Welcome to VIPsight International

 

Scoop in 2017:

$900bn oil fund shake-up in Oslo. On 16 February, Norway's government has proposed fundamental change to the world's largest sovereign wealth fund in this century, cutting the amount of oil money Norwa can spend each year and tilting the fund towards higher risk by investing about +15 % more in equity stock markets. The $900bn oil fund should be able to invest 70 per cent of its assets in equities, up from 60 per cent. The shift, which needs approval by the parliament, would be significant for global markets since the fund on average already owns 1.3 per cent of every listed company.

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Last scoop in 2015:

Myanmar's new stock exchange came into existence Wednesday, but there are no listed companies or brokers and therefore no trading as well. When trading begins, foreigners won't be allowed to participate. Six companies are in line to list in Myanmar, but after opening in recent years, exchanges in Laos and Cambodia each have less than five listed companies, Reuters reported.
IBT international business times

http://www.ibtimes.com/myanmar-stock-exchange-opens-no-trading-speed-market-development-2217306

The ability of companies to obtain capital via the stock exchange is of outstanding importance for a national economy. The global finance crises has shown us that striving for porfit without sustainability can easily lead us to ruin.
A misunderstood shareholder-value approach misled issuers into striving for maximum short-term profits, causing them to recklessly neglect their risk policy or to massively overestimated their risk-bearing capacity. sustainably managed companies are distinguished by the fact that they not only keep an eye on their risks but actually have them under control.
In asset management, social, ecological and economic risks are also to be taken in account in addition to the classic financial risks, which are more easily quantifiable. The reward is more stable growth of the capital investments, as the precondition of solid fundings that can withstand even the imponderables of the capital markets. The key of GLOBAL success lies in maintaining one's responsiveness to local and REGIONAL sensibilities - that is, what VIPsight so calles Satellites report us from insights in other Corporate Governance cultures.

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Effective Supply Chain Accountability:

Investor Guidance on Implementation of The California Transparency in Supply Chains Act and Beyond

<click here> complete version (PDF)

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UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD) Corporate Governance Disclosure in Emerging Markets Statistical analysis of legal requirements and company practices <click here> complete version (PDF)

 

Welcome to VIPsight Oceania - Australia

 

Author

UTS Centre

 

 

 

2012 Australian Census of Women in Leadership

OPUS - Open Publications of UTS Scholars

Abstract:

A research book commissioned by the Australian Government Equal Opportunity Agency. This work reports the results of the 2012 Australian Census of Women in Leadership. The survey includes an analysis of the ASX 500 companies boards and executives gender diversity; gender diversity in public sector boards; and comparison with international initiatives in gender diversity in leadership positions. The work provides a detailed analysis of a large data base, and analytical commentary of the results. There is an assessment of remaining obstacles to achieving greater diversity, and analysis of what is required to create a better pipeline for the development of women for leadership.

<click here> complete version (PDF)

 

 

20 November 2020

Responsible Investment - Benchmark Report 2020 Australia

Negative screening of fossil fuels is beginning to catch up to consumer interest.

Fossil fuels are clearly front of mind for consumers and survey respondents. In 2018, only 5% of responsible investment AUM for survey respondents who conduct negative screening was screened for fossil fuels. In 2019, 19% of responsible investment AUM has been screened for fossil fuels, growing 14 percentage points from the year before.

For consumers using RIAA's Responsible Returns online tool,2 the most important exclusionary screens are fossil fuels (36%), human rights abuses (17%) and armaments (12%).

Read more (responsibleinvestment.org/RIAA-RI-Benchmark-Report-Australia-2020.pdf)

 

 

27 September 2015

High-frequency trading and dark pools: sharks never sleep

THOMAS CLARKE

Director, Centre for Corporate Governance, UTS Sydney, Australia

The implications of massive high-frequency trading are becoming increasingly clear in equity markets and other financial markets. In recent years high-frequency trading has not only increased vastly in US equity trading, but in the last ten years has extended widely to other major international exchanges. High-frequency trading from its origins attracted the interest of regulators concerned about the impact on market integrity and stability. However, it was the publication of Michael Lewis’s best-selling book Flash Boys that alerted the world to the imminent dangers of this form of trading. Regulators are now confronted with the dilemmas of attempting to regulate an industry operating at the speed of light.

A. Introduction

The dangers of massive high-frequency trading (HFT) are becoming increasingly clear in equity markets and other financial markets. HFT is a form of algorithmic trading per- formed by computers, to rapidly move into and out of trading positions in microseconds in order to capture fractions of a cent profit on every trade, which when magnified by millions of trades quickly yields a substantial return. In contrast to traditional buy-and-hold investment strategies, HFT firms do not need to employ large amounts of capital, do not accumu- late positions, nor hold portfolios overnight.Trading on tiny margins, their large gains are through speed and frequency combined with fractionally earlier access to information.1 The awesome power of this technologically driven approach to trading is hard to imagine: in a single day in October 2008 one HFT firm exchanged over 2 billion shares, amounting to 10% of US equities trading volume for the day.2 Carol C Clarke of the Federal Reserve Bank of Chicago accurately captures the technical essence of this radical automation of trading:

“A small group of high-frequency algorithmic trading firms have invested heavily in technology to leverage the nexus of high-speed communications, mathematical advances, trading, and high-speed computing. By doing so, they are able to complete trades at lightning speeds. High-frequency algorithmic trading strategies rely on computerized quantitative models that identify which type of financial instruments to buy or sell (eg, stocks, options, or futures), as well as the quantity, price, timing, and location of the trades.These so-called black boxes are capable of reading market data, transmitting thousands of order messages per second to an exchange, cancelling and replacing orders based on changing market conditions, and capturing price discrepancies with little or no human intervention.”3

<click here> complete version (PDF)

 

 

30 June 2015

Federal court considers shareholder rights

Last year the ACCR put a shareholder resolution to the Commonwealth Bank asking it to report on its financing of the fossil fuel industry and exposure to risks from climate change.

The CBA did not put the ordinary resolutions on their AGM agenda. Instead the CBA board said the only valid option open to the ACCR was to endeavour to change the constitution of the bank, which required a higher (75% versus 50%) voting threshold to be approved, the ACCR case states.

Ordinary resolutions avoid the need to change the company’s governance rules when shareholders simply want a single issue considered. As such they are a much more practical and accessible way for shareholders to express their concerns about the company’s practices, Millner said.

“Australian law is unclear about whether shareholders have the right to put ordinary resolutions to company AGMs, expressing an opinion about the management of the company. Companies have been acting on the assumption that they do not. This case will set a precedent which will apply to future AGMs of listed companies in Australia,” Millner said.

The CBA welcomed the participation of shareholders and other groups in Annual General Meetings, and balanced this with the need to run meetings effectively, a spokesperson for the bank said.

“A company is only required to put a proposed shareholders’ resolution to its general meeting if it is properly constituted. A company is not obliged to put forward a resolution that simply contains an expression of opinion by a particular number of shareholders.

“In this case, ACCR sent a letter to CBA in September 2014 notifying it that it proposed to “move a resolution” at the Group’s 2014 AGM.

ACCR’s letter only asked CBA to put forward one of three proposed alternative resolutions to the AGM. CBA put forward the only proposed resolution that was properly constituted.

“As the matter is still before the Court, we will not be providing any further comment,” the spokesperson said.

The case was heard on Monday June 1 at the Federal Court in Melbourne before Justice Davies. A decision is expected within three weeks though it could be longer.

 

 

26 November 2014

IAN T DUNLOP

STATEMENT IN SUPPORT OF APPOINTMENT TO THE BOARD OF BHP BILLITON LIMITED

Chairman, thank you for the opportunity to speak in support of my nomination to join the Board of BHP Billiton (BHPB).

Ladies and gentlemen, as last year, my platform for election is the climate change and energy challenge we face, specifically its implications for BHPB shareholders.

At the BHPB Plc AGM in London last month, I congratulated the Company on the action it has taken since I raised these matters last year. With its new climate change policy and scenario analysis, BHP Billiton is undoubtedly setting the standard for the global resource industry. The Chairman’s comments this morning that further low emission technology initiatives are planned are also encouraging.

However, the real issue remains the urgency with which climate change must be addressed. Developments since the London AGM emphasise that the even new BHPB policy is wholly inadequate in this regard.

Earlier this month, the Intergovernmental Panel on Climate Change (IPCC) issued its bluntest warning yet in their 2014 Synthesis Report, calling for urgent action if “severe, pervasive and irreversible impacts” are to be avoided. And this is a conservative, lowest-common denominator, consensus, which ignores the big risks of positive feedback “tipping points” already becoming evident in the Arctic, Antarctic, the Oceans and elsewhere. Once they take hold, they may well be irreversible.

The International Energy Agency’s 2014 World Energy Outlook, released last week, warns that current and planned policies will lead to temperature increase in excess of 40C - to contain temperature below the official 20C target requires global emissions to peak within 5 years and then reduce rapidly.

Even then, evidence suggests that a 20C temperature increase will halt population growth in large parts of the world. A 40C increase will see substantial population decline, with escalating social conflict, as we are already seeing in the Eastern Mediterranean.

Why is this important for shareholders? As the Chairman stated earlier, the prosperity of BHPB depends upon a stable and growing global economy. This is incompatible with even a 20C temperature increase. Growth now depends upon a rapid transition to a low-carbon world. Stability requires urgent action, as further delay is cutting off our options to make that transition in good order.

The low-carbon economy represents the greatest value creation opportunity in human history, provided it is seized with proactive leadership. That is the leadership which BHPB must now demonstrate, and despite recent progress, I do not see that happening yet.

The Company’s risk management approach shows no sign of real urgency. It must go beyond the conservative IPCC conclusions to encompass the “tipping points” we now see developing.

The new policy implies a temperature increase of around 30C, which would be extremely damaging to shareholder value. It assumes that “fossil fuels will continue to be a significant part of the energy mix for decades”, which in a world with virtually no carbon budget remaining today, is nothing less than suicidal unless emergency programmes are initiated to make solutions such as Carbon Capture and Storage really work. There is no sign of BHPB, or the industry, making that commitment. Indeed the coal industry lost interest in the technology a decade ago.

The Minerals Council of Australia, and the Business Council of Australia, substantially funded by BHPB, continue to undermine any sensible policy development, and BHPB itself has done nothing to contest the Australian government’s blatant climate change denialism.

Most importantly, BHPB’s strategy must move away from incrementally changing “business-as-usual”, to focus on rapid transition to the low-carbon economy, not least to avoid losing major opportunities for shareholder value creation.

Ladies and gentlemen, the Board has recommended against my appointment on the grounds that my experience and expertise do not meet the requirements of a BHPB Non-Executive Director. This response highlights governance issues which have lain dormant for years, as remuneration-driven short-termism has dominated corporate thinking.

I have the greatest respect for the competence of the existing board in a conventional sense. However, these are not conventional times and those self-same conventional skills are, in my view, blinding the Board to the great changes already taking place in the climate and energy arena.

The Chairman has emphasized the sophisticated succession-planning approach used by BHPB. My concern is that these conventional processes ensure that directors are appointed in the existing Board’s own image. Whilst this may have been acceptable in the days of relatively predictable growth, in creating the low-carbon world we are in the midst of the greatest discontinuity, and opportunity, the world has ever seen. Company prosperity now depends upon avoiding myopic “groupthink” by complementing conventional skills with further board diversity and unconventional perspectives.

At the most fundamental level, it raises yet again the question of “What is a Company For?” Is it to supinely follow, and be shaped by, the dictates of dysfunctional governments and the market, optimising short-term returns? Or is it to use its undoubted influence and expertise in shaping a genuinely sustainable future?

