Matt Chapman

Strategic Reports: room for improvement

‘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.’

Oliver Ziehn

The board’s role in determining culture

‘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.’

Matt Chapman and Tim Copnell

Viability assessments: is practice living up to expectations?

‘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.’

Cas Sydorowitz

Proxy Season Review

‘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.’

Professor Alex Edmans

In praise of hedge funds

‘... 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.’

Carl Sjostrom and Hans-Kristian Bryn

Symbiotic board committees

‘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.’

Peter Tunjic

A Newtonian Revolution in CG

‘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.’

Hans-Kristian Bryn and Carl Sjostrom

Linking Risk and Reward

‘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).’

Tracy Gordon

Boardroom priorities across EMEA

‘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.’

Neill Blundell

Tackling bribery and corruption

‘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.’

Alex Edmans

Why organisations cannot thrive without purpose

‘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.’

Vicky Maxwell Davies

Cyber-security and boards

‘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.’

Alex Cameron and David Archer

Programme Boards – room for improvement

‘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.’

Dr Sabine Dembkowski

Private equity board audits

‘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.’

Baroness Bowles of Berkhamsted

Reflections on corporate governance

‘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.’

Judith Nicol

Effective board culture

‘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.’

Will Moynahan and Sacha Sadan

Beyond the numbers

‘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.’

Chris Hodge

Governance in perspective

‘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.’

Anne Kirkeby

Reporting on corporate culture

‘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.’

Dr Sabine Dembkowski

Board audit: let’s get it right

‘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?’

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