New CEO and Board Research from Stanford and The Miles Group: In Grading CEO Performance, Financials Still Dominate.

By Stanford Graduate School of Business and The Miles Group, May 22nd 2013, The Sacramento Bee

Boards rate CEOs high in decision-making, low in talent development

NEW YORK and STANFORD, Calif., May 22, 2013 – /PRNewswire/ – A new study conducted by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford University’s Rock Center for Corporate Governance, and The Miles Group reveals that boardrooms are giving poor grades to CEOs for their mentoring skills and board engagement – but still prioritize financial performance above all else. More than 160 CEOs and directors of North American public and private companies were polled in the 2013 Survey on CEO Performance Evaluations, which studied how CEOs themselves and directors rate both chief executive performance as well as the performance evaluation process.
When directors were asked to rank the top weaknesses of their CEO, “mentoring skills” and “board engagement” tied for the #1 spot. “This signals that directors are clearly concerned about their CEO’s ability to mentor top talent,” says Stephen Miles, founder and chief executive of The Miles Group. “Focusing on drivers such as developing the next generation of leadership is essential to planning beyond the next quarter and avoiding the short-term thinking that inhibits growth.” Continue reading…

Median CEO pay rises to $9.7 million in 2012

By Christina Rexrode May 22nd 2013, Bloomberg Businessweek

CEO pay has been going in one direction for the past three years: up.

The head of a typical large public company made $9.7 million in 2012, a 6.5 percent increase from a year earlier that was aided by a rising stock market, according to an analysis by The Associated Press using data from Equilar, an executive pay research firm.

CEO pay, which fell two years straight during the Great Recession but rose 24 percent in 2010 and 6 percent in 2011, has never been higher.

But the numbers don’t tell the whole story. After years of pressure from corporate governance activists unhappy about big payouts, many companies have revamped their compensation formulas. They have awarded a bigger chunk of compensation in stock to align pay more closely to performance, become more transparent about how compensation decisions are made and in some cases promised to claw back pay from fired executives. Continue reading…

A question of principles

by Alexandre Di Miceli, May 2013, Capital Aberto

Returning to the origins is the best way of consistently ensuring current advances

Since its inception, the movement for good corporate governance has been driven by steadfast principles. The Cadbury Report, a pioneering reference document on the subject, created in the United Kingdom in 1992, stated that “the Code [of recommended practices] is underpinned by the principles of openness, integrity and accountability. They go hand-in-hand”. Seven years later, the Organization for Economic Cooperation and Development (OECD) launched another reference document, entitled the Principles of Corporate Governance, which reinforced the importance of adopting basic principles.

In Brazil, the Brazilian Institute of Corporate Governance (IBGC, the organization of reference in this area, founded in 1995) has been characterized since its beginnings by the idealism of its founders regarding principles such as commitment, respect for formalities, transparency, independence, accountability, etc. Continue reading…

Digital Economy, Analog Boards: The 2012 Study of Digital Directors

Russell Reynolds Associates

The digital transformation of business is dramatically changing both the products and services that companies produce and the processes used to produce them. Retailers prosper or struggle based on their ability to leverage online social networks. Oil companies race to build digital oil fields—data-driven models to help maximize extraction. Financial services firms must retool to serve a cashless society. Healthcare companies are developing online patient communities and are leveraging digital technologies to drive collaborative research and development.

In this environment, every function has a digital component, every C-suite executive must be able to lead a piece of the company’s digital transformation and the CEO must be the chief digital visionary. These imperatives are widely recognized. Too often, however, companies fail to see that the same requirement holds true for boards. After all, how can boards provide counsel to the CEO, ask the right questions of senior management and manage the CEO succession process in an increasingly digital environment if they themselves don’t have a certain critical mass of the digital “right stuff”? Continue reading…

 

Survey reveals desire for pragmatic measures to improve corporate governance

16th May 2013, PwC

• The real challenge for corporate governance lies in developing the right culture and behaviours
• Businesses need a balanced approach to risk management, resisting excessive risk avoidance and focussing instead on well-controlled expansion instead of more legislation, a new drive is needed to encourage adoption of best practices in corporate governance
• Over half disagree with mandatory quotas to promote diversity
• More meaningful disclosures (‘substance over form’) are essential
• More transparency and shareholder influence on remuneration

A survey of senior European managers with responsibility for Corporate Governance in both the public and private sectors shows that the real challenge for corporate governance to work in any organisation lies in developing the right culture and behaviours. Delegates attending a major EU Corporate Governance conference, facilitated by the Department of Jobs, Enterprise and Innovation, as part of the Irish Presidency, were strongest in endorsing this view across a wide range of opinions canvassed in a special survey prior to the event. Continue reading…

Corporate expert favours region-specific solutions

J.Venkatesan, May 17th 2013, The Hindu

“U.S., European models don’t sufficiently adjust for market circumstances in India or Australia”

Countries around the world face common challenges in getting their corporate regulation frameworks right, balancing the objectives of fairness and efficiency, and in this, there is a lot that India and Australia can learn from each other, according to Australian legal expert Robert Austin.

A former Justice of the Supreme Court of New South Wales, distinguished academic, and leader in corporate law reform, Dr. Austin is on a visit to India to discuss ways in which the two countries could cooperate, share information and build stronger institutional linkages in corporate affairs.

In an interaction with The Hindu on Tuesday, Dr. Austin called for region-specific solutions to corporate governance issues. “The U.S. and European models don’t sufficiently adjust for market circumstances in India or Australia, or most other economies in the Asian region. It is time for us to share and adapt the best of each other’s regulatory experience so as to build on the Asian region’s existing economic success. Good regulation creates value.”Continue reading…

Corporate Governance in Japan Inc. – It’s Not All Bad

By Isabella Steger, May 16th 2013, The Wall Street Journal

The history of shareholder activism in Japan might be littered with failures, but there are some signs, albeit small ones, that things could be changing.

An attempt by hedge fund Third Point LLC’s founder Dan Loeb to shake things up at Sony Corp.  is shining the spotlight once again on corporate governance in Japan. Long-time observers may remember past battles such as U.S.-based fund Steel Partners Holdings L.P SPLP versus Sapporo Holdings Ltd. and The Children’s Investment Fund versus Electric Power Development Co.  which didn’t end happily for the foreign funds, with Steel Partners withdrawing from the country. Continue reading…