Despite having access to the best possible scientific and risk advice, corporate leaders including BHPB, seem to take the former view. As a result, we are witnessing a fundamental failure of risk management and corporate governance as directors, in underplaying the real risks of climate change, abrogate their fiduciary responsibility to objectively assess and manage those risks and opportunities in the interests of their companies in perpetuity, not just in the short-term. Investors, with some notable exceptions, are equally complicit for not insisting that boards of directors take far more vigorous action.

Many commentators claim that BHPB and other companies are engaged in a “race-to-the-bottom” as iron ore demand slides, grabbing volume at all costs. I do not want to buy-in to that argument, but what I do know is that we cannot afford a “race-to-the-bottom” in fossil-fuels! BHPB, along with likeminded progressive organisations and investors, in their own self-interest must now publicly articulate the need for, and implement, radical action.

I believe that I am well-equipped to meet those unconventional needs and to assist in framing that action, so I appeal to you directly for shareholder support.

Thank you for your consideration, and thank you, Chairman, for the opportunity to speak to the meeting.

 

22 November 2014

 

16 June 2014

The impact of financialisation on international corporate governance: the role of agency theory and maximising shareholder value

THOMAS CLARKE

Affiliation?

The phenomena of financialisation has had a universal and pervasive impact upon economies and societies in recent decades. Global finance is now typified by a more international, integrated and intensive mode of accumulation; a new business imperative of the maximization of shareholder value; and a remarkable capacity to become an intermediary in every aspect of daily life. The finance sector has progressively increased its share of GDP, and even for non-financial corporations the pursuit of interest, dividends and capital gains outweigh any interest in productive investment. As non-financial corporations have become increasingly drawn into a financial paradigm they have less capital available for productive activity. These financial pressures are translated into the operations of corporations through the enveloping regime of maximising shareholder value as the primary objective. Agency theory has provided the rationale for this project, prioritising shareholders above all other participants in the corporation. This article seeks to discover the origins of the financialisation of corporations in the early development of agency theory and shareholder value in Anglo-American corporations. The enduring myths of shareholder primacy are examined. The article concludes with a consideration of how the reform of corporate law might serve to strengthen the recognition and pursuit of the wider purposes of corporations and longer-term investment horizons. <more>

 

5 September 2013

With the AGM season fast approaching, ASA (Australian Shareholders' Association) monitors are now in full swing preparing voting intentions. Find hereafter just posted the updated list of the companies monitored for the rest of this year. The 2013 list can be accessed from our home page. If you have shares in a monitored company, we encourage you to appoint the VIP with your proxy and we will be in charg to forward this.

COMPANIES MONITORED BY THE ASA IN 2013
ASX COMPANY NAME	ASX CODE	MONITOR NAME	AGM DATE	AGM LOCATION
ASX Limited	ASX	Carol Limmer	25-Sep-13	Sydney
Australian Foundation Investment Company	AFI	Geoff Read	09-Oct-13	Melbourne
Worley Parsons	WOR	Stephen Mayne	09-Oct-13	Sydney
Transurban Group	TCL	John Curry	10-Oct-13	Melbourne
Cochlear	COH	Dan Steiner	15-Oct-13	Sydney
Telstra Corp	TLS	Geoff Read	15-Oct-13	Sydney
CSL	CSL	Don Hyatt	16-Oct-13	Melbourne
Milton Corporation	MLT	Peter Metcalf	16-Oct-13	Sydney
The Reject Shop	TRS	Ian Curry	16-Oct-13	Melbourne
Ansell	ANN	Richard Giles	17-Oct-13	Melbourne
ARB Corporation Limited	ARP	Bill Henderson	17-Oct-13	Melbourne
Cardno	CDD	Kym D'Arcy	17-Oct-13	Brisbane
Qantas Airways	QAN	Richard McDonald	18-Oct-13	Brisbane
21st Century Fox Broadcasting	FOX	Stephen Mayne	18-Oct-13	Los Angeles
McMillan Shakespeare	MMS	Terry Peevors	21-Oct-13	Melbourne
Wotif.com Holdings	WTF	Denis O'Sullivan	21-Oct-13	Brisbane
Blackmores	BKL	Mary Curran	22-Oct-13	Sydney
Brambles Industries	BXB	Mary Curran	22-Oct-13	Sydney
Charter Hall Retail	CQR	Michael Perry	22-Oct-13	Sydney
SMS Management & Tech	SMX	Peter Schiff	22-Oct-13	Melbourne
Southern Cross Media	SXL	Stephen Mayne	22-Oct-13	Melbourne
Treasury Wine Estates	TWE	Geoff Read	22-Oct-13	Adelaide
AGL Energy	AGK	Michael Shea	23-Oct-13	Sydney
Bradken	BKN	Phillip Hocking	23-Oct-13	Sydney
Codan	CDA	Stefan Landherr	23-Oct-13	Adelaide
Origin Energy	ORG	Geoff Orrock	23-Oct-13	Sydney
Pacific Brands	PBG	Dick Morgan	23-Oct-13	Melbourne
Super Retail Group	SUL	Peter Mortiss	23-Oct-13	Brisbane
Amcor	AMC	Gavin Morton	24-Oct-13	Melbourne
APA Group	APA	Nick Bury	24-Oct-13	Sydney
Carsales.com	CRZ	Stephen Mayne	24-Oct-13	Melbourne
Forge	FGE	Len Roy	24-Oct-13	Perth
Insurance Australia Group	IAG	Michael Perry	24-Oct-13	Sydney
Newcrest Mining	NCM	Gavin Morton	24-Oct-13	Melbourne
Skilled Group	SKE	John Curry	24-Oct-13	Melbourne
Suncorp Group	SUN	Kym D'Arcy	24-Oct-13	Brisbane
Toll Holdings	TOL	Graham Walker	24-Oct-13	Melbourne
Transfield Services	TSE	Peter Barker	24-Oct-13	Sydney
Karoon Gas Australia	KAR	Duncan Seddon	25-Oct-13	Melbourne
Korvest	KOV	Yin Young Yu	25-Oct-13	Adelaide
M2 Telecommunications	MTU	John Whittington	25-Oct-13	Melbourne
Paperlinx	PPX	Geoff Bowd	25-Oct-13	Melbourne
Bendigo & Adelaide Bank	BEN	Rex McKenzie	28-Oct-13	Bendigo & Adelaide

NIB Holdings	NHF	Phillip Hocking	29-Oct-13	Newcastle
Penrice Soda Holdings	PSH	Michael Davey	29-Oct-13	Adelaide
Stockland	SGP	Michael Perry	29-Oct-13	Sydney
UGL Group	UGL	Estelle Renard	29-Oct-13	Sydney
Atlas Iron	AGO	David Brooke	30-Oct-13	Perth
Ausdrill	ASL	John Campbell	30-Oct-13	Perth
Crown	CWN	John Curry	30-Oct-13	Melbourne
Envestra Ltd	ENV	Stefan Landherr	30-Oct-13	Adelaide
Flight Centre	FLT	Mike Glajnaric	30-Oct-13	Brisbane
GWA Group	GWA	Peter Mortiss	30-Oct-13	Brisbane
JB HI-FI	JBH	Rod McKenzie	30-Oct-13	Melbourne
Transpacific Industries Group	TPI	Lee Buckland	30-Oct-13	Brisbane
Boral	BLD	Estelle Renard	31-Oct-13	Sydney
Federation Centres	FDC	Graeme Walker	31-Oct-13	Melbourne
GUD Holdings	GUD	Norm West	31-Oct-13	Melbourne
Hills Holdings	HIL	Joseph Tan	31-Oct-13	Adelaide
Perpetual Limited	PPT	Peter Metcalf	31-Oct-13	Sydney
Reece Australia	REH	John Whittington	31-Oct-13	Melbourne
Tabcorp Holdings	TAH	John Curry	31-Oct-13	Melbourne
Tassal	TGR	John Quinn	31-Oct-13	Melbourne
Tatts Group	TTS	Malcolm Badgery	31-Oct-13	Brisbane
Whitehaven Coal	WHC	Geoff Orrock	04-Nov-13	Sydney
Dexus Property Group	DXS	Allan Goldin	05-Nov-13	Sydney
Platinum Asset Management	PTM	Mary Curran	05-Nov-13	Sydney
Downer EDI	DOW	Geoff Orrock	07-Nov-13	Sydney
Fairfax Media	FXJ	David Allen	07-Nov-13	Sydney
Wesfarmers	WES	John Campbell	07-Nov-13	Perth
Charter Hall Group	CHC	Michael Perry	08-Nov-13	Sydney
Commonwealth Bank	CBA	Dan Steiner	08-Nov-13	Adelaide
Echo Entertainment	EGP	Carol Limmer	08-Nov-13	Sydney
Fleetwood Corp	FWD	Tony McAuliffe	08-Nov-13	Perth
Asciano Group	AIO	Merv McDougal	12-Nov-13	Melbourne
Unity Mining	UML	Rex McKenzie	12-Nov-13	Melbourne
Aurizon Holdings	AZJ	Lee Buckland	13-Nov-13	Brisbane
Computershare	CPU	Tom Rado	13-Nov-13	Melbourne
Mount Gibson Iron	MGX	Tony McAuliffe	13-Nov-13	Perth
REA Group	REA	Stephen Mayne	13-Nov-13	Melbourne
Bluescope Steel	BSL	Rex McKenzie	14-Nov-13	Sydney
Fortescue Metals	FMG	Peter Kent	14-Nov-13	Perth
Mirvac Group	MGR	David Allen	14-Nov-13	Melbourne
New Hope	NHC	Bill Seymour	14-Nov-13	Ipswich
Qube Logistics Holdings	QUB	Roger Duchau	14-Nov-13	Sydney
ResMed Inc	RMD	Skye Fitzpatrick	14-Nov-13	USA
Automotive Holdings	AHE	John Campbell	15-Nov-13	Perth
Lend Lease	LLC	Roger Juchau	15-Nov-13	Sydney
Macmahon Holdings	MAH	Tony McAuliffe	15-Nov-13	Perth
Mesoblast	MSB	Peter Schiff	15-Nov-13	Melbourne
Seven Group Holdings	SVW	Nick Bury	15-Nov-13	Sydney

