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Setting the benchmark in corporate integrity

Incentives & Remunerations

OXY’s chairman ousted by shareholders


After having been opposed by 76 percent of shareholders on their considering his re-election, Occidental Petroleum’s (OXY) chairman, Ray Irani has been shown the door. Though not without taking a customarily large share of the pie, the longstanding oil executive presently stands to receive a $50m exit package on his dismissal.

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Perks and fringe benefits grow for C suite

As shareholders and the general public look closer at personnel returns, many CEOs have been forced to trim their salaries. But research by Equilar for The New York Times reveals that some executives are still taking home hefty sums, only in different and more creative forms of remuneration.

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Shareholders reject Julius Baer pay report

The ongoing row over executive pay in the European banking industry continued in April when shareholders at Switzerland’s third largest wealth manager rejected the company’s remuneration report.

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Goldman directors award continual performance

In his first letter to shareholders James J Schiro, Goldman Sachs lead outside director claimed the board remained ‘very focused’ on the company’s reputation and detailed the compensation packages for the directors. Schiro’s role was created less than a year ago, after intense shareholder pressure; the lead outside director’s role is to act as supervisor of the board.

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Gunaxi: Bribe or gift?

A failure to understand local traditions has lead to several US-based companies infringing laws laid out by the SEC. Under the Foreign Corrupt Practices Act, anti-bribery previsions mean offering a payment of money of anything of value to foreign officials in an attempt to influence them is outlawed.

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Court rules “unenforceable” arbitration

The long-running case of Compton vs AMS has had a breakthrough as the Second Appellate District court ruled that the arbitration agreement signed by Compton is ‘unconscionable’ and therefore unenforceable. The decision is a milestone for employment contract litigation that has long been thought to favour employers.

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Churchill Mining grants 5.4 million share options

Churchill Mining has extended 5.4 million share options to its directors, executive management and consultants. The corporation, whose primary activity is in coal mining, has stated for the new options to be exercisable at the price of 28p per share, expiring five years from date of issue.

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Should defined contributions be re-distributed?

The Lords Select Committee said the process of saving for pensions does not correlate with the post-retirement payouts. “The current DC pensions system is not fit for purpose for anyone who is not rich, or who moves in and out of work due to bad health or the need to care for others. We urge [the pensions industry, employers and the Government] to work together to redesign DC schemes to create better options so that people are clearer about how much they can expect to get from their pensions as a result of the savings they make.”

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A cultural aversion to defined benefit pension plans

The widespread and continued closure of defined benefit plans have made for a climate of uncertainty and aversion amongst participating companies and members alike. According to reports from the Pension Protection Fund and The Pensions Regulator, the number of schemes open to accrual continues to fall, as do levels of membership. As such, schemes are being made to seem an increasingly unattractive option to today’s overly risk conscious climate.

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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

We, the corporations?

Luigi Zingales on the possibility of a mandatory disclosure rule

Gunaxi: Bribe or gift?

The efforts of multinational companies to do business in China is marred by the tradition of Gunaxi – the concept of courting clients and networking that traditionally involves gift giving

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

Health audit ceases force’s IT system

Surrey Police forced to abandon failed multi-million pound computer system

Australian government launches mining probe

Australia’s securities regulator is set to launch a probe of the country’s biggest mining companies in a bid to crack down on selective briefings

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

Tech Data delays annual report after regulator questions

US-based technology wholesaler made to delay the publication of its annual report after questions are raised about accounting practices of its UK subsidiary

Shareholders sue CEO after Walgreens is slapped with $80m DEA fine

The largest drug retailer in the US has hit back at its board members. Chairman James Skinner and CEO Gregory Wasson have been sued by shareholders who blame them for exercising poor corporate oversight regarding the distribution of prescription painkillers like Oxycodone

OXY’s chairman ousted by shareholders


The oil and gas company is to have undergone a recent change of personnel, the chairman herein being forcibly made to step aside by activist shareholders

Highest paid CEOs, 2012

The world’s top jobs command the world’s top remunerations, so long as they’re well earned

Norway appoints corporate governance board

In a bid to become a more active investor, Norway has appointed a corporate governance advisory board to help oversee its $760bn sovereign wealth fund

UK’s FRC rejects calls for compulsory audit rotation

Despite pressure to encourage greater competition in the UK’s accounting market, regulator waters down its proposed rule changes

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