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Setting the benchmark in corporate integrity

Boardroom & C Suite

Pay ratio disclosure leaves directors unconvinced

Even as the window for public comments looms large on the horizon, the SEC’s pay-ratio disclosure proposal continues to ignite criticism, the most recent of which stems from company directors.

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US companies call for roles to be separated

It is a common trend for US corporations to combine the role of chief executive and board chairman. But increasing numbers of activist investors are calling for an independent chair to run the board. The past weeks have seen disputes between shareholders and directors at both JPMorgan and Hess Corp over their dual leadership roles.

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Diversity: missing the wood for the trees?

April saw the publication of Lord Davies’ second annual progress report on women on boards. The primary recommendation of his original report, published in February 2011, was that FTSE 100 boards should aim for a minimum of 25 percent female representation by 2015. He is now encouraging FTSE 250 companies to take up the same challenge and asks FTSE 350 chief executives to publish, by September 2013, the percentage of women they aim to have on their executive committees by 2015.

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Succession planning: How prepared are you?

Succession planning is an important but undersubscribed aspect of corporate governance. Research suggests that the average tenure for a CEO in the financial industry is five years, but only 2.5 percent of companies have succession planning committees. It is often a tricky issue to have on the agenda, as no CEO takes a job with retirement plans already in mind, but it can be vital for a company to have a clear, long-term strategy for management, for the sake of growth.

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Male-only boards “short-change investors”

The paper, published in March, in the International Journal of Business Governance and Ethics found that male directors, who made up 75 percent of the survey sample, opted to make decisions based on rules, regulations and traditional ways of doing business. Female directors, on the other hand, are less constrained by these parameters and more prepared to eschew tradition and consider the interests of all stakeholders as well as be more cooperative and more inquisitive.

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Leighton’s governance “lead to triple resignation”

The chairman of Leighton Holdings, Stephen Johns, has – in March of this year – resigned amid an ongoing relationship breakdown between the independents and the group’s majority shareholder, German construction company Hochtief.

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Aviva’s failure to meet objectives reflected in slashed dividends

In an ironic turn of events over the past year, the Aviva shareholders who revolted against executive pay plans and poor managerial performance, effectively forcing flailing CEO Andrew Moss to step down, have seen their own dividends slashed by 44 percent.

Recently there was a shareholder run on the company, instantly wiping more than £1.5bn off Aviva’s market value. Additionally, Aviva executives will not receive bonuses this year and senior management will see a pay freeze in an attempt to cut expenses by any means.

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Social business collaboration enhances corporate communications

Outside the boardroom, social media helps everyone to keep connected. Between Facebook, Twitter, Skype and Instant Messaging services, nobody need ever be left out of the social loop. By adapting social media solutions to business strategies, the challenge of keeping all levels of management in the decision-making processes can be resolved.

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An outline of the who, what, where, when and why of corporate foundations

Infographics Corporate foundations

The many faces of auditing

Both mandatory and discretionary, auditing comes in many guises

1 Integrated

A necessary undertaking for public companies, an integrated audit entails the auditing of both financial statements and internal control over financial reporting. Necessarily conducted by an external auditor, integrated audits are advantageous in that they encourage a holistic approach to the internal auditing process.

2 Performance

Conducted by either an asset manager or an outside firm, a performance audit verifies performance figures with those demonstrated to the public. Beneficial in that a performance audit allows an accurate insight into a firm’s returns.

3 Quality

Quality audits entail the systematic examination of a quality system, undertaken by either an internal or external quality auditor. Quality audits are integral in determining compliance with a defined quality system process and are a necessary requirement in maintaining the ISO quality system standard.

4 Regular health checks

Regular health check audits are carried out for purposes in understanding the present state of a specific project. Primarily conducted by an independent party, regular health checks are intended to further increase productivity or otherwise effectiveness.

5 Energy

Energy audits consist of an inspection, survey and analysis of energy consumption. Largely intended for the bettering of energy conservation, input is often sought to be reduced though without the hindering of subsequent output. Energy audits are largely meant for reducing overheads.

6 Regulatory

Otherwise termed financial, regulatory audits are intended for assessing the legality of processes pertaining to financial operations. Encompassing management, collections and expenditure, regulatory audits seek to determine a true and fair representation of policy and financial management.

Community spirit

Research has shown that companies giving back to the communities in which they work tend to enjoy better long-term results

1 IBM

An organisation famed for valuing innovation and entrepreneurship, IBM helps its employees to give back to the community in the way they best see fit. IBM distributes Activity Kits, each one designed around different volunteering opportunities. For those who want to use their expertise to help educate others, there are kits advising on how to conduct workshops for adults who want to get into the industries IBM operates in. Employees wanting to inspire future generation can use kits to engage children in workshops that see students make anything from paper dog houses to solar-powered model cars. Or those who prefer a more hands-on approach they can volunteer to help in disaster zones.

