Monthly Archives: June 2012

Corporate Governance and the Problem of Executive Compensation

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By J Robert Brown Jr

“Corporate governance is one of those topics that only seems to grow in importance.  Some of the importance comes from increased organization of shareholders. 
The public has also become increasingly aware of these sort of issues.  What was once a matter betwen managers and owners has now become an issue debate within the public at large.”  

J Robert Brown in .theracetothebottom.org website, author of this article deals about the issues of executive compensation.

Compensation issues raise questions about the role of the board of directors. For public companies traded on a stock exchange, there must be at least a majority of independent directors.  In fact, the largest public companies typically have a super majorityof independent directors.  Yet this structure has been unable to stop a steady increase in the amount of compensation, the payment of unnecessary perqs, and, until say on pay, a not uncommon disconnect between pay and performance.  Nor has the structure stopped an escalation in director compensation.

This is one of those areas where the problem is clear, the source obvious, and the solution straightforward.  State law determines the obligations of the board, including those connected to the approval of executive compensation.  State courts, particularly those in Delaware, have adopted standards that impose no meaningful limits on executive compensation.  This phenomena is discussed at length in Returning Fairness to Executive Compensation.

The Solution ?
Read the article on Theracetothebottom.org

 

First Key to Agile IT Governance: Stakeholder Satisfaction

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By Chiranjeev Bordoloi

The website CIO started a serie called The 12 Principles of Agile IT Governance.
The series is designed to help board members and senior managers leverage technology excellence as a competitive advantage for their organization. Each article discusses a key principle of agile IT governance and presents tactical measures that allow for deployment of that principle.

This interesting series accurate that 4 steps are necessary to focus on Stakeholders  satisfaction :

1- Manage shareholder satisfaction with ROI on technology investments.

2- Improve management’s technology quotient.

3- Ensure that employees feel like they work for a tech-savvy company.

4- Actively contribute to open source projects and organizing hackathons to improve   the company’s brand perception in the community.

 

Read More: CIO website 

 

Women in Finance: Focus on board diversity is the tip of the iceberg

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By Yasmine Chinwala

 

Yasmine Chinwala, the new article’ author deals about the diversity in boardroom. She has seen a significant increase in the number of women in Board of Directors in United Kingdom. 

When the movement thrives, it should be pointed out”

 

“Not a week goes by without headlines about the growing recognition of the importance of women on boards. The figures in the UK at least are promising: women now hold 16% of FTSE 100 board positions, up from 12.5% last year.”

“In the light of such positive news, and with gender diversity making headway on the corporate agenda, the findings of the fifth annual Financial News Women in Finance survey are sobering. Of the 650 female respondents to the survey, all of whom work in the financial services industry, two thirds said their gender made it harder for them to succeed and a similar proportion said they felt they needed to work harder than male counterparts in order to be viewed at the same level of achievement by managers.

Ruth Grant, a litigation partner and co-chair of the diversity committee at law firm Hogan Lovells, said: “There is a mismatch between what’s being done and outcomes. There is a difference between management having projects and structures that they put in place and actually embedding those ideas into the corporate culture and how the business makes them part of the daily life and DNA of an organisation.”

The survey results are a timely reminder that, while top-level management of financial firms is largely convinced that change is necessary and has begun to implement programmes, there is still more that needs to be done. The challenge, particularly in depressed market conditions, is keeping gender diversity on the priority list.

Helena Morrissey, chief executive of Newton Investment Management and founder of the 30% Club, which has had notable successes encouraging chairmen to bring more women into board roles, said: “There has been a very long, slow burn over the understanding of gender imbalance, but a sharp pick-up and growing momentum for change over the past 18 months. The financial services sector, and especially bigger companies, are trying very hard, partly in an attempt to rehabilitate their reputation. It is a paradigm shift for many people.” …

Read more on the efinancialnews website

 

10 Ways To Measure The Tone At The Top

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By Donna Epps

To complete our series on Governance especially Board evaluation, let me show you an comprehensive article on the corporatecomplianceinsights.com website. Donna Epps, the author write about the  management’s ”tone at the top” and the Dodd-Frank Act’s. 

What is the Dodd-Franck Act’s?
The author explain, “The Dodd-Franck Act’s is offering potentially large rewards for tips about possible securities law violations, this could be an opportune time for compliance executives to consider new ways to evaluate their company’s tone at the top.”

In other words, directors in Boardroom have today many ways and tools in their hands to limit the risks’ management . Donna Epps going further that and lists 10 ways to assess the current state of an organization or a Board of Directors.

 
1- Extent and nature of wrongdoing

2- Anonymous incident reporting

3- Social media reputation assessment

4- Employee surveys

5- Tone of management communications

6- Group discussion

7- Facility visits

8- Exit interviews

9- Interviews and focus groups

10- Customer complaints

 

Read the article on corporatecomplianceinsights.com

To read more: 
Board Evaluation: What areas of operation are evaluated regularly or annually?
In CAMERA Board Session… Why?

Should CEO board service be limited?

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By Paul Hodgson

On the Corporate Secretary.com website, Paul Hodgson wrote an interesting article on the exchange of skills and experience of a senior executive. The author ask himself a series of issues about it :

“But what about when service on other companies’ boards begins to interfere with the effective practice of an executive’s primary position? What about when the executive is a CEO?”

We have already talking about Conflict of interest but in this case, this topic is not concerned. In fact, the eventual problem could be the CEO’ concentration level. As the author wrote “What is arguable is whether the CEOs of some of the largest companies in the world have the time to meet their increased duties.”

Read this article on the Corporate Secretary Website