Monday, April 25, 2005

hello, i'am searching for information on corporate governance ratings, in particullar for the belgian market and on the ussefulness of such instruments.

Ruben De Meyer

Monday, April 18, 2005

Downsizing the CEO

According to Business Week,"directors, auditors, and lawyers are more powerful than ever. That shift has fundamentally altered relations between CEOs and the advisers they depend on. At their best, these supposed guardians of shareholder value, chosen for their ability to complement the CEO and provide specific areas of expertise, were trusted advisers. At their worst, they were little more than bag carriers and sycophants. Either way, these advisers -- who were always supposed to work for the shareholders, not the CEO -- usually exercised their power as watchdogs only in moments of genuine crisis. But now the chumminess and banter have given way to a more adversarial attitude...Even CEOs who don't lose their jobs are finding that their ability to impose their will, whether it's in setting strategy or hiring a successor, has been severely curtailed."

David Henry, Mike France and Louis Lavelle argue "the new rules may initially go too far and create their own distinctive set of problems." Candid conversarions are gone. CEOs are being micromanaged by boards and now seek safe strategies rather than risk confrontations. Pay for performance is the new standard. Board independence makes it harder for CEOs to put together boards that compensate for their weaknesses. CEOs are being bullied by boards, auditors and attorneys. "The downsizing of the CEO has led, to a certain extent, to the supersizing of the advisers. That's not necessarily a cure for everything that ails Corporate America. It is a clue that successful CEOs will have to be consensus builders in the future. And should be a warning to CEOs everywhere: The age of the absolute corporate monarch, such as AIG's Greenberg, is over." (The Boss On The Sidelines, 4/25/05)

Really? CEOs still seem to have the power to block the SEC from finalizing its "equal access rule." True, they are less likely to be out and out crooks and that's certainly a step in the right direction. Is the imperial CEO dead?

Sunday, April 17, 2005

FTSE and ISS reveil Corporate Governance indices

The six new CGI indices focus on the US, UK, Japan, Europe, the eurozone and the developed world and rank about 2,200 companies. Companies are rated on a scale of one to five, with the higher scores for the best governed. The top five sectors for good governance include oil and gas, while the bottom five sectors include construction and materials, and healthcare.

The FTSE ISS CGI Series contains six regional indexes. The ratings, which cover over 2,200 companies from 24 countries are based on the following five themes of corporate governance:

- Equity structure and anti-takeover devices,
- Structure and independence of the Board,
- Independence and integrity of the audit process,
- Executive and non-executive director stock ownership,
- Compensation systems for executive and non-executive directors.

The world's top five performers are BHP Billiton; Smith & Nephew, a UK medical devices company; utility Scottish Power; UK telecoms company BT
Group; and Cognos.

In the US the top companies are maker of electrical tools and hardware Cooper Industries, car-maker General Motors, bank National City Corp, contract electronics manufacturer Flextronics International and oil and gas producer Occidental Petroleum.

In Europe, top-ranked companies include French cement maker Lafarge and Dutch food group Numico. In Japan, Nomura Holdings is a leader.

In Asia, the top companies are Hong Kong Exchanges & Clearing, Asia Sat Telecom Hldgs, Hysan Development, Parkway Holdings, and Nomura Holdings.

In the UK, top-ranked companies include BHP Billiton, Smith and Nephew, Scottish Power, BT Group and BPB.

Mark Makepeace, chief executive FTSE Group, and John Connolly, ISS chief executive, said: “Until now, quantifying the risk represented by corporate governance practice has posed a challenge for investors. The ratings provide a means to integrate that information into global portfolios.” More on ISS here.

Pressure for stricter corporate governance guidelines has increased in recent years after a series of high-profile corporate collapses, including US energy firm Enron Corp and Italian food company Parmalat.

While the EC has launched a public consultation on shareholders rights, some prefer shareholders vote with their hands and feet. Also the board structure, in particular separating the CEO and Chairman role is part of the debate.

Critics of stricter rules say too much focus on corporate governance could distract top management and lead to higher costs. Also there are doubts about whether check list approaches towards Corporate Governance work work at all.