September 2011 - MINDA Malaysian Directors Academy ...

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article fiveMALAYSIAN DIRECTORS ACADEMY 2026Qmore active role in overseeing companies by requiring a“nonbinding shareholder advisory vote on remuneration.”In 2002, the British government adopted the Directors’Remuneration Report Regulations, which made annual payvotes mandatory. By 2004, say-on-pay spread to continentaldirectly with shareholders. Since the board is responsible forEurope as the Netherlands made it a requirement. It haddetermining the nature and extent of the significant risks themoved to Norway, Sweden, Spain, Portugal, Denmark,France,companyGermanyis willingandto take,Australiait’s notbyunusual2007, whenfor theinstitutionalchairmaninvestors explain in the the company’s United States business filed model shareholder as well as proposalsthe formal44 performance companies. evaluation In the of the financial board as overhaul, a whole.” Dodd-atFrank It might reconciled be well previous for directors proposals to consider by that RepