Featured Articles

What the KPMG saga says about shareholder activism

28 September 2017 | Aean Gossel, University of Cape Town and Timothy London, University of Cape Town | ENCA.com

Accounting and consulting firm, KPMG South Africa, is reeling after it was exposed to have played a part in the Gupta inspired state capture activity. The fallout has been remarkable. Some major firms have fired KPMG as an auditor and more Johannesburg Stock Exchange listed companies are expected to follow suit.

KPMG offers tax, advisory and auditing services and is one of the Big Four auditors, along with Deloitte, Ernst & Young, and PricewaterhouseCoopers (PwC). Despite their integration into the economy, all four of these audit firms have experienced significant lapses of judgement.

The KPMG case provides a potential example of how shareholders can attack the soft underbelly of the private sector state capture enablers. Globally, the number of shareholder challenges has increased dramatically from 520 episodes in 2013 to 758 in 2016. Around two thirds of these challenges were successful, double the rate of just a decade ago. Read more

Corporate governance and the proactive board

14 September 2017 | Anette Mikes | Board Agenda

When should boards take a more proactive approach to governance and strategic decision-making? Research shows that non-executives needn’t wait for a crisis to intervene. 

Boards are supposed to provide governance and oversight of strategy and activities pursued by senior management. But the approach they take to fulfilling this role can vary considerably.

Often, mindful of an expectation that board members should behave in an “engaged but non-executive” manner, boards tend towards the passive monitoring of management decisions. Read more

Top CEOs Place High Value On Corporate Ethics And Social Responsibility To Drive Business

10 September 2017 | Robert Reiss, Contributor | Forbes

Remember Gordon Gecko from the movie Wall Street? Little did we know then how closely life could imitate art when the likes of Enron, Bernie Madoff and a worldwide financial crisis lambasted the world’s economy a few years ago. But it also vaulted companies like the Ethisphere Institute, which since 2007 has annually compiled a list of World’s Most Ethical Companies, into the foreground of discussions involving the corporate ecosystem in the United States and abroad. Today, several studies illustrate the cultural changes that have elevated ethics and corporate social responsibility (CSR) more than ever.  Read more

The Practices of Boards Across the World

6 September 2017 | Stanislav Shekshnia, INSEAD Senior Affiliate Professor of Entrepreneurship and Family Enterprise, and Veronika Zagieva, Ward Howell Talent Equity Institute Project Manager | INSEAD Knowledge

How culture impacts the role of a board chair.

Difficult team members are ubiquitous in business. Generally HR steps in to coach individuals accused of using inappropriate language or displaying domineering or argumentative behaviour. But what happens when the difficult person is a member of a company’s board of directors? Depending on the national culture, they may be shouted down, taken outside for a quiet word or offered professional help. Board chairs across the globe generally have the same essential priority: to lead the board and the organisation. But the methods they employ across borders hold cross-cultural lessons for international chairs as we found in a recent study of chairs in Belgium, Denmark, Italy, the Netherlands, Russia, Singapore, Switzerland, Turkey and the United Kingdom. Read more

11 Quick Tips to Get More Value out of Your Board

15 August 2017 | Mark Suster | Both Sides

Many board meetings are bored meetings. Management teams whisk through slides trying to get through a presentation to share how great things are going and they are eager to get through the meeting so they can get back to their real jobs. This is a shame since the value that the right board could add is immense if you select the right board members and manage them effectively.

Yesterday I wrote a blog post about what the role of a board actually is. In short the board is there to represent the interest of all shareholders (big & small) of the company and all other stakeholders (debt, creditors, employees, etc.). The board’s job is to review the company’s financial performance and strategy and help provide counsel to the executive team. Read more

Boards must adapt to deal with increasing shareholder activism

20 August 2017 | Sharon Geraghty | The Globe and Mail

Sharon Geraghty is a partner at Torys LLP specializing in M&A, corporate governance and securities law.

Today's shareholders want an increasingly active role in governance, even if they don't have a literal seat at the table. And as investors get closer to the boardroom than ever before, directors have to take notice and change their practices to respond.

Shareholders have been putting the spotlight on governance practices for several years as they seek to promote better governance and better boards, pushing for greater board independence, majority-voting policies and "say on pay" votes. This rise in engagement shows no sign of abating, with recent research by FTI Consulting Inc. suggesting that Canada is likely to face increased shareholder activism, in part because the regulatory environment here is considered more activist-friendly than that in the United States. Read more

Why good minute taking is key for cleaning up culture of corruption

Faithful recording of boardroom meetings and adherence to practices around the process ensure there is no room for falsehoods and trickery

4 August 2017 | J Michael Judin | BusinessDay

As scandal after scandal is uncovered in SA, as we witness crisis after crisis and deepening corruption, the name of the game is blame.

It’s always someone else’s fault. Secrets co-conspirators believed were safe are being spilled and what transpired in corridors and parked cars is now being revealed.

We learn of instances where people recording the minutes of meetings were told either to leave the room or not record what was being said. Read more

A CEO letter to the board...long overdue

28 July 2017 | Henry Mintzberg, Contributor | Huffpost

I am writing to you with a proposal that may seem radical, but is in fact conservative. That is because my primary concern as Chief Executive Officer is to conserve this company as a healthy enterprise. You are now paying me so much that I can no longer manage this company as I should. I hereby request that you cut my salary in half and eliminate my bonuses.

We have talked a great deal about teamwork in our enterprise, that our people are all in this together. So why I am singled out by virtue of my compensation? Bonuses are the worst part of it. Like everyone else in this company, I am being paid to do my job. Why should I be paid extra to do a good job? If I believe in this company, I buy the stock. If I don’t, I quit. The misguided assumption behind these bonuses is that I, as CEO, do it all.  Read more

How shareholders can help keep large businesses in check

6 July 2017 | Tim Cooper | The Spectator

Investors are increasingly turning to shareholder activism to make their views heard, and their campaigns are working. As public trust in large businesses and politicians is at an all-time low, many argue that, in the right hands, activism is more effective than political intervention in curbing corporate excess and poor governance.

According to research by FTI Consulting, shareholder campaigns in the UK nearly doubled from 28 to 51 last year as people increasingly used their ownership of companies to make a difference. Globally, campaigns have increased nearly five-fold since 2010 and now focus on a huge range of issues from boardroom pay to climate change. Read more

Microsoft’s revised policy aims to bring new voices to its board

13 July 2017 | Matt Day  | The Seattle Times

The new language in Microsoft’s corporate-governance guidelines formalizes moves the board has made in recent years to make it more responsive to change.

Microsoft’s board of directors has adopted a policy that aims to limit the average tenure of independent directors to 10 years or less, a bid to keep injecting new opinions into the company’s governing council.

The revised language in Microsoft’s corporate-governance guidelines formalizes moves the board has made in recent years to make it more responsive to change. In 2015, the company added provisions to its bylaws that give large shareholders more of a voice in nominating board members. Read more

Managing Risk in an Age of Social Media

5 July 2017 | Diana O'Brien and Deborah DeHaas | The Wall Street Journal

In today’s transparent, always-on world, control of brand messaging has shifted from organizations into the hands of increasingly connected consumers. With the touch of a key, consumers have the power to share information about companies instantly on social channels and significantly shape brand perception. A single negative post about a company can go viral and create untold brand damage in a matter of minutes.

Despite this reality, the topic of brand reputation is not often addressed in the boardroom unless there is an immediate crisis—for example, if a company’s stock price plummets after an attack in social media. Although 75% of board directors identify reputational risk as a top concern in a survey of board directors, only 6% of directors say they are well-versed in social media issues. Read more

Want to Know What a Company Really Values? Look at Its Board of Directors

23 June 2017 | Quora | Inc.com

Is lack of diversity on a board of directors a signal of a company that doesn't value diversity? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Shefaly Yogendra, Board Director experienced with for- & non-profit, private & listed boards, on Quora:

It is worth considering who is likely to use the signaling from the make-up of a board of directors.

Investors are the first group who should watch the make-up of a board of directors, seeing as companies with at least one female board director deliver better return on equity and income growth, and those companies in the top quartile of gender and racial diversity delivered 35% better returns than their industry's mean. A homogeneous board of directors is really just signaling that it does not care for shareholder returns more than it cares for retaining their own jobs on the board. Read more

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