Sims Metal Management	SGM	Nick Bury	15-Nov-13	Sydney
Sonic Healthcare	SHL	Joyce Yong	15-Nov-13	Sydney
Arrium (former Onesteel)	ARI	Geoff Orrock	19-Nov-13	Sydney
Emeco Holdings	EHL	Len Roy	19-Nov-13	Perth
iinet	IIN	Peter Jensen	19-Nov-13	Perth
Monadelphous	MND	Peter Kent	19-Nov-13	Perth
Lynas Corporation	LYC	Joyce Yong	20-Nov-13	Sydney
Navitas	NVT	John Ferguson	20-Nov-13	Perth
Virgin Australia	VAH	Sally Mellick	20-Nov-13	Brisbane
BHP Billiton	BHP	Duncan Seddon	21-Nov-13	Perth
Goodman Group	GMG	Alan Goldin	21-Nov-13	Sydney
Mermaid Marine	MRM	Alan Dickson	21-Nov-13	Perth
Mineral Resources	Mineral	Wayne Platt	21-Nov-13	Perth
Nexus Energy	NXS	Norm West	21-Nov-13	Melbourne
Paladin Energy	PDN	Len Roy	21-Nov-13	Perth
AWE	AWE	Michael Shea	22-Nov-13	Sydney
David Jones	DJS	Roger Juchau	22-Nov-13	Sydney
Duet Group	DUE	Tony Robinson	22-Nov-13	Sydney
Energy World Corp	EWC	Michael Shea	22-Nov-13	Sydney
Gindalbie Metals	GBG	Alan Dickson	22-Nov-13	Perth
Goodman Fielder	GFF	Roger Ashley	22-Nov-13	Sydney
Kingsgate Consolidated	KCN	Michael Shea	22-Nov-13	Sydney
Perseus Mining	PRU	Barry Nunn	22-Nov-13	Perth
Regis Resources	RRL	Peter Jensen	22-Nov-13	Perth
Western Areas	WSA	Tony McAuliffe	22-Nov-13	Perth
Billabong International	BBG	Silvana Eccles	25-Nov-13	Gold Coast
Challenger	CGF	Peter Metcalf	26-Nov-13	Sydney
IOOF Holdings	IFL	Ian Curry	26-Nov-13	Melbourne
Resolute Mining	RSG	Geoff Field	26-Nov-13	Perth
Sandfire Resources	SFR	David Alltree	26-Nov-13	Perth
St Barbara	SBM	Rod McKenzie	26-Nov-13	Melbourne
Woolworths Ltd	WOW	Doug Campbell	26-Nov-13	Chatswood
Brickworks	BKW	Peter Metcalf	27-Nov-13	Sydney
Harvey Norman	HVN	Nick Bury	27-Nov-13	Sydney
Independence Group	IGO	Derek Miller	27-Nov-13	Perth
NRW Holdings	NWH	Stephen Weston	27-Nov-13	Perth
Cabcharge Australia	CAB	Alan Goldin	28-Nov-13	Sydney
Linc Energy	LNC	Bill Seymour	28-Nov-13	Brisbane
Ramelius Resources	RMS	Michael Davey	28-Nov-13	Adelaide
Seek	SEK	Stephen Mayne	28-Nov-13	Melbourne
Aquila Resources	AQA	Geoff Field	29-Nov-13	Perth
Beach Energy	BPT	Bob Ritchie	29-Nov-13	Adelaide
Buru Energy	BRU	Peter Jensen	29-Nov-13	Perth
Dyesol	DYE	Edward Patching	29-Nov-13	Queanbeyan
FKP Property Group	FKP	Jim Gregg	29-Nov-13	Brisbane
Myer Holdings	MYR	John Curry	29-Nov-13	Melbourne
Primary Health Care	PRY	Roger Juchau	29-Nov-13	Sofitel Sydney
Premier Investments	PMV	Bill Henderson	03-Dec-13	Melbourne

Nufarm	NUF	Judith Seddon	05-Dec-13	Melbourne
TPG Telecom	TPM	Estelle Renard	05-Dec-13	Sydney
Ten Network Holdings	TEN	Allan Goldin	06-Dec-13	Sydney
Washington H Soul Patt	SOL	Peter Metcalf	06-Dec-13	Sydney
Bank of Queensland	BOQ	Denis O'Sullivan	13-Dec-13	Brisbane
Westpac Banking Corp	WBC	Carol Limmer	13-Dec-13	Melbourne
ANZ Banking Group	ANZ	Richard Giles	18-Dec-13	Brisbane
Elders	ELD	Bob Ritchie	19-Dec-13	Adelaide
GrainCorp	GNC	Randall Kingsley	19-Dec-13	Sydney
Incitec Pivot	IPL	John Parker	19-Dec-13	Melbourne
National Australia Bank	NAB	Dennis Shore	19-Dec-13	Melbourne
Dulux Group	DLX	Geoff Bowd	20-Dec-13	Melbourne

 

 

 

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VIPsight Archives Oceania - Australia

 

2010 2011 2012 2013

 

22. Mai 2013

I'm afraid, there are other more knowledgeable people on this situation!

I would only say that the subsidiary resisting the parent does not look like a good outcome for the subsidiary. It is Spanish corporate governance meeting the definance of Australian corporate governance and the notion of 'independence'. It would behoove the Spanish parent to be cautious or they will see their cash cow in Asia-Pacific lose its lustre. Of course, the possibility of it being spun off isn't too far off either!

 

 

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18 November 2012

2012 CHANGES TO THE GLOBAL INTERNAL AUDIT STANDARDS

SIX THINGS

AUDIT COMMITTEES AND CHIEF AUDITORS

NEED TO KNOW

OCTOBER 2012

 

SUMMARY

In October 2012 the Institute of Internal Auditors (IIA) released their latest revisions to their global standards. These standards come into effect from 1 January 2013.

The IIA’s global standards board have held global webinars to give insights not only into what was written, but what their thinking was at the time. As a former member of the IIA’s Global Professional Practices Council and protagonist of some of these changes, we were very keen to understand some of the subtleties in what has changed and why.

Our assessment is that while at first glance many of the changes appear to be semantic word changes, there are six key areas that chief auditors and audit committees will want to be across.

In this brief we provide a summary of each issue, together with our interpretation and actions that organisations can and should take now to comply while also getting more out of their internal audit function.

<click here> complete version (PDF)

 

11 November 2012

 

The Australian Council of Superannuation Investors

 

In its latest annual series of reports on corporate governance issues in Australia, the Australian Council for Superannuation Investors (ACSI) has published research by the investor-activist group, Ownership Matters, into proxy voting, in particular "the inner workings, the idiosyncracies and anomalies" (Byrne 2012) of the voting process. This report publishes the changing, dynamic environment in ensuring shareholders and stakeholders can keep their companies responsive and accountable.

Read more in VIPsight studies & science. <click here>

 

 

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14 December 2011

European Corporate Governance:

The Investor‘s View
Corporate Governance in Europe ,
focussing on Germany

Europe post-crisis continent – post?

<click here> complete version (PDF)

 

Content - nobody responsible

Capital
- Germany
- EU aspects

Corporate Governance
- Germany
- EU aspects

cases
- German
- EU aspects

Who we are?  What do we do?

VIP eV

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- monthly
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Since 1975 : Regular personal AGM-Presence and Voting
Since 1990 : Active participation in the international CG - Discussion
Sinde 2000 : Professional physical AGM- Presence and VIP proxy voting
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14 July 2011

Australia’s new rules on remuneration by Marie dela Rama

On June 20^th, the Australian parliament passed new laws (Corporations Amendment [Improving Accountability on Director and Executive Remuneration] Actⁱ) which have a significant impact on the reporting of the executive remuneration of public companies. These laws also go some way to empower shareholders whose dissent over the failure of boards to link executive remuneration with performance was previously ignored.

These laws amend significant sections of the key Australian legislation governing companies, the Corporations Act, and they apply from the 1^st of July. Where previous voting on remuneration reports on Australian companies were non-binding (that is, even when a majority of shareholders vote down the reports, the vote is ignored by the board and reports are still passed), this legislation binds the vote and makes them legally enforceable.

These laws also will force a renewal of boards – that is, directors face compulsory re-election - if shareholders repeatedly vote down a company’s remuneration report. Specifically, the amendments to sections 249L(2) and 250U-Z are the spill amendments because they allow a board spill to occur after two consecutive annual general meetings if shareholders are continually dissatisfied with the company’s remuneration report:

• Section 249L(2) applies the “two-strikes” rule which refers to the circumstance where a remuneration report is not well-received. The “first strike” is when at least 25% of shareholders vote against the remuneration report. The board is given the chance to explain to shareholders justifying the remuneration and/or change the report at the next annual general meeting. If at the next annual general meeting the remuneration report is voted down again by more than 25% of the company’s owners, this is called the “second strike” and shareholders can vote for a board spill (which means a new board).ⁱⁱ

• Section 250V is the spill resolution as it requires a fresh election of board directors within 90 days after the second strike occurs.

These two sections emphasise the necessity to have a majority of shareholders be satisfied with the remuneration report of the company’s executives. Shareholders now have the power to elect a new board due to remuneration issues. These sections also focus the spotlight on boards of directors and their responsibility to be attuned to the requirements of their companies’ shareholders and the wider investing community that remuneration must reflect the performance of their executive management.

Furthermore, the amendments cover issues such as:

• Ban on hedging the remuneration of executives (section 206J)

• Improving disclosure practices on the hiring and using of remuneration consultants by the board (sections 206K-206L). Significantly, section 206M(2) requires that the remuneration consultant must declare whether s/he made his/her recommendations “free from undue influence” from executives of the company.

• Proxy voting by executives or their related parties (section 250BD)

• Discussing board policy over executive remuneration (section 300A)

Australian companies have now been put on notice to have better awareness over the impact of their remuneration report and greater dialogue with their shareholders. In a couple of years’ time we may see the first cases applying these amendments.

These laws improve the accountability of managers to their shareholders where it matters most by giving the latter power and say over the former’s remuneration: a power long overdue to the owners of corporations.

i Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act http://www.comlaw.gov.au/Details/C2011A00042 accessed 17th July 2011

ii Bradbury, David (2011) Executive Remuneration Reforms Pass the Parliament, 20^th June http://parlsec.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2011/027.htm&pageID=003&min=djb&Year=&DocType= accessed 17^th July 2011

 

7 April 2011

In whose interest?

The failed takeover by the Singapore Stock Exchange (SGX) of the Australian Stock Exchange (ASX) was cemented this week when the Foreign Investment Review Board (FIRB), in only its second disapproval of a foreign takeover of an Australian company in over a decade, stated that it was not in the national interest for this to go ahead.

There are many factors why the proposed takeover failed. The most fundamental factor is the institutional cultural aspect. Singapore and Australia are the most developed countries in the region but the similarities end there. Both countries’ economic development have been achieved differently. The strong paternalistic state led by the formidable Lee Kuan Yew ensured that the country would be limited to a one-party state directed by Lee under the umbrella of “Asian values”. The family’s achievement in this island state has been recognised with the son of Lee Kuan Yew now Prime Minister while his daughter in law as head of the country’s sovereign wealth fund, Temasek. Unlike other business families in the region, the Lee Family has ensured its interests in both private and public sector spheres.

Australia, on the other hand, has had a more consensus approach towards economic development and faces the bane of democratic countries everywhere in that decisions need to go through different layers of processes, consultation and the approval of many institutions. One critical factor was that Parliament’s approval was required for any ownership stake greater than 15% of the ASX – this clause was to ensure no stakeholder group - be they stockbrokers, institutional investors, or in this case the Singaporean government - would have a dominant stake in the exchange. This is similar to other stock exchanges in the region where governments have ensured that while exchanges were demutualised, the controlling stakes were closely monitored.

Reciprocal ownership control is a sensitive issue in an environment of trade liberalisation and the question has been raised as to whether the ASX could have proposed a takeover of the SGX without obstacles. Indeed, Singaporean companies do have heavy foreign ownership control limitations and any takeover of the SGX by a foreign entity will be bluntly met by legislation, if not the same nationalism sentiment supporters of the takeover have accused Australian opponents of the takeover of being infected with.

But based on the record of the FIRB, this has not been the case. Australian companies especially in the lucrative extractive and agricultural industries have been bought by foreign entities be they Canadian, American or even Chinese state owned companies.

Hence, the question is why did such a proposed takeover take place? Perhaps the senior managers of the stock exchange shared the chemistry that infects business relationships anywhere and they were unanimous in the tie up regardless of laws and sensibilities – not to mention their remuneration had the deal gone ahead. Indeed, the CEO of the SGX is a charismatic Scandinavian Magnus Bocker who was involved in the consolidation of the Scandinavian stock exchanges that led to the OMX. However, what he failed to realise is the context of this takeover. Scandinavian countries share similar values, outlook and cultures – far more than paternalistic Singapore and laidback Australia. This lack of recognition or even respect for Australia’s institutional particularities ensures Bocker’s reputation as a bold dealmaker extraordinaire but this failed takeover mean his ambition for a similar Asia-Pacific tie up straddling different cultures and values has been thwarted.