2 Ford

According to Henry Ford, “A business that makes nothing but money is a poor business”. This inspired Ford’s Accelerated Action Day in 2012, which saw more than 600 employees in American branches step away from their desks to work in local community projects, supported by various charities. Volunteers were dispatched to shelters, schools and family centres, helping to clean, paint and build in their on-going renovation missions. Projects included renovating shelter rooms for the Salvation Army’s centre in Detroit, building houses with Habitat for Humanity and creating therapy rooms for children with the First Step Domestic Violence Program.

3 JP Morgan

JP Morgan engages in many community projects globally, but recent years have seen emphasise focused on improving education on both sides of the Atlantic. Last year they helped to fund Achieve Together, a drive to recruit and inspire good teachers in disadvantaged areas of the UK. The first phase of the programme will roll out later this year, estimating to help 8,000 pupils. 2010 saw the firm launch a $325m initiative to support publically-funded schools in the US. The company granted $50m to community-development financial institutions to support new schools, as well as helping to tackle the financial problems of schools that already have a strong academic track record to keep them afloat.

4 Coca-Cola

5by20 is Coca-Cola’s initiative to empower five million female entrepreneurs worldwide by 2020. The multinational aims to focus its efforts on the small businesses across the world, currently focusing on Brazil, South Africa, the Philippines and India, by providing training with financial resources and mentors to women looking to get ahead in business. Since launching the program in 2010, Coca-Cola claim to have economically enabled more than 131,000 women. As part of the program, a new initiative in Kenya has helped female farmers grow mangoes for locally sold fruit juices, which has in turn helped create sustainable livelihoods around the farms.

5 Johnson and Johnson

As part of Johnson and Johnson’s No More Tears brand’s 50th anniversary, its Clean Water Initiative was launched as a combined effort with non-profit charity Water for People. Operating under the slogan “Because every baby deserves clean water”, the program has aided small, rural communities in ten of world’s poorest countries, including Malawi and West Bengal to tackle water contamination. The charity not only educates communities but also installs sanitation facilities in schools to provide clean water to hundreds of thousands of children.

Corporate Governance Report interviews international migration expert Sophie Barrett-Brown on the value of immigrants to UK corporations

Keeping up with UK immigration rules | Sophie Barrett-Brown| Video

Corporate Governance Report interviews international migration expert Sophie Barrett-Brown on the value of immigrants to UK corporations

Corporate Governance Report interviews international migration expert Sophie Barrett-Brown on the value of immigrants to UK corporations

The value of immigrants to the UK economy | Video

Corporate Governance Report interviews international migration expert Sophie Barrett-Brown on the value of immigrants to UK corporations

Corporate Governance Report interviews CapitaLand CFO Arthur Lang on the impact of corporate governance on Asia's real estate industry and investment

Arthur Lang: How corporate governance has affected Asia’s real estate market | CapitaLand | Video

Corporate Governance Report interviews CapitaLand CFO Arthur Lang on the impact of corporate governance on Asia’s real estate industry and investment

News

Churchill Mining grants 5.4 million share options

Following what many have perceived to be detrimental legal altercations through the past year, the London-listed mining company has since granted new share options to many of its employees

Pay ratio disclosure leaves directors unconvinced

The SEC’s recent pay ratio proposal has given rise to criticism and suggestions that it is an ineffective way of curbing excessive executive pay

Just how flexible is the UK employment market?

Government declares that “firms have a duty to hire Britons” but what are the implications for employers?

ASIC pushes ahead with annual report reforms

Australian regulator demands more information on strategy from public companies in their annual financial statements

New union group pledges to ‘tackle corporate responsibility’

The Trade Union Share Owners group will put union values at the heart of corporate governance through the Trade Union Voting and Engagement Guidelines

Shareholders reject Julius Baer pay report

Disgruntled shareholders at Swiss private bank vote to reject remuneration report at annual meeting

SASB set ambitious targets for reforming sustainability reporting

Sustainability advocate SASB is aiming to transform the way a number of core US industries report on their environmental and social practices

ASEAN governance framework established

The results of the first-ever ASEAN Corporate Governance Scorecard have been released, in an effort to establish greater international visibility

Notable reports

Some of the leading reportage in corporate governance

EU outlines new disclosure guidelines for extractive industries

Newly introduced laws are to ensure resource-rich nations are less so made subjects of exploitation, requiring for a much greater extent of transparency among extractive industries

Redefining corporate responsibility: award winners 2013

Organisations are seeking to correct past workplace models, taking stock and embarking upon a new age of responsibility. Here, the Corporate Governance Report celebrates those firms carrying the governance torch

Xerox chief accounting officer appointed to the IASB

Trustees of the IFRS Foundation have announced the appointment of Gary Kaburek as the sixteenth member of the International Accounting Standards Board

EU’s proposed CSR rules split industry and NGOs

Businesses call CSR rule changes too strict, while NGOs say they don’t go far enough