive than it was at the time the 2003 Code was introduced.”
Sir Bryan Nicholson GBE, Chairman of the FRC
“Corporate transactions play to key NED abilities such as strategic guidance, risk management, independence and an understanding of how to protect shareholder value.”
Mark Womersley, partner, Osborne Clarke
“What is different is the extent to which many [managers] feel responsible to a wide circle of stakeholders, before ultimately serving the interests of their shareholders.”
Makoto Seta, Associate Director, Hermes Pensions Management Ltd
“This report will enable the Government to learn from the introduction of the OFR about the process by which corporate governance regulations are and should be developed.”
The Rt Hon Francis Maude, MP, Chairman of the All Party Parliamentary Corporate Governance Group
“The strongest agreement however was with the statement ‘it would be easier to create wealth if companies could give more attention to corporate governance performance than compliance with governance rules’.”
Paul Moxey, Head of Corporate Governance, ACCA
“The optimum level of information to be provided to the board is the one topic that is almost universally seen as challenging.”
Caroline Phillips, Director of the ICSA Board Performance Unit
“Today’s measures provide a sound platform for auditors, companies and investors alike to work together to strengthen financial reporting and corporate responsibility in the UK.”
Neil Lerner, Global Head of Regulatory Issues at KPMG
“The priorities we now set in the Action Plan must be conducive to entrepreneurship and making the most of the potential of the international dimension.”
EU Commissioner Charles McCreevy
“Many employers are now throwing up their hands and saying that pension planning for executives is too hard.”
Paul Jayson, Head of Actuarial Consulting & Benefits at Higham Group
“Companies should not interpret our decision to make only limited changes to the Turnbull Guidance as a signal that there is nothing for boards to do.”
Douglas Flint, Group Finance Director of HSBC Holdings plc
“It has become clear that having independent members of the board of directors increases the investment appeal and market capitalisation growth of a company.”
Alex Filatov, Executive Director, Independent Directors’ Association
“At present much disclosed information is not used and/or there are not people with the interest or ability to use it.”
Dr Shann Turnbull, Principal of the International Institute for Self-Governance
Journal 142
August 2005
“This research reinforces the importance of leadership and effective management around the ‘soft assets’ of a business.”
David Phillips, Head of Value Reporting, PriceWaterhouseCoopers
“Human dynamics in the not-forprofit sector are more intense and unpredictable than those in the commercial sector, and mainly for one reason - that the ‘bottom line’ is seen to be intangible.”
Jean Roberts, Director, Roberts Management Concepts Pty Ltd
“An effective board does not just happen - it needs leadership from the directors, particularly the chairman, in establishing the right team and methods of working.”
Tom Lawton, head of listed company services at RSM Robson Rhodes
“The requirement on directors to make forward-looking statements which, of their nature, are more likely to turn out to be incorrect will undoubtedly cause concern for directors who are charged with responsibility for such statements.”
Richard Slynn, Corporate Partner, Allen & Overy
“... their focus is generally on defending often controversial positions rather than on how corporate responsibility and related policy activities can support core business strategies.”
Jodie Thorpe, Senior Advisor at SustainAbility
“The more advanced regulators are working hard to strike the right chord but some still have a way to go - micro-management does not work, especially from a distance.”
Sir Alan Langlands, Chairman of the Independent Commission on Good Governance
Journal 140
June 2005
“Boards and investors alike told us that the Turnbull Guidance has contributed to a notable improvement in the overall standard of internal control since 1999.”
Douglas Flint, Group Finance Director of HSBC Holdings plc
“We have again updated the Code in line with its basic principles of flexibility and self-responsibility and created even more transparency - in the interests of investors, companies, and Germany as a business location.”
Dr Gerhard Cromme, Chairman of the Government Commission on the German Corporate Governance Code
“International codes and standards provide a ready-made framework for business-NGO partnerships, from the initial partner selection process to developing a sustainable partnership initiative.”
Amanda Powell-Smith, Director, The Forster Company
Journal 139
May 2005
“The requirement to prepare an OFR should be seen as an opportunity for directors to present a clear and balanced analysis of the strategic position and direction of their business.”
Ian Mackintosh, Chairman of the Accounting Standards Board
“SOX compliance ... is the beginning of an ongoing process of self-assessment, monitoring, improvement and ultimately leads to a control compliant, process improved organisation of benefit to all internal and external stakeholders.”
Michael Nelson, Managing Director, Jefferson Wells
“Directorial competence and board effectiveness cannot be assumed. Both have to be worked at. An assembly of impressive individuals does not necessarily constitute an effective board.”
Professor Colin Coulson-Thomas
“There is a long way to go to before shareholder democracy meets widespread acceptance in European markets. Making companies properly accountable to their owners reduces the need for intrusive regulation.”
Peter Montagnon, Director of Investment Affairs at the ABI
“Systems and controls are what drive the financial data and reporting of a group. The audit committee needs to be satisfied that these are designed and operating effectively, particularly in areas that connect into management judgement.”
Tom Lawton, Head of the Listed Companies sector, RSM Robson Rhodes
“...a non-executive director’s credibility and effectiveness in the board room will depend not just on their existing capability but on their ability to extend and refresh their knowledge and skills.”