When the ultimate shareholder of the ASX would have been the Lee Family through their investment vehicle Temasek, there was a great deal of discomfort over this scenario in Australia where share ownership is far more widely dispersed with institutional investors dominating – not business families. Australia is a democracy, not an oligarchy.

The Australian corporate governance system is healthy, robust and a hallmark of the strength of the institutional environment. Australia’s institutions are its main competitive national advantage in this region and that includes the ASX.

 

27 February 2011

Deutsche Bank and Board Diversity

It has not been a good month for Deutsche Bank (DB).

Firstly, Europe’s most prominent banker, Josef Ackermann, stated at the company’s annual general meeting that the lack of female executive directors on the DB 7-male management boardⁱ was something he hoped to address as their addition would bring some colour to the boardroom. ⁱⁱ Not talent, wisdom or experience but adornment.

The bank also does not have a woman representative on its executive committee whose membership are eventual nominees to the board despite women making up 44% of the bank’s workforce but only 16% % of its senior management.

Ackermann’s perspective reverberated around the corporate governance sphere as seemingly outdated views on female gender representation from an influential global financial leader proved not to be so outdated. DB’s response was to dismiss this as part of Ackermann’s character representing the traditional mould. Upon closer inspection, perhaps this should not have been a surprise.

In 2010, a study by the German Institute for Economic Research found major under-representation of females on Germany company boards with only 2.5% of executive board members in the DAX-200 comprising of women and 10% in supervisory boards.ⁱⁱⁱ For DB, the first and last time it had a female executive board member was in 1996 with Ellen Schneider-Lenné.^iv

What compounded this comment is the stark contrast between female representation in the highest level of the German business sphere with its counterparts in the political arena. The German head of government is Chancellor Angela Merkel and out of 16 federal cabinet members, 6 (or 37% of the cabinet) are females (Merkel; Kristina Schröder – Family Affairs, Senior Citizens, Women & Youth; Annette Schavan – Education and Research ; Ilse Aigner – Food, Agriculture & Consumer Protection; Ursula von der Leyen – Labour and Social Affairs; and Sabine Leutheusser-Schnarrenberger – Justice).

Soon after this kerfuffle, the German carmaker Daimler appointed former German constitutional court judge Christine Hohmannn-Dennhardt as its first ever female board member.^v

As the corporate world in OECD countries is increasingly under pressure to improve gender representation in the boardrooms (Australian listed companies are required to have a diversity policy^viand the UK Davies Report has recommended a minimum target of 25% female on FTSE 100 boards by 2015^vii), the struggle continues for women to be recognised for their talents and not be treated as mere adornments.

In a revealing article in the Economist, corporate France seems to be similarly afflicted by the Ackermann perspective with Gallic chief executives said to:

“…look for female board members of a particular type: those who will look decorative and not rock the boat. One boss asked a headhunter for photographs of candidates and said he would treat looks as his first criterion, ahead of industry experience. A board member of a multinational company who opposes the 40% quota said that bosses could simply appoint their wives or—more subtly—their girlfriends.”^viii

As France’s employers’ union MEDEF President (Ms) Laurence Perisot so eloquently put it: “sometimes we have to use the law pour encourage les autres.”^ix

While DB has put this incident behind it, a couple of weeks later its Korean subsidiary was found to be engaging in market manipulation on the stock market^x and the Korean regulator, the Financial Services Commission, has banned its proprietary trading unit for six months. As the Financial Times noted, the country is not willing to compromise the stability of its financial markets for what DB calls “standard international practice.”^xi

February 2011 is perhaps a month the bank would rather forget.

 

i http://www.db.com/en/content/company/management_board.htm

ii http://www.handelsblatt.com/unternehmen/management/koepfe/ackermann-schuert-die-diskussion-um-die-frauenquote/3824928.html

iii Holst, E. & Wiemer, A. (2010) Women still greatly under-represented on the top boards of large companies http://www.diw.de/documents/publikationen/73/diw_01.c.347859.de/diw_wr_2010-07.pdf

iv http://www.web-wows.db.com/en/content/532.html

v http://www.dw-world.de/dw/article/0,,14844683,00.html

vihttp://www.asx.com.au/documents/about/mr_071209_asx_cgc_communique.pdf

vii http://www.bis.gov.uk/news/topstories/2011/Feb/women-on-boards

viii http://www.economist.com/node/16064321

ix Parisot, L. (2011) Letter to the Financial Times: If persuasion doesn’t work, legislation will be inevitable. http://www.ft.com/cms/s/0/0a7d8b94-37e4-11e0-b91a-00144feabdc0.html

x http://www.db.com/medien/en/content/press_releases_2011_3503.htm

xi Oliver, C. (2011) Deutsche Bank hit by Seoul ban, Financial Times, February 25, Thursday p. 13

 

 

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2 November 2010

Board Effectiveness, Performance and Evaluation

Summary of the research

This research aims to capture the state of play of board and director evaluation processes both internationally and in Australia. Board evaluation is becoming widely established in companies internationally, and in large Australian corporations the commitment and rigour surrounding board evaluation is increasing. Board evaluation processes may have proved nominal in the past but presently board evaluation in large corporations is seen as an essential tool to assist in achieving better board performance and effectiveness.

This report provides a survey of processes of company board evaluation and explores their value in improving board performance. The survey examines the policy and practices of international corporations and a selection of Australian companies in the large listed sector.

The first stage of the research involved an analysis of information on board evaluation as published by a sample of companies world-wide. This allows a comparison of Australian companies with international companies in terms of their regulatory environment and how they communicate with shareholders about their efforts to improve board effectiveness and performance. The companies surveyed were from the ASX 30, NYSE 10, Euro 10, FTSE 10 and TSE 10.

The second stage of the research consisted of interviews with Australian directors and investors to explore their perspectives on board evaluation; its association with board effectiveness and performance; and their views on potential improvements to board evaluation. Interviews were conducted with 12 directors who sit on 26 boards from the ASX 100.

The report is a comprehensive summary of current practices in board evaluation.

Key Findings

International variance

Disclosure on board evaluation is strongly influenced by the regulatory approach of each country. In the US where a rules-based approach to regulation is prevalent, disclosure is relatively standardised and perfunctory. In the principles-based jurisdictions (Australia, UK, Canada and some European countries) there is the opportunity for richer disclosure although a common format is still apparent with only a few companies voluntarily offering more (or different) information.

Flexible processes

As with all corporate governance processes, a performance evaluation process needs to be adapted to a company’s circumstances including the stage of the corporate life-cycle and length of tenure of board members. The same process does not have to be used every year.

Continuous improvement

An effective board will not save any performance issues for discussion during the annual board evaluation but will undergo a continual self-improvement process. Good boards will be proactive, not only assessing themselves retrospectively but prospectively.

Individual performance

Opinion is divided on whether performance evaluation of individual directors is a valuable exercise or whether it can inhibit whole-board dynamics and group performance. There perhaps needs to be more discussion over why, in the context of a board, the individual can be less important than the team.

Senior management

The relationship between the board and senior management is vital to effective board performance in terms of information flow and strategy development. For this reason, it is good practice to involve members of senior management in the board evaluation process.

Informal discussion

Many board members find that board effectiveness can be greatly enhanced if the board members, particularly non-executives, have a chance to get together outside of formal board meetings to discuss issues that might not fall within the formal meeting agenda.

External facilitation

The general opinion is that the use of an experienced external consultant can be very valuable but may not be justified every year. External reviews are costly but may be particularly useful when the board is going through change.

Outcomes

Outcomes of board evaluation processes range from relatively minor amendments to board processes (meeting agendas, format of board papers etc) through alteration of committee structures (amalgamation or changes to committee charters) to significant changes in board composition (to fill skill gaps or remove directors contributing to dysfunction).

Implementation

The process of implementing the outcomes of board evaluation is a crucial step that perhaps deserves more attention. It is a vital component in whether a board evaluation process actually leads to better board performance.

Links to other processes

The links between the process of board evaluation and other processes such as director re-election, succession planning and director education and development are becoming clearer and more formalised in practice.

The effective board

Factors necessary for effective board performance include:
• a boardroom culture of mutual respect, honesty and openness that encourages constructive debate
• diversity of experience, styles, thought and, as far as possible, age, gender and nationality
• a good relationship with the CEO and senior management
• a common purpose and strategic clarity
• an experienced chairperson who can manage the board agenda, encourage debate and work in harmony with the CEO
• efficient board structure and processes including committees, board papers, information flow and a good company secretary

The dysfunctional board

Factors that can hinder board effectiveness include the opposites:
• an adversarial atmosphere in the boardroom or an unmotivated board with a tendency to group-think
• skill deficits or lack of genuine independence on the board
• a poor relationship with the CEO and senior management which can impede information flow
• conflicts of interest or factional interests on the board, perhaps due to a dominant shareholder
• poor chairmanship – a chair who is too week, too autocratic or too close to the CEO
• poor processes leading to inefficient use of time

Skills matrices

Boards are creating detailed matrices of the skills required on the board and are using these in their succession planning and nomination processes. However, there is still room for improvement in succession planning in order to reduce the influence of dominant board members and to improve long-term plans.

Disclosure

Some directors were open to the concept of increased reporting on board evaluation including providing more detail on non-sensitive outcomes. Others were of the view that this was of little value and, interestingly, the fund managers we spoke to agreed. It seems that the institutional investors place little value on annual report disclosures preferring to assess board members based on their backgrounds and personal characteristics.

Company performance

Both directors and fund managers understood that the link between board performance and company performance is complex and that even the best of boards can be hindered by factors beyond their control.

Indicators of an effective board

Both directors and fund managers agreed that it is difficult for outsiders to assess whether a board is performing effectively. However indicators include:
• willingness of a company to seek and respond to market feedback
• personal characteristics and credibility of directors
• professional history of directors
• company performance within the industry
• quality of board decisions, particularly in times of crisis

Launch of the report

The report was launched at the Australian Stock Exchange on the 27th October 2010 by the Chairman Michael O'Sullivan and CEO Ann Byrne of the Australian Council of Superannuation Investors (ACSI), the peak-body group representing over half of Australia's non-for-profit superannuation sector.

Representatives from the Australian Institute of Company Directors, Australian Shareholders Association, Chartered Secretaries Australia, and members of ACSI and the Australian Stock Exchange Corporate Governance Council were in attendance at the launch of the report.

