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    ICGN'15: On global governance reform

    Accountability Conferences Ethics Governance
    Sophie L'Helias, Senior Fellow, Governance at Governance Board chaired a very interesting panel discussion. The panel was asked to discuss whether corporate governance had progressed or regressed over the last twenty years (since ICGN was formed). The opening observation was that much had changed, yet much remained the same:
    • Investors hold more power now than they did twenty years ago. Shareholders—institutional investors in particular—now know they can exert influence and many are starting to take this role quite seriously.
    • While activism brings its own challenges (including battles during proxy season), the notion of trying to hold a company and its board accountable for company performance is something institutional investors and smaller shareholders are increasingly aware of.
    • Transparency, accountability, fairness and responsibility are four key principles that feature more often now than in the past. However, the application of such principles is by no means universal.
    • The conceptualisation of corporate governance remains, in the main, one of a policy framework within which shareholders seek to exert influence over performance and outcomes. [note: In this regard, the investor community seems to be some distance behind the research that suggests corporate governance is far more than a structure or a process or a policy framework.]
    • Calls for 'responsible investing' and responsible use of the three capitals—financial (money), human (people) and natural (environmental)—are much more prevalent than ever before.
    This first panel session of the conference provided an interesting opening play, upon which later discussants could build (or otherwise!). The main takeaway for me was that shareholders and boards need to 'grow up'. Looking over the fence at each other (and, in some cases, simply ignoring each other) is not a healthy context for either productive ownership or effective control. Boards were created to bridge between owners and managers, yet many boards seem to be far more interested in pursuing their own interests and priorities (than acting in the best interests of the company or the shareholders). While we appear to have come far, we still have much to learn.
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    ICGN'15: Official welcome

    Conferences Governance Performance
    Alderman Alan Yarrow, Right Honourable The Lord Mayor, City of London provided the official welcome address straight after the ICGN AGM. Yarrow's speech was short and sharp, and it was delivered with great enthusiasm. Looking back over the last twenty years, Yarrow observed that while much appeared to have changed in the corporate governance world, much more had not. He went on to suggest that, with the benefit of hindsight, many seemingly good decisions made in good faith actually had unintended consequences. For example, many of the reforms introduced in the 2008–2010 period in response to the GFC did not deliver the expected benefits. Rather than tidy up company operations and reporting regimes, they have decreased liquidity, increased the rate and extent of change; and, increased the volatility of markets. An enlightening observation.
    Baroness Neville-Rolfe spoke after The Lord Mayor. Neville-Rolfe is a recently re-elected Conservative MP in the British House of Commons. Her speaking engagement at ICGN was her first 'outing' (to use her word) since the election results were confirmed. She claimed to be in listening mode, to find out what was going on and to learn about emerging trends in the world of commerce. More specifically, the Baroness invited the corporate community to express its view and to make recommendations. However, the Baroness was not without opinions herself. Having issued the invitation, she went on to suggest that the following attributes are important for 'good governance'.
    • Help determine and contribute to the enterprise's success
    • Ensure fairness (reigns)
    • Promote transparency
    • Require CEO remuneration
    Together these two speeches were as wonderful as they were brief. They set the scene for the conference very well. I could have listened to these two speakers for longer, but sadly their time was at a premium.
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    ICGN'15: AGM summary

    Conferences Governance Performance
    If you are anything like me, Annual General Meetings do not normally feature as compelling events in your calendar. AGMs are often boring sequences of compliance-oriented voting, with little if any inspirational or aspirational commentary. Most of the time, I give AGMs a wide berth. However, as a new ICGN member, I decided to attend the AGM to hear the discussion, and I'm pleased for the experience. The chairman, Erik Breen ran a good meeting and every resolution was carried.
    On first contact, the ICGN feels like 'just another' corporate governance body. However, having listened through the AGM, I was pleasantly surprised to find:
    • ICGN is a genuinely international network of like-minded professionals, the usage of network (cf. organisation) being intentional
    • The multi-national context of ICGN provides opportunities to engage regionally- and nationally-based entities in discussions in ways that would not otherwise be possible
    • That ICGN has a  clearly defined (and annunciated) aim, which is to influence (policy), communicate (networking) and inform (provide guidance and education)
    While the ICGN was birthed out of the investor community (53% of the membership today is from this community) to support multi-national investment activity, a trend away from investor dominance is readily apparent. The organisation has a clearly stated goal of reducing the dominance of the investor membership increasing corporate and individual membership. 
    One minor disappointment was that there was little mention of individual directors during the AGM. Rather, the focus was on the investor/advisor community—indicative language being 'investors', 'advisors' and 'the company'. This led me to wonder about the ICGN's commitment to championing the task of directing and to holding directors accountable for doing their job properly.
    The outgoing deputy chairman and finance committee chairman, Frank Curtiss, was recognised for his significant contribution of many years. Anne Simpson received the ICGN Award having been nominated by Sir Adrian Cadbury and Nell Minnow amongst others. This very popular decision was well received by the assembled membership.
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    ICGN'15: integrated reporting update

    Accountability Conferences Governance
    The 20th ICGN conference is underway. While the annual meeting and official welcome signalled the start of the conference, ICGN committee meetings and lunchtime panel discussions were scheduled, to fit everything into the thee-day window. Claudia Kruse chaired a very interesting lunchtime panel discussion on integrated reporting. The IIRC's Corporate Reporting Dialogue (CRD) was launched twelve months ago, and it was the panel's purpose to discuss the progress made and to solicit feedback from the gathered members.
    ICGN has bee an active proponent of 'tidying up' reporting. The aim of integrated reporting is to provide a representative view of how the company is actually performing. After a brief summary provided by the panel, the time was turned over to attendees, to ask questions and discussion:
    • The panel acknowledged the perennial chestnut, of who wants IR was briefly mentioned. Panel members indicated a dichotomy exists whereby some think IR is an investor-led initiative, and others think it is (or should be) management-led. While the question was not opened fully, I found the possibility that any group other than the shareholders or the board might initiate anything. Yet boards hardly rated a mention during the entire conversation. This, despite the board being a proxy representative of shareholders!
    • I found it interesting that 'value creation' was offered as a key driver for integrated reporting, and that "proper reporting leads to better corporate governance". Really?
    While I am a strident fan of transparency and straightforward reporting, I couldn't help but think that the approach the IIRC and ICGN is following has missed the boat somewhat. Integrated reporting has been conceptualised as being management-led activity, and that "proper reporting leads to better corporate governance. Yet the elephant in the room (if I can mix metaphors) is that integrated reported has been conceptualised by the ICGN team as being a management activity. The board was mentioned rarely during the entire panel discussion, even though the board is supposed to be accountable for company performance. Another challenge for the ICGN working group is that the focus is almost entirely on publicly-listed companies. I asked the question and, for my troubles, may have 'volunteered' to working out if and how integrated reporting might apply in a privately-held company context. 
    Notwithstanding these challenges, the fact the ICGN is asking the question and looking for ways to bridge between the different reporting requirements of different jurisdictions is good, really good. I look forward to future updates and, possibly, to contributing the the 'privately-held' part of the discussion.
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    International Corporate Governance Network: Annual conference starts today!

    Conferences Leadership Research
    I have arrived in London ahead of the International Corporate Governance Network conference which starts today. The organisers have prepared a full three-day programme (agenda here), based at Guildhall (an historic building in central London).  Further details are available here.
    I'll post summaries here during the conference. Please contact me if you'd like to meet up during the conference, or if you want to know about a particular presentation.
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    Pausing to celebrate two important milestones

    Governance Phd Research Research Update
    Picture
    May 31 is an important day on our family calendar: This year doubly so. It's our daughter's birthday (our youngest reached the ripe old age of 21 this year). We hosted a luncheon for her and several of her friends. Gifts were given and stories were told. We had a great time together. The 'doubly so' part is that I finished writing up my doctoral thesis! Some three-and-a-quarter years after setting out (to discover how boards influence business performance), the main output of the doctoral research process, the thesis dissertation, is complete and ready to be examined.
    Four copies of the 336-page tome have been printed and bound, and the associated 'submission' paperwork has been signed. Will the thesis dissertation be good enough? I hope so, but only the examiners can answer that question.
    Where to from here? Today I will rest, to start dissipating the intensity of the final ten days of the write-up and to 'change gear' (from writing to meeting people). I am en route to London, ahead of three exciting corporate governance conferences—two of which I have the honour of addressing. Tomorrow I will start preparing presentations and thinking about the future.
    Thank you to everyone who has provided support and offered encouragement in recent weeks. The focus on the write-up process has been total. I appreciate your comments—deeply.