Author Archives: Raphaël Ozenfant

Initiatives to Place Women on Corporate Boards of Directors

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By R. Christopher Small,

The Harvard’s blog on corporate governance wrote an article about the initiatives to place women on corporate BoDs.

You may have heard about the idea of quota system  for women in Boards (France for example), but now in Austriala another program is considered : The Australian Stock Exchange (ASX) has adopted a “comply or explain” diversity disclosure requirement which emphasizes gender diversity.

“In the paper, Initiatives to Place Women on Corporate Boards of Directors, forthcoming in the Australian Corporate & Securities Law Review, I investigate initiatives to place women on corporate boards. In the United States, the representation of women on corporate boards of directors has been flat for 6 years now. By contrast, elsewhere around the world the topic is a hot button issue. This includes Australia where the proportion of board seats held by women has suddenly jumped from 8% in 2010 to nearly 14% today. The Australian Stock Exchange (ASX) has adopted a “comply or explain” diversity disclosure requirement (for emphasis termed an “if not, why not” disclosure requirement), which emphasizes gender diversity. The requirement is even more stringent than the London Stock Exchange (LSX) comply or explain regulation adopted after the Lord Mervyn Davies Report on women in corporate governance appeared in February 2011. The Australian Institute of Company Directors also has instituted a mentoring/sponsorship program, the first of its kind in the world, designed to obtain board seats for women. This article reviews these Australian as well as global developments, including enactment of quota laws (especially Norway and France), certificate and pledge programs (“Rooney Rules”), and hard law disclosure requirements (United States).

As part of a study group which includes governance scholars from Norway, the UK, the U.S., Australia and New Zealand, we interview women company directors, along with company chairpersons and representatives of adjective organizations interested in the subject of diversity on corporate boards of directors. Examples of adjective organizations who have undertaken efforts to place women on corporate boards are, in the U.S., Catalyst, Inc., or Women Corporate Directors (WCD), or in Australia, the Institute of Company Directors (AICD) or the Australian Business Council (ABC). The expected outcome of our study group endeavor is to describe how various women actually have attained elevation to corporate boards and senior management positions, as opposed to the anecdotal and other non-empirical accounts which have dominated the literature to date.

In 2010, at the New South Wales State Library in Sydney, the group interviewed 16 women who serve as directors of publicly held companies, 5 company chairmen, and 4 representatives from adjective organizations. A subsidiary goal is to repeat the process in several countries, developing a comparative as well as empirical model of pathways for women to corporate board seats.”

To read more : blog.law.havard.edu

What to do With Proxies That You Get in the Mail

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By Sheyna Steiner,

On the bankrate website, Sheyna Steiner deals about the next question :
Why your proxy vote matters in proxy season?

“ Proxy season may be winding down, but next year’s voting season will be here sooner than you realize. If you’re at all interested in influencing corporate governance, then learn the ins and outs of proxy voting before your company’s meeting or before next year’s ballots arrive in the spring.

For small-time owners of common stock in companies, it can be easy to discount the importance of participating in corporate governance. Why should management at Exxon Mobil Corp. care about the votes from a shareholder with a measly 100 shares, for instance? But adding your voice to those of other shareholders, big and small, can get attention and influence the decisions of the board of directors, the management and the social and environmental direction of the company.

What is a Proxy? Why Do You Vote It?

Before the annual shareholder meeting, packets of information containing the proxy statement are sent to all shareholders. The proxy statement contains information about the topics to be covered at the annual meeting, including nominations for the board of directors and the pay packages of the top five executives. There are also proposals from management as well as shareholder proposals.

Also included in the mailing is background information on the issues.

The shareholder then fills out the proxy ballot, also known as a voting instruction form, and sends it back.

Alternatively, shareholders can vote by phone or over the Internet.

The various issues up for a vote every year receive different treatment from management. For instance, while the votes for directors on the board are binding, the say on pay vote and those on shareholder resolutions are considered advisory.

For the advisory votes, “there’s nothing legally binding where the company has to make a change. But even if there are just 20% of shareholders who voted in favor of a certain initiative, that’s a lot. When a portion of your shareholders get together in support of an issue, that warrants discussion at least,” says Jessica Clarke, advocate relationship manager at Moxy Vote, a proxy voting research firm.”

The author continue the analyse with the shareholder initiatives and their power over decisions

Shareholder initiatives

“Anyone who owns $2,000 worth of a company’s stock for one year can submit shareholder resolutions to be voted on at the shareholder meeting. Shareholder initiatives span many different environmental, social or governance issues.

Like most investment mailings, proxy voting materials tend to be complex and a little esoteric. In most cases, the nominations for the board of directors are not particularly well-known people, and the other issues up for a vote can also require some research…”

Read the full article on the bankrate website

Risks, Security… Directors, Are You Aware?

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By Jody R. Westby,

The 2012 Cylab Governance published a survey on how boards and senior executives are governing the privacy and security of their organizations’ digital assets (networks, systems, and data).

The report reveal that corporate data at a higher risk of theft or misuse than ever before. These are issues that now require active oversight by boards and senior executives.      The risks are real, fresh in all our minds theexample of the recent web attacks.

Read the Reuters’ article about hacked companies :
(Frustrated by their inability to stop sophisticated hacking attacks or use the law to punish their assailants, an increasing number of U.S. companies are taking retaliatory action.)

It can be concluded that…
“The 2012 CyLab Governance survey results indicate a serious lack of attention at the top. Although organizationally, boards are forming Risk Committees and establishing cross-organizational teams within their organizations, they are not regularly engaging in key cyber governance activities. Nearly half of the respondents indicated that their companies do not have personnel in key privacy and security roles, and 58% of the respondents said their boards are not reviewing their companies’ insurance coverage for cyber-related risks. In addition, only about one-third of the boards that are engaged with privacy and security issues are focusing on activities that would help protect against reputational or financial losses flowing from data breaches and theft of confidential and proprietary information.”

Read the full report on :
www.rsa.com/innovation/docs/CMU-GOVERNANCE-RPT-2012-FINAL.pdf

Senior Management Has No Idea where their Company Data Resides

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According to a recent article on our blog “Confidentialité: du papier au sans papier…“ and the issues of Data’s storage in companies, some societies by their Board of Director hesitate to transmit Data’s company at their IT services. Confidentiality is the key of the Data management and many directors indicate that their senior management has little or no idea where their company data resides.

 

The Agile IT Governance website by one of these author CJ wrote an article about this issue. 

“ The majority of companies surveyed also indicate they have no systems in place to account for which corporate files reside in systems managed by third-party service providers. Companies reported they have no way to track what data is being stored in the cloud and no process to manage access to that data.

In short, the survey reveals that:

- Only 9% of the companies surveyed have procedures in place to control access to data stored in the cloud;

- 23% of organizations are still developing their data access policies;

- 74% of respondents reported that they do not have a process for tracking which files have been placed on third party services;

- 68% either have no plans in place that they are aware of, or live without formal processes for granting and reviewing access

These survey results should be a wake-up call for all companies. CIOs should start developing and implementing strategies to ensure data security as quickly as possible.

Here are some questions that senior managers and the board of directors should be able to answer:

- Do managers know who is responsible for security?

- Does the head of security frequently meet the board of directors?

- When was the last time top managers got involved in security-related decisions?

- Would people recognize a security issue? Would they know who to call?

- Is the company clear on its position relative to IT and security risks?

- What percentage of staff had security trainings?

- Are managers convinced that security is being appropriately addressed in the company?

- Are managers aware of the latest information security issues and best practices?

- What can be done to successfully implement information security governance?

Protecting the interests of the stakeholders is a fundamental responsibility of senior management. This includes understanding the IT risks and ensuring that they are adequately addressed from a governance perspective. To do so effectively you need to manage information security risks, by integrating an information security governance framework into your overall enterprise governance framework. “

Read more on Agile IT Governance website

More articles: Confidentialité: Du papier au sans papier…
Caution – PATRIOT Act …
Les irréductibles du sans papier…

 


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

In CAMERA Board Session… Why?

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One of the most delicate topics in governance is the ability to discuss freely any contentious agenda items. As the Board and committees are intended to oversee the management and the executive team in place, it may be difficult in their presence to address openly certain subjects during a meeting. This may be even more difficult when discussing and evaluating their performance.

The governance practice “in-camera session” is designed to help board to manage these delicate situations.  Note that in-camera session if started should be held at every meeting, otherwise it will stress too much the CEO and the management since they will suspect that a request for a private session is to talk about them.

A definition of what constitutes an in-camera session is  when directors meet on their own, without management or any other non-Board member present.

The legal term is “recused,” which means to disqualify someone from participation in a decision on grounds that they cannot, because of a particular interest or position, objectively discuss the matter.

Currently accepted principles of good governance provide that all boards and committees should regularly hold scheduled in camera sessions for board members only.

We find several references to this practice to hold a session of 15 minutes or less at the end of CA with only directors. It’s providing them with the opportunity to talk about more sensitive elements or simply get together as a team. In Camera session provide:

• an opportunity for the board to discuss particularly sensitive matters within the jurisdiction of the board (such as litigation, work relations, management/CEO’s performance )

• an opportunity for the board to discuss sensitive internal board governance matters, attendance, evaluation, leadership

• an opportunity for the board to review the performance and compensation of the president, discuss the attitude of one director, etc.

In conclusion, in–camera sessions are a very valuable tool allowing full and open debate on different topics strictly between board members and without any possible interference.