You can download a copy of the report from the link below:

Research Report: Board Effectiveness and Performance - The State of Play on Board Evaluation in Corporate Australia and Abroad

The slides of the presentation by Professor Thomas Clarke and Alice Klettner

Slides of Board Effectiveness Report Summary

 

18 October 2010

Australian Corporate Governance Note 4: September-October 2010

On Leighton Holdings’ CEO Wal King AO, German Hochtief AG and Spanish ACS

On 13 September 2010, after much speculationⁱ, Leighton Holdings, the listed Australian engineering group announced the retirement of Wallace “Wal” Macarthur King after 23 years as Chief Executive Officer and Managing Director.ⁱⁱ King is regarded as one of the finest CEOs in the country and this announcement ends the illustrious and his brilliant career at Leightons. The following laudatory excerpts from press releases by Leighton’s stakeholders duly reflect the estimation held by his peers and the close identification of King’s role with Leighton:

"Wal King has made an enormous contribution to the development of the Australian construction industry and has been an outstanding leader in industry affairs."- Australian Constructors’ Associationⁱⁱⁱ

“Wal King is one of Australia’s most successful and well-respected corporate leaders who has made an enormous contribution to the construction industry in Australia and throughout the world. Wal is one of a kind - a real intellect with extraordinary energy and an engaging personality. He has a genuine love for his company, his industry and for the people who have worked for him over more than four decades…He has delivered extraordinary value for Leighton shareholders and for the tens of thousands of people that have worked on Leighton company projects in Australia and globally. He has always had a big view of Australia’s potential performance and had the courage to take the risks that would see the Leighton Group become a long-term participant in Asian and Middle-Eastern construction and mining markets.”-Australian Industry Group^iv

“Wal’s contribution to the Australian construction industry over a long period is widely acknowledged. Members of the Business Council of Australia (BCA) have appreciated his straight-talking style and the courageous way he is prepared to speak out on important public policy issues, particularly infrastructure and workplace relationships reform.” –Business Council of Australia^v

Under King’s leadership, Leighton Holdings expanded and has a diversified portfolio of assets in construction and construction-related interests through its subsidiaries including Thiess Australia, John Holland and Leighton Contractors^vi. In October 2010, Leighton had a market value of A$11 billion.^vii

 

Hochtief and ACS

Hochtief is a German construction group and is the parent company of Leighton Holdings. According to Leighton Holdings’ 2010 Annual Report, the top 5 shareholders are Hochtief, which has an ownership stake of 54.5%, and single-digit ownership figures from institutional investors. This is reproduced in Table 1 below:

Table 1: Top 5 Shareholders of Leighton Holdings – 2010 Annual Report^viii (2010: 96)

Shareholder	No. of Shares	% of Total Shareholdings
HOCHTIEF Australia Holdings Limited	163 839 412	54.48
JP Morgan Nominees Australia Limited	16 272 9107	5.41
HSBC Custody Nominees (Australia) Limited	15 219 569	5.06
ANZ Nominees Limited Cash Income A/C	11 498 625	3.82
National Nominees Limited	11 182 688	3.72

 

King’s departure was said to be instigated by Leighton Holdings’ parent company, the struggling German construction group, Hochtief AG. In recent years, Leighton has flourished while Hochtief struggled. ^ix Hochtief has majority ownership of Leighton but did not have control over the board of its Australian subsidiary under King. King’s ousting was an exercise of control by the parent over its subsidiary. King’s replacement is the company’s Chief Operating Officer David Stewart who has the approval of Hochtief.^x

On 16 September, Hochtief announced that it was the subject of a takeover bid by the Spanish construction company Madrid-based Actividades de Construcción y Servicios (ACS).^xi In February 2010, ACS owned just under 30% of Hochtief’s shares.^xii Furthermore, the current jewel in Hochtief’s crown, Leighton, could be subject to a “downstream” takeover bid^xiii Hochtief has placed this extra obstacle in ACS’ way applying to the Australian companies’ regulator, the Australian Securities and Investments Commission (ASIC), that ACS be required to make an additional takeover offer for Leighton even if it could successfully takeover Hochtief.^xiv This distinctively continental battle between two European giants has ensured that ACS’ takeover bid for Hochtief is far from straightforward.

Ironically, it has been reported Wal King has more cordial relations with ACS than Hochtief. ^xv Should ACS’ bid for control of Hochtief and Leighton succeed, Wal King’s departure from the leadership mantle of Leighton could be but a brief interlude.

 

i Durie, John (2010) Time for Wal King to abdicate for Leighton’s sake, The Australian, 3 June http://www.theaustralian.com.au/business/time-for-wal-king-to-abdicate-for-leightons-sake/story-e6frg8zx-1225874716941; O’Sullivan, Matt & Wen, Philip (2010) Leighton’s King mum on succession, Business Day, 17 August http://www.theage.com.au/business/leightons-king-mum-on-succession-20100816-1272d.html

SMH (2010) Stewart ends King’s reign at Leighton, Sydney Morning Herald, 13 September http://www.smh.com.au/business/stewart-ends-kings-reign-at-leighton-20100913-158fa.html

ii Leighton Holdings (2010a) Media Release: David Stewart to succeed Wal King as CEO at Leighton, 13 September http://www.leighton.com.au/verve/_resources/13092010b_mr.pdf

iii Australian Constructors Association (2010) Media Release: Retirement of Wal King AO, 13 September http://www.leighton.com.au/verve/_resources/220910c_mr.pdf

iv Australian Industry Group (2010) Retirement of Leighton Holdings CEO – Wal King, 13 September http://www.leighton.com.au/verve/_resources/220910b_mr.pdf

v Business Council of Australia (2010) BCA Pays Tribute to Longest-Service Member, 22 September http://www.leighton.com.au/verve/_resources/220910d_mr.pdf

vi Leighton Holdings (2010) Corporate Structure http://www.leighton.com.au/about_us/corporate_structure/corporate_structure.html

vii ETrade (2010) Company Profile: Leighton Holdings LEI.AX https://invest.etrade.com.au/QuotesAndResearch/Shares/Profile.aspx?symbol=LEI&tab=Profile

viii Leighton Holdings (2010b) Concise Annual Report 2010 http://documents.leighton.com.au/display.asp?pdf=Leighton_AR2010.pdf

ix Verrender, Ian (2010) Exquisite timing: Wal King may have the last laugh, Sydney Morning Herald, 17 September http://www.smh.com.au/business/exquisite-timing-wal-king-may-have-the-last-laugh-20100917-15f38.html

x Leighton (2010a)

xi Hochtief (2010a) Takeover offer http://www.hochtief.com/hochtief_en/7100.jhtml

xii Hochtief (2010b) Shareholder structure as of February 2010 http://www.hochtief.com/hochtief_en/782.jhtml

xiii Leighton Holdings (2010c) Company Announcements: Leighton to Monitor Events in Relation to the ACS bid for Hochtief http://www.hochtief.com/hochtief_en/data/pdf/101006_leighton_announcement.pdf

xiv Hochtief (2010d) Hochtief to make application to Australian Securities and Investments Commission, 5 October http://www.hochtief.com/hochtief_en/200.jhtml?pid=8608

xv Verrender (2010)

All above URLs accessed on 18 October 2010

 

11 August 2010

Australian Corporate Governance Note 3: July-August 2010

A World Environmental Organisationⁱ

By Marie dela Rama

In the July 10^th 2010 edition of The Economist, the respected international current affairs magazine lambasted the United Nations body, the Intergovernmental Panel for Climate Change (IPCC) and in particular its chair, eminent scientist Dr. Rajenda Pachauri, over the failure by the organisation to respond quickly and immediately to Climategate (the release of damaging emails between climate researchers), which helped undermine a global agreement on climate change at Copenhagen last year.ⁱⁱ

Two weeks later, a deeply wounded Dr. Pachauri responded and explained amongst other things that the IPCC is an organisation that runs on £5m ($8.7M) a year, with the voluntary support of the intellectual contribution from the wider academic community, advancing the knowledge of climate science upon which the IPCC administers, coordinates, forms policies and publishes.ⁱⁱⁱ

How can we say that we are serious about environmental issues when we only give $8.7M to a body that is the global authority on climate change issues? It is about time we seriously think about setting up a definitive global body on environmental issues in the way the World Trade Organisation (WTO) acts for trade, and tariff-related disputes and issues. The WTO experienced teething problems as it transformed from the General Agreements on Trade and Tariff (GATT), but it has proved an essential body as world trade continues to expand.

Like many people around the world, I felt saddened by the failure to reach a global accord at Copenhagen. The weakening of the resolve for urgent reform by the selective interpretation of data that foreshadowed Copenhagen, and the character assassination of climate scientists, was an exercise in industrial espionage of breathtaking proportions. A properly funded, independent and authoritative global environmental organisation dedicated to climate research is required to ensure there is no repeat of vested interests sabotaging independent science.

It is disheartening to see how the decade opened so brightly with a farewelling of, the carbon economy of the 20^th century, and embracing the 21^st century bold era of sustainable energy solutions, has dissipated so tragically with the disappointment of Copenhagen. Realistically, industry and trade are dependent on, and subsidiary to the environment – if there is no viable environment, there can be no viable industry or trade. Yet we now have the absurdity of having environmental issues treated as an adjunct of the WTO.

We need a proper and appropriate forum to advance science, develop policy and highlight significant issues: a World Environment Organisation (WEO) or Global Environment Organisation (GEO) as proposed at the 1992 Rio de Janeiro Climate Conference.^iv

Firstly, this organisation will provide a forum to encompass the broad cathedral of issues advocated by different stakeholders. As Ian McGregor, a researcher at the University of Technology Sydney (UTS), describes there is a need to bring together the policy coalitions of the environment: governments, the private sector, the low-lying nation-states( who are the canaries in the coalmines as sea levels rise), and the numerous non-governmental organisations whose advocacy remind us all what we may have overlooked.

Secondly, this body will have a research and policy unit that will investigate and publish papers for public dissemination that cover the three pressing issues that the IPCC’s working groups have been diligently working on:

1. The science of climate change

2. Impacts, adaptation and vulnerability

3. Mitigation of climate change

Thirdly, this institution will deal with the impact and ramification of events such as BP’s monstrous catastrophe in the Gulf of Mexico. For the first time, powerful multinational companies will answer to a multinational body that has the mandate to exact responsibility and accountability from them. This is recognition that society expects companies to carry out their triple bottom line responsibilities:

Presently the variety of bodies who deal with global environmental issues are symptomatic of displacement, bureaucracy, lack of unity, inability to communicate with the rest of society, and a failure to articulate an overall vision for the environment.

We can organise globally and form institutions to deal with interconnected issues that affect us all. We do have the ability to cooperate internationally in the common interest. Most recently this was witnessed when the G20 countries cooperated and provided leadership regarding the global financial crisis, rather than face the risk of another Great Depression.

We need a global institution to defend the planet because the planet cannot defend itself. We are the stewards and guardians of this precious and fragile earth on which we dwell. Let the institution-building begin: a global environmental body to look after the health of the earth.

 

i An edited version of this article appeared in the Sydney Morning Herald on 10^th August 2010, http://www.smh.com.au/opinion/politics/only-global-body-can-sideline-saboteurs-20100809-11tzo.html

ii Economist (2010) Climate controversies: flawed scientists http://www.economist.com/node/16539392

iii Pachauri, R.K. (2010) Letter to the Editor, The Economist http://www.economist.com/node/16636429?story_id=16636429

iv See Biermann F. & Bauer, S. (2005) (eds.) A World Environmental Organization: Solution or Threat for Effective International Environmental Governance, Aldershot UK: Ashgate

 

23 June 2010

Australian Corporate Governance Note: June 2010

The Financial Times Global 500 and the proposed mining super profits tax

Last month, the Financial Times released its annual Global 500 list of the top 500 corporations around the world by market capitalisation.ⁱ The 14^th edition of this list has chronicled China’s rise with PetroChina the planet’s most valuable at $329B, with its nearest rival the US’ Exxon at $316B into second place.

The list also provides clues of the economic shifts in power with 23 mainland Chinese companies (excluding Hong Kong) being represented while Japan’s most valuable company, Toyota, only making the list at 32. However, there were more Japanese companies in the list in the mid-rankings though not at the top 100. The notable exclusions in this list are of course the privately-held companies such as Cargill with listed rivals Monsanto at 177 and Nestle at 12.

Australian entries were well represented with 12 companies making the list: BHP Billiton (No.6, mining), RioTinto (No.35, mining), Commonwealth Bank (No.67), Westpac Bank (No.70), ANZ Bank (No.100), National Australia Bank (No.118), Telstra (No.217, telecoms), Wesfarmers (No.222, diversified), Woodside (No.224, petroleum), Woolworths (No.232, retail), QBE (No.402, insurance) and CSL (No.405, pharmaceuticals).

The planet’s reliance on energy also was evident on the list with the following companies being the most valuable in their respective countries:

FT Global 500: Most valuable companies (all energy) by country
PetroChina (no.1, China) ExxonMobil (no.2, USA) BHP Billiton (no.6, Australia) Vale (no.22, Brazil) Gazprom (no.33, Russia)	Total (no.34, France) Eni (no.53, Italy) Saudi Basic (no.66, Saudi Arabia) Reliance Industries (no.68, India) Statoil (no.74, Norway)

 

BHP Billiton’s growth has seen it jump up from No.19 in the Global500 list last year to No.6 with a $209B market value. It remains Australia’s only top 10 entry in the Global 500.

The wealth generated by Australian mining companies has become a source of contention. The Australian Treasurer, Wayne Swan, recently announced proposals to charge a tax on the excess or super profits created by the resource companies. The Resource Super Profits Tax (RSPT) proposes to impose a levy of 40% on excess profits generated by mining companies in order to fund superannuation (pension) funds, to lower company tax and fund infrastructure needs.ⁱⁱ Arguably, the tax proposes to spread the country’s “common wealth” for the “common good” – a Robin Hood tax for the resources sector.

Not surprisingly, the powerful Australian mining lobby, the Minerals Council of Australia, is vehemently opposed to the proposal with a “Keep Mining Strong” campaign on all forms of media^iiiiv The government of the state that will be most affected, Western Australia, has vehemently opposed its implementation though being from the opposite side of the political spectrum to the current Federal Government helps. including a social media presence on Twitter.

The RSPT is shaping to be a pivotal election issue with the Opposition Party supporting the Minerals Council in its stance.

Keywords: resources, regulatory environment, government-business relationship

Conduct unbecoming: a CEO resigns

Unprecedented in Australian corporate history, the CEO of publicly-listed high-end retailer David Jones Limited, Mark McInnes, resigned on 18 June 2010 after being accused of sexually harassing a 25 year old female employee on two separate occasions. McInnes admitted his conduct was unbecoming in his resignation statement^v. A highly successful CEO who turned around the retailer’s fortunes during the 2000s, McInnes was one of the youngest CEOs in the country appointed at age 37 to head the company.

The Chair of David Jones, Robert Savage fronted a hurriedly organised press conference expressing his and the board’s deep disappointment at the CEO’s conduct. David Jones Limited has two female board members and around 80% of its workforce is comprised of women. The board has awarded the former CEO a $2 million severance package.

Keywords: crisis management, succession

Plane crash in the Congo: a company’s entire board disappears

On 21 June 2010, a plane chartered by Sundance Resources, an iron ore company with exploration interests in the region crashed “on the western ridge of the Avima Range in the Republic of Congo, near the Gabonese border.^vi” The plane contained nearly all members of the board and company’s senior management including its Chair, MD and CEO, company secretary and three non-executive directors.^vii

Keywords: crisis management, succession

i) Financial Times (2010) Global 500 List http://media.ft.com/cms/607e0f18-67b6-11df-a932-00144feab49a.pdf accessed 7 June 2010

ii) http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/028.htm&pageID=003&min=wms&Year=&DocType=0 accessed 7 June 2010

iii) http://www.keepminingstrong.com/ accessed 7 June 2010

iv) See http://twitter.com/MiningStrong and http://twitter.com/NSWMC

v) http://www.davidjones.com.au/Images/For-Investors/ASX-and-Media-Releases/2010/ASX-Release-Departure-of-MMcI-Jun-2010 accessed 21 June 2010

vi) http://www.sundanceresources.com.au/media/33024/media%20announcement%20-%20air%20incident%20update%204.pdf accessed 22 June 2010

vii) http://www.sundanceresources.com.au/media/32885/media%20announcement%20-%20air%20incident%20update%202.pdf accessed 21 June 2010

 

10 April 2010

Australian Corporate Governance Scope

Navigating through bribery and corruption in China : the case of the Rio Tinto Four

On 30 March 2010, after a three-day trial, four Shanghai-based senior executives, including Australian citizen Stern Hu, from the iron-ore arm of the Anglo-Australian resource giant Rio Tinto (http://www.riotinto.com), were found guilty on charges of bribery and stealing commercial secrets or commercial espionage. They have been given lengthy sentences ranging from 7-14 years.

The four men were arrested last year in the wake of a failed transaction between Rio Tinto and China’s aluminium producer, stated-owned Chinalco (http://www.chinalco.com) Prior to the global financial crisis, Rio Tinto acquired Canada’s Alcan in November 2007 in part to ward off any overtures of a merger from its rival, the other Anglo-Australian resource giant, BHP Billiton (http://www.bhpbilliton.com). In the global financial crisis, Rio Tinto faced liquidity problems stemming from this costly acquisition. Chinalco offered to rescue Rio Tinto from its vulnerable predicament with a proposed strategic alliance. However, a combination of extraneous factors including a pessimistic outlook of the alliance from major institutional investors based in London and with global markets recovering, and internal changes in senior management at Rio Tinto, made the company walk away from a deal with Chinalco and instead pursued a joint venture with rival BHP Billiton. Had the transaction gone ahead, Chinalco would have had a more active influence on the iron ore market which was deemed to be unfavourable to Chinese steel interests.

The political response was not long in coming and the four executives were arrested initially charged with offering bribes (instead of receiving them). The arrest of the executives sent shock waves to Sino-Australian relations and the expatriate mining community in China. Regulatory and political risk mitigation strategies were set in motion for key executives based in some foreign companies in China. As Stern Hu was an ethnic Chinese, his successor is an Australian-born Mandarin speaker.

Timing, as they say is everything. Strong symbolism was placed with the opening of the trial in Shanghai coinciding with Rio Tinto’s CEO Tom Albanese’s address to the China Development Forum¹ (see photo below)

Left: Rio Tinto CEO Albanese bows to Chinese Premier Wen Jiabao,

Source: Front page of the Financial Times, 22 March 2010 http://bit.ly/9UpsQQ

1 http://www.riotinto.com/documents/100322_CDF_Strengthening_global_cooperation_TA.pdf

In wake of the verdict, the Australian Foreign Minister, Stephen Smith, has called for transparency in the Chinese legal system as parts of the trial were closed to consular officials:

“As China emerges into the global economy, the international business community needs to understand with certainty what the rules are in China. What is unknown as a consequence of the lack of transparency is whether here we are simply dealing with information which would be normally and commercially available or whether we're dealing with something more broad than that."¹ – Stephen Smith, Australian Foreign Minister

The oligopoly of the iron ore market controlled by three players - BHP Billiton, Rio Tinto and Brazil’s Vale (http://www.vale.com) means China’s resource-hungry growth will continue an uneasy reliance on these three mining giants for some time. Equally, the three resource giants will try and navigate a sometime complex relationship with their largest market. The Rio Tinto case serves as a reminder of the risks of doing business in country which still has under-developed legal institutions and the perception of a judiciary that is still largely politicised. For Rio Tinto, it has terminated the employment contracts of the four executives after the sentences were handed down.

Marie dela Rama, http://www.twitter.com/corpgovresearch

1 http://www.abc.net.au/news/stories/2010/03/30/2859623.htm

 

Welcome to VIPsight America - Brazil

Author

Herbert Steinberg

 

29 November 2021

Desde o início da crise sanitária, provocada pela pandemia da COVID-19, os Conselhos de Administração foram testados e seu papel e sua resiliência, a fim de manter as entregas requeridas pelo momento inusitado, que abateu todas as empresas do mundo, em uma rápida reação em cadeia, acompanhando a evolução da doença pelos países por onde avançava.
Como e onde manter o foco?

Em quais prioridades colocar energia e recursos?

Quais os novos riscos surgidos e seus impactos nas empresas?

Estas passaram a ser algumas das perguntas que passaram a constar das pautas dos Conselhos país afora.
Muitas perdas foram registradas em empresas de diversos setores e de diferentes tamanhos ao longo dos meses. Mas vários negócios ganharam um fôlego não previsto em um cenário de crise. Diante disso, quem estava mais preparado e atuou de forma ágil e competente, conseguiu aproveitar e conquistar importantes ganhos.

Vivendo um cenário ainda incerto, com riscos de que a pandemia não desapareça no curto prazo, os Conselhos de Administração mais ativos e com visão estratégica estão revisando suas pautas, para as novas demandas e preocupações que vêm ao encontro das Companhias, originadas de diversas fontes. Vale lembrar que está chegando o momento de discutir as diretrizes e os objetivos para o próximo ano.
Em uma recente pesquisa global publicada pela Consultoria McKinsey, onde foram ouvidos cerca de 800 conselheiros e altos executivos, ficou evidente uma sinalização que, para as Companhias e para os Conselhos que conseguiram entender e atuar neste ambiente incerto, com reconhe-cida evolução na sua forma de atuar e entregar resultados, as maiores atenções ficam para os riscos externos.
Os três pontos que apresentaram maior relevância e crescimento nos quesitos atenção e cuidados estão:

- Riscos macroeconômicos;

- Riscos políticos;

- Efeitos das mudanças climáticas.

Olhando para nosso país, esses riscos se mostram, igualmente preocupantes e de alto impacto para o ambiente dos negócios. Os dois primeiros se misturam e se alimentam de forma a criarem um cenário de alta volatilidade, trazendo de volta o sentimento de que o ritmo dos investimentos poderá sofrer retração.

O terceiro também já se mostra presente, seja pelo risco da falta de abas-tecimento de água, seja pelo custo da energia elétrica que já assombra empresas e população, além de alimentar o monstro da inflação.

Outro ponto relevante desta pesquisa mostra alguns temas que têm presença constante nos Conselhos mais atuantes, mas que reconheço, temos muito a avançar por aqui:

- necessidade de desenvolvimento das competências dos colaboradores;

- diversidade da liderança corporativa;

- responsabilidade social corporativa;

- cyber segurança.

Ainda temos muito a avançar nas pautas dos Conselho em relação a estes temas.

O desenvolvimento das competências corporativas, alinhadas às diretrizes estratégicas e a ações de retenção de um time coeso, comprometido e de alta performance, deveria ser um tema presente ao longo do ano. Muitas vezes o assunto que envolve as pessoas está mais ligado ao custo do que ao retorno.

Da mesma forma o tema de diversidade no ambiente de liderança e os impactos na sociedade têm tido mais atenção devido a demandas externas, acima da consciência da alta administração. Algo como “precisamos dar uma resposta a isso”. Dentro dos próprios Conselhos a diversidade ainda é limitada.

Os riscos cibernéticos também estão ganhando espaço na pauta, muito devido aos eventos recentes, em que grandes companhias são atacadas por hackers e acabam literalmente ficando fora do ar por horas ou dias. Claramente vivendo a situação de reforçar a tranca depois do assalto.

Mais do que nunca fica evidente que, para uma atuação que traga impactos positivos, um bom Conselheiro contribui, não apenas com sua experiência passada, mas com sua visão de futuro e resiliência pessoal, para a longevidade do negócio.

Luiz Marcatti é presidente da MESA Corporate Governance e integrante de conselhos de administração.

A série “Papers MESA 2021” traz reflexões sobre a governança corporativa e familiar nos tempos atuais. Estão disponíveis em artigos no site da MESA e, também, nos vídeos no canal da MESA no YouTube.

Acesse o link para ler os artigos dos sócios, consultores e articulistas convidados da MESA.

A MESA Corporate Governance trabalha a governança corporativa e familiar na dimensão humana do poder, dinheiro e afeto. A empresa é constituída por uma equipe de consultores especialistas e experientes que atendem às necessidades nos diferentes momentos de modernização de empresas de origem familiar ou multissocietárias, quer sejam de capital fechado ou com ações listadas em bolsas de valores. Também é filiada às seguintes entidades e instituições: AMCHAM Brasil, IBGC – Instituto Brasileiro de Governança Corporativa, ICGN – International Corporate Governance Network, FBN – Family Business Network e NACD – National Association of Corporate Directors.

 

20 November 2020

Reforma tributária e expansão da governança foram temas no Congresso IBGC

Tópicos do ciclo “Evolução da Governança” retrataram pontos de atenção para o mercado

by Giulia Landriscina

O terceiro ciclo do 21º Congresso IBGC, dedicado à “Evolução da governança – Um olhar para o futuro”, teve dois debates na terça-feira (17). Na primeira sessão, organizada pelas comissões Jurídica e de Finanças e Contabilidade do IBGC, o tema foi a reforma tributária. No segundo debate, o Capítulo Ceará abordou a expansão e o desenvolvimento da governança corporativa na região nordeste. Confira a seguir.

Um passo necessário para a economia

Segundo o Instituto Brasileiro de Planejamento e Tributação, 419 mil normas tributárias já foram editadas no país. Porém, apesar do alto número e da constante mudança, pouco foi feito — efetivamente — para sanar os problemas tributários no país. Para se ter uma ideia 41,25% do PIB brasileiro é relacionado à carga tributária sobre renda, patrimônio e consumo. Em média, o brasileiro trabalha 158 dias para pagar imposto, de acordo com dado de 2018 divulgado pelo Impostômetro. 

A reforma tributária tem como principal objetivo a simplificação do sistema tributário. Maria Carolina Bachur, sócia-gestora do Lobo de Rizzo Advogados, acredita que uma reforma efetiva pode ajudar o País neste momento de crise. “Os tributos são instrumentos de política financeira que precisam ser usados com responsabilidade e que podem ajudar a impulsionar a retomada econômica”, explicou. 

Com a mudança da tributação de consumo, na qual os cinco impostos (PIS, Cofins, IPI, ICMS e ISS) passariam a um único: Imposto sobre Bens e Serviços (IBS), o PIB brasileiro pode crescer em 5,4% até 2033, completou Durval Portela, sócio líder da Área de Consultoria Tributária e Societária da PwC Brasil.

As esperanças em torno da reforma são altas, mas há grandes desafios pela frente, como manter o equilíbrio fiscal e ultrapassar a complexidade do sistema atual, que precisam ser feitos de maneira planejada e estruturada. “Qualquer mudança drástica pode afetar valores que são muito caros à nossa estabilidade social”, disse Maria Carolina. 

O debate, intitulado Reforma Tributária: Desafios e Perspectivas, teve a moderação de Edison Fernandes, sócio do FF Advogados.

Expansão da governança

O painel “Desenvolvimento da governança corporativa na região Nordeste” contou com a participação da Pague Menos. A empresa cearense chegou à bolsa de valores este ano. Na avaliação de Luiz Renato Novais, vice-presidente Financeiro e RI, a adoção de boas práticas de governança corporativa foi fundamental para o sucesso do IPO da rede de farmácias. 

“Os investidores locais e estrangeiros vão questionar de que forma é conduzida a empresa. É preciso estar preparado”, explicou Novais, destacando que o investimento em governança é essencial para qualquer companhia interessada em trilhar caminho semelhante.

O debate contou com a moderação de Júlio Borges de Carvalho, diretor de Auditoria, Riscos e Compliance da M. Dias Branco e coordenador geral do Capítulo IBGC no Ceará.

 

21 August 2015

PLANNING IS CRUCIAL TO THE SUSTAINABILITY OF THE FAMILY BUSINESS

The succession issue is not simple. The idea that someone needs a successor, by itself, creates discomfort, forces people to envisage the end of life. When we talk about succession plan in a family business we are talking about, therefore, to deal with the whole range of aspects: strategic, corporate, tax, management, behavioral and emotional.

It is about starting to go a long way and it needs to start as soon as possible. For this movement to happen harmonically, it is necessary to take the first step and lead the process so that successor  and succeeded  reach their goals and the business does not miss a beat.

While challeging, the owner of a family business needs to draw a strategic plan that will help the business to survive for several generations. Companies, be they family or not, are subject to having their life expectancy affected by different agents, often uncontrollable. Changes in market rules, life cycle of their products and services, behavior change and needs of its consumers, competition, new technologies, ultimately staying alive requires a willingness to face challenges and ability to renew itself continuously.

Show tomorrow and think of long-term actions are basic conditions for maintaining a business. And that requires planning. To John Ward, Professor Kellogg School of Management and IMD (International Institute for Management Development), the difficulty to think about the future is one of the major causes of a company failure. The strategic plan increases the options and responsiveness of a company facing changes; generates information that reduce uncertainties, improves internal organization and inhibits speculation; stimulates the company competitive strengths; helps conserve resources, improves their relationship with the different stakeholders, among other benefits.

A strategic plan necessarily undergoes  a succession plan. Any entrepreneur who think about business preservation for the future generations needs to think on its succession and how to manage this delicate transition.

Making It Happen

For a succession process to happen it is necessary that the business owner, the potential succeed, wants it. More than that, he needs to make it happen. Establish what is wanted for the business, preparing it for the future, defining how he intends to get there, backed by  what values and seeking to perpetuate his guidelines ​​on  the company’s mission. In addition to the tangible aspects of a succession plan, we must always keep in mind that the search for a new leader goes beyond the appointment of a new president.

The search for help in conducting this process is a valid recommendation. The company - and the family – will have issues to deal with, many variables and a degree of sophistication that the support of an expert becomes critical. Play the process as amateurs can result in risks to the business and probably to the relationships.

One of the reasons for a company to pay attention to a family succession plan are the requirements of an economy increasingly dynamic , and globalized and complex. Brazil is inserted in this context with considerable growth prospects, and the fierce competitiveness in all production segments is therefore a path of no return. There is no doubt that well structured companies in their management and with their bases consolidated in good corporate governance practices are more competitive and able to take care of succession.

Being a company able to meet the new times, capable to perform above average and so remain in the game is key. Also be perceived as such. Having a competent program, focused on the generation of new leaders, anchored on a succession plan for its key managers creates an environment that enables the company to perpetuate.

 

 

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VIPsight Archives America - Brazil

 

13 July 2013

Brazilian Takeover Panel begins operating in August

São Paulo, June XX, 2013 – The Brazilian Takeover Panel (Comitê de Aquisições e Fusões – CAF)* begins operating in August. It aims to secure the compliance of equitable conditions in public tender offers and restructurings that involve Brazilian publicly-traded companies which, based on a self-regulation model, have decided to submit to the body.

The Brazilian Takeover Panel was conceived by and has the support of some of the main participant bodies on the Brazilian capital market: the Association of Capital Market Investors (AMEC), the Brazilian Financial and Capital Markets Association (ANBIMA) and the Brazilian Institute of Corporate Governance (IBGC). The Takeover Panel is ready to act and is chaired by the well-known lawyer Nelson Eizirik and integrated by ten more members whose expertise and reputation are recognized in the local financial and capital markets (see the enclosed member list).

The Brazilian Takeover Panel will apply and update a Self-Regulation Code, which reflects the consensus and current needs of the market participants. Technical support will be provided by a team that will be headed by the executive João Pinheiro Nogueira Batista.

The Self-Regulation Code does not substitute legal and regulatory provisions. It contains principles and rules that complement applicable law and regulations enacted by the Securities and Exchange Commission of Brazil (CVM), seeking rather to fill gaps that exist in the discipline of public offerings corporate restructurings.

To name some of the principles, the Code foresees equal treatment among shareholders; mandatory disclosure of information that is necessary for considered and independent decision-making; independence, discretion and impartiality of its members; and consistent information in appraisal reports, among other principles. When applying the Self-Regulation Code, it will be incumbent upon the Brazilian Takeover Panel to privilege meeting principles instead of the rules.

The Securities and Exchange Commission of Brazil (CVM) has already expressly manifested its institutional support of Brazilian Takeover Panel. It has decided that, according to a Cooperation Convention to come into effect between the Brazilian Takeover Panel and CVM, there will be the presumption of legitimacy of public offerings subject to registration with the government body, and corporate restructurings involving related parties, which follow the procedures established in the Self-Regulation Code.

 

18 June 2012

BM&FBOVESPA publishes first “Report or Explain” results

São Paulo, June 18, 2012 – During the Rio +20 United Nations Conference on Sustainable Development, BM&FBOVESPA presented the results of the “Report or Explain” initiative that seeks to encourage companies listed on the exchange to report sustainability related information to stakeholders. According to the findings, 45.31% of listed companies published information related to social, environmental and corporate governance dimensions, or explained why not.

Out of a total of 448 listed companies analyzed, 96 published sustainability reports or similar (21.43%), 107 did not publish but explained why not (23.88%) and 245 did not comment at all (54.69%).

Of the 94 companies in the current portfolio of the Brazil Index – IBrX (which measures the performance of the 100 most traded shares in the BOVESPA Segment in terms of number of trades and traded volume), 49 published a report (52.13%), 22 did not publish but explained why (23.40%) and 23 did not comment at all (24.47%).

The complete list of publicly-traded companies that published or did not publish a Sustainability Report or Similar is available on the BM&FBOVESPA website at: www.bmfbovespa.com.br; Markets/Equities/Listed Companies/Sustainability Report or Similar Document.

The companies had until the end of May to inform in item 7.8 of the Reference Form (“Description of the company’s relevant long-term relationships not elsewhere described”) whether they published a sustainability report or included socio-environmental information in their annual report, indicating where these data are available. If they do not they have to explain why.

BM&FBOVESPA created “Report or Explain” at the end of last year, seeking to encourage listed companies to report to all stakeholders (especially investors and analysts) information and results related to corporate disclosure along general lines, granting transparency to the market and encouraging ever more companies to adopt this practice.

 

 

7 January 2012

BM&FBOVESPA recommends listed companies publish a Sustainability Report or explain why they do not

The objective of this recommendation is to encourage listed companies to report information and results related to environmental, social and corporate governance issues, providing greater transparency for investors

São Paulo, January 4, 2012 – BM&FBOVESPA is recommending that as of 2012 listed companies state in item 7.8 of the Reference Form (“Description of the company’s relevant long-term relationships not elsewhere described”) whether they publish a regular sustainability report and where it is available, or explain why not.

BM&FBOVESPA believes that this report-or-explain initiative will encourage the adoption of sustainability reporting by a steadily growing number of listed companies. The goal is to make this database publicly available at Rio+20, the United Nations Conference on Sustainable Development, which will take place in Rio de Janeiro, from the 20th to the 22nd of July. Realized twenty years after the historic Rio Summit on Environment and Development of 1992, the event will have as one of its key themes the green economy in the context of poverty eradication and sustainable development.

Workshops

In order to assist companies not familiar with sustainability reporting, the Exchange will hold training workshops on the 17^th, 19^th and 20^th of January, in partnership with the Global Reporting Initiative (GRI), a non-profit organization based in Amsterdam, Holland, which is responsible for the development of a comprehensive sustainability reporting framework that is widely used by companies around the world. In 2010, BM&FBOVESPA became the second Exchange in the world and the first in the Americas to use the GRI sustainability reporting model in its Annual Report.

By recommending sustainability report on a report-or-explain basis, BM&FBOVESPA seeks to contribute to this growing international trend in the financial market. The publication of sustainability or similar reports by listed, privately held and state-owned companies was made a listing requirement by the Johannesburg Stock Exchange in 2010. It is mandatory for listed companies in France and Denmark, and for state-owned enterprises in Sweden. The European Union is studying the possible introduction of mandatory sustainability reporting for all member states in 2012.