Sir Derek Higgs
Journal 137
March 2005
“...our research suggests that it is not the technicalities of IFRS adoption that are holding analysts back, rather the level of communication from companies.”
Kate Delahunty, Director, Citigate Dewe Rogerson
“While it is encouraging to report a great deal of progress, there is still a lot of work which needs to be done... It is incumbent on all participants to take the necessary remedial action.”
Paul Myners
“Boards are influenced by pressures associated with individual company lifecycles, corporate structures, board cultures and corporate processes, which in turn influence the nature of nonexecutive contribution.”
Tracy Long, founder of Boardroom Review
Journal 136
February 2005
Featured Articles:
- Risk of legislation on pay diminishes
- The value of diversity in the Boardroom
“The UK now has a corporate governance framework for directors’ pay that leads the world in terms of transparency and accountability.”
Patricia Hewitt, Secretary of State for Trade and Industry
“The composition of the board sends messages to customers, clients, investors and employees.”
Virginia Bottomley, Head of Board Practice, Odgers Ray & Berndtson
“It has often struck me as curiously anomalous that professionals with these exceptional skills are primarily seen as corporate undertakers rather than as individuals who can administer acute preventive medicine to sick companies.”
Ladislav Harnon, Managing Partner, UHY Hacker Young London
Journal 135
January 2005
Featured Articles:
- Public service Standard published
- The real contribution of Non-Executives
“As a short, clear, practice guide based on six core principles it provides an excellent framework for putting good governance into practice.”
Robert Black, Auditor General for Scotland
“The one fundamental right and obligation of the Non-Executive is to keep asking questions until they get an acceptable answer.”
Sir Derek Higgs
“As investors become increasingly sophisticated and the demand for transparency grows, companies cannot afford to rest on their laurels.”
Simon Lowe, head of Grant Thornton’s Risk Management Services
“Pension fund trustees understand that well-governed companies that engage with investors will perform better in the long term.”
Brendan Barber, TUC General Secretary
“Some investors and analysts have indicated that share price volatility may occur, in some cases, if companies are unable to demonstrate this year that they have ‘IFRS 2005’ under full control.”
Ian Dilks, partner, PricewaterhouseCoopers
“The more financially numerate we are, the greater the temptation to forget the human factor, to dismiss it as ‘fluffy stuff’ or to place it outside the category of measurable and manageable business factors.”
Lynn McGregor, Managing Director, Convivium
“Shareholder engagement is a success when there is an informed, healthy, open dialogue between investors and business.”
Patricia Hewitt, Secretary of State for Trade and Industry
“The presence of a series of strong independent directors can help ensure that the interests of all shareholders and other stakeholders are duly taken into account in the preparation of company decisions.”
Frits Bolkestein, Internal Market Commissioner
“The ability to bring past experience of, for example, expanding into a new geography, defusing a personality conflict or managing an investor relationship to a board grappling with such issues for the first time represents the essence of non-executive added value.”
Garry Sharp, Director, IDDAS
“CSR is no longer merely ‘fashionable’ but an essential component in delivering improved performance, requiring committed leaders to put it at the heart of business.”
Tony Hoskins, The Virtuous Circle
“The governance challenge is not simply to keep pace with the regulators and ensure compliance with the rulebook. Confidence stems from competence not compliance.”
Chris Lucas, partner, Pricewaterhouse Coopers
“The days of ‘chaps regulating chaps’ are well and truly over.”
Martyn Jones, National Audit Technical Partner, Deloittes
Journal 125
March 2004
“The results of our survey suggest that trustee boards are keen to enhance governance, but may have lulled themselves into a false sense of security by making some moves to comply with Myners.”
Andrew Evans, Pricewaterhouse Coopers
“I believe we need to foster a regulatory framework which empowers shareholders and encourages companies to get their policies on directors’ remuneration right, without meddling in commercial decisions on individual remuneration.”
Frits Bolkestein, Internal Market Commissioner
“The OECD Corporate Governance Principles have failed to protect shareholders, investors, stakeholders and the integrity of the corporate economies of its member states.”
Shann Turnbull, International Institute for Self-governance
Journal 124
February 2004
“There are some companies that will only take social responsibility on board if they have to. You’ve got to use regulation to make them.”
‘Behind the Mask - The Real Face of Corporate Responsibility’
“Once a new text is agreed, it will be up to governments, companies, investor groups and others to implement the recommendations and the OECD will follow this process closely.”
General Donald J. Johnston, OECD Secretary
“With 2005 fast approaching, the UK regulatory structure could play a role in mediating between the extreme version of rules-based procedures in the US GAAP ... and the vague principles-based approach employed in the rest of the EU.”
John Friedland, Managing Director of Lawland Corporation
Journal 123
January 2004
“We do not want regulations that are so stringent, complex or unclear that honest, capable people are put off being directors or auditors.”
Patricia Hewitt, Secretary of State for Trade and Industry
“We believe that our revised policy together with the Combined Code will be of fundamental importance to investors and to management in years to come.”
Geoff Lindey, NAPF Strategic Adviser on Corporate Governance
“The participation of institutional investors in, for instance, shareholder meetings is essential to the success of the new corporate governance structure.”
Morris Tabaksblat, Chairman of the Dutch Corporate Governance Committee
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