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros

Shareholder Brazil in December 2010 <click here>

 

8 December 2010

Hero or Bandit?

The role of the CEO has never been so complex as currently

Herbert Steinberg*

It is not easy being a CEO today. Either in Brazil or abroad, the leadership role has never been so inglorious. The reasons are many. A leader is expected, among other things to have an above-average ability to inspire people and to anticipate events.

Two tasks that in an unstable environment such as the one that the world has faced this year, require more than talent and skill.

The daily challenge is basically: in difficult times, the CEO needs to be attentive to details that previously were not part of his routine. In parallel, the CEO is increasingly charged to run the company for the short term, focusing on the present. However, if the CEO lets himself/herself be overpowered by the day-to-day and shift the focus from the future, he will be severely punished. The problem is that the CEO is no hero. The CEO is human.

The CEO then has to keep all senses connected on today, be a motivating leader to his followers and subordinates, think about the company in the long run, not losing sight of tomorrow, knowing how to accurately administer the investments and not forgetting, even for a moment, that if the planned outcome for the short term does not happen, he will be unemployed.

Times of crisis always bring about new and bigger challenges. In the corporate world, the speed of the change, the complexity of the negotiations and the globalization also contribute to the construction of a new scenario, where the actors need to recycle the whole time, to think along the paths and be ready for other finales, not always happy.

Everything is still not enough

With so many tasks and "missions" to fulfill and an agenda that has not changed - the day still has 24 hours - the CEO, from the absolute master, the god guy, almost a hero, became a villain. Currently, in the eyes of many, the CEO can often be seen as a villain. The demon that came to haunt us. Full stop. The large rooms, high wages and status are still part of the reality. But the price to pay became much higher. The nomenclature of the position imported from American culture, Chief Executive Officer - CEO - is now almost a taboo word. The Rambo style has no more room. Hero of the masses, who had control of the assemblies of shareholders, the CEO has now become the bad boy. The "suspect", someone who needs to be controlled by the Management Board. And he has accomplices. The CFO is also now in sight.

The fact is that leadership positions bring into the package a set of responsibilities and challenges. Being always ready to make decisions and undertake the consequences are just the beginning.

Balance, prudence, transparency. Leadership in crisis requires a never before required combination of talents, an ability to overcome, more and more. The current reality is this and it should not change anytime soon. The life of a CEO today is the sum of vectors ranging from meeting the expectations of shareholders, clients, suppliers, employees; even the ability to know in detail what happens behind the scenes of the company, and where to invest in order to ensure a positive future. Be well advised, rely on an also talented and well articulated executive team, makes a big difference.

It is up to the CEO to perform the task of making a very accurate reading of what is entered in relation to the different stakeholders, what the shareholders expect, the explicit objectives in contract and those not so explicit, unwritten and unspoken; but on which he surely will be held accountable. Currently, the CEO needs to foment people and motivate them to be in the play for the company to follow the outlined path. That is, there must be an attitude and a vision that the shareholders agree and co-opt with, validating his choices and being also inspiring for everybody who is on his side and under his command so that the expected results shall occur. The CEO cannot make a mistake. In some cases, getting too much can also be dangerous. Threaten the vanity of an heir can also bring problems to his life.

Even during the crisis that devastated the world and, of course, it spilled over here, the BRIC countries will advance. Among them, Brazil and India are by far the most promising markets. We do have such a potent economy, with a strong ability to leverage growth in our own market. Who may mange to look beyond the southeast and south borders of the country, caught by the records two thirds of the GDP are found there, will perceive an India right here in the West - the North and Northeast of the country.

* Chairman of Corporate Governance Board and Corporate Governance Committee of Amcham

 

28 June 2010

Best on the Board

After the troubles with derivatives, companies are favoring directors with more time to dedicate instead of status – and you guessed it, they haven't been easy to find

If the crisis that aggrieved the world's financial markets has had any positive effects, one of them has certainly been companies "growing up" when it comes to the role of boards of directors. Corporate governance had already been improving in Brazil in recent years, especially after the BM&FBovespa's Novo Mercado listing tier established standards of good corporate governance for public companies. But nothing could be more effective than a major scare to break up the "afternoon tea" mentality.

Companies that still weren’t taking the matter seriously saw that a board of directors cannot be merely a formality or a place for exchanging favors. After the world's financial shake-up and, specifically in Brazil, the exposure of flawed derivative operations, they found out that very important risks are at stake. Now they want more experienced – and dedicated – people on the board. "The consequences of the crisis have not been negative. They ended up enhancing the professionalization process that was already underway, and led companies to realize that they needed better directors", says headhunter Guilherme Dale from Spencer Stuart. "No one is going to call anymore the old friend who says yes to everything."

But the truth is that the right people for the job have also become scarcer. The game has changed, and most are no longer accepting invitations simply for the money or the prestige – the annual pay for board members ranges from R$ 45 thousand to R$ 180 thousand. They want guarantees that they will be able to work without risking their image or their own wealth. "For the first time, I'm seeing some fear and greater precautions from potential board members", says Dale. "Now they want to know more about the company, they answer invitations with ‘'it depends', whereas in the past they immediately said ‘it would be an honor'".

VISION BEYOND THE NUMBERS — Thomas Brull, a finance professor and the MBA program director at the Business School São Paulo (BSP), feels that the position is being given greater importance. As member of three boards, he emphasizes that the international turbulence and the incidents with derivatives have increased companies' concern with risk management and, with that, the board's responsibilities have become much greater. In the past, Brull was financial director of two IPOs: Tectoy, in the 1990s; and EDP Energias do Brasil, in 2005. His experience helps him face his mission. "We in the financial industry have to look deep into the numbers, but the risks go beyond that, to IT and people", Brull says.

Independent directors with finance experience are the most in demand. Eight out of every ten companies look for an ex-CFO or another professional from the financial market, estimates Herbert Steinberg, the founder of Mesa Corporate Governance, which specializes in board structuring and corporate governance. Within that profile, there are basically two favorite types, depending on the board's needs: comptrollers, for enforcement purposes; and financial engineering professionals. According to Steinberg, general managers – whether you call them chairmen, CEOs or business leaders – are also targeted, but in a much smaller proportion than financial experts. The third sought-after profile is specialist, or professionals who deeply know a given segment or business model.

This greater appetite for financial experts is no longer based on technical aspects of the financial world, however. In the past, they needed only to know how to read and analyze balance sheets, but now the market wants more. "The ability to interpret the market and a vision for corporate and people management have been gradually incorporated into that profile", says headhunter Francisco Ramirez, from Arc Executive Talent Recruiting. "They must have financial qualifications, know how to read the company's numbers, but a more comprehensive profile is sought." The crisis accelerated the practical application of what had already been recommended by governance manuals for some time. The recently launched IBGC director certification program, for example, is comprehensive and covers not only the basics of finance, but also some areas in human resources, compensation, civil law, corporate regulations and sustainability.

FEW CANDIDATES ¬— Mesa Corporate Governance has a database of over 300 directors, including consultants, former executives, notables (such as former Central Bank presidents) and governance activists. Steinberg calculates that no more than one thousand professionals in Brazil are mature enough to work as directors under the current set of requirements. He also explains that the hiring process for directors is much different than headhunting for a traditional position. When he sits for lunch for the first time with the client and the candidate, the deal is usually already made. "I can't invite a celebrated professional and then simply say that he wasn't chosen", he explains.

The requirements are indeed getting tighter. Released in September, the new best practices code of the Brazilian Institute of Corporate Governance (IBGC) carries a series of recommendations for boards. One is that a director cannot be part of more than five boards, in order to preserve the quality of his or her work. The story of one director, who prefers to remain anonymous, illustrates this problem well. Six years ago, he was part of 12 boards and had no time to prepare for the meetings. He ended up glancing through the documents just minutes beforehand, as he took the elevator up. "There are still some directors who lend their prestigious names to the board, but don't add much value beyond that", says IBGC chairman Mauro Cunha. "But that will become increasingly less frequent", he believes.

After participating in the Klabin paper company's supervisory board, in 2000, economist Luiz Alberto de Castro Falleiros became fascinated with this type of work and never turned back. Today, he heads a consultancy but dedicates most of his time to the four boards where he is a member: two supervisory boards and two boards of directors. This year in particular, Falleiros is noticing more pressure on board members. "Before the crisis, Brazil was growing, so everyone seemed happy and little attention was paid to important issues", says Falleiros, who has worked at companies such as Suzano, Sabesp and Banco Alfa. "Two years ago, for instance, if a company's managers came up to the board with a list of institutions in which to invest, nobody would disagree. A good rating was enough", he says. "Now, the directors not only ask questions, but also get more involved in the operations."

The origin, size and developmental stage of a company also influence the qualities wanted in a good director. Smaller, family-run companies, for instance, usually prefer someone with an economic-financial background who can make the family comfortable and even help with specific business operation matters. Larger companies usually go for the generalist type, especially someone who has occupied a chairmanship or been a CEO at another organization. "Consolidated companies require directors with strategic vision, people who know how the government works, for example. They don't need opinions about operations", explains Dárcio Crespi, directing partner at Heidrick & Struggles in Brazil.

Investing in education is never a bad idea. Carlos Bifulco, a consultant and former chairman of the Brazilian Institute of Finance Executives (Ibef), adds that directors must always seek continuous professional improvement. "At times of crisis, the most important people are those with a deep knowledge of the market", says Bifulco, who is currently a member of four boards.

 

24 March 2010

Dangerous practice

Directors’ interests should not be influenced by management incentives

The Brazilian capital market underwent more than a few changes in recent years. Throughout this process, new challenges and more complex scenarios appeared in the corporate world and, consequently, the agenda of management and governance discussions has become broader. Among the newly prominent themes is a reflection on the role of the board – as generator of a platform for decisions and actions – and the issue of director compensation.

Variable director compensation has been the theme of heated debates and a divider of opinions for quite some time. In mid-2008, it was the high point of discussions at the International Corporate Governance Network (ICGN) meeting held in Seoul, South Korea. Already then, I placed myself vehemently against variable director pay and argued that the board should receive a fixed salary. To work at full effectiveness and live up to a company’s expectations, a director must be independent. In other words, his or her interests must not be aligned with the same incentives which are guiding management. Establishing variable director pay means creating a conflicting environment, to say the least, if not dangerous and contaminated.

I thus believe that other parameters of value and reward must apply to members of the board. Their talent and expertise should favor decisions that guarantee the company’s future and preserve its reputation. It is therefore increasingly important to establish professionalized, independent boards, supported by strong control mechanisms. The variable element produces a harmful short-term view.

Also, shareholders should reflect on a few issues before offering variable pay to their directors. For example, would a director with stock options in his or her compensation package have the necessary independence to detect problems which could negatively impact the future value of those stocks? How would that director discuss executive pay, if his or her own compensation is tied to the performance of the company’s shares?
What are a director’s true motivations?

Given these questions, it becomes clear that intellectually and financially independent directors are the best choice for companies and their shareholders. This guarantees that the board will truly focus on the challenges imposed by the corporate environment and how much of a difference their expertise can make within that dynamic.

The latest edition of the best corporate governance practices code issued by the Brazilian Institute of Corporate Governance (IBGC) addresses this issue and provides very clear recommendations on board compensation. In the institute’s view, companies should avoid compensating their directors based on short-term results. Variable compensation mechanisms exist – as well they should – and are well justified when well-adjusted to an executive’s attributions. This is neither true nor pertinent when it comes to a director, especially an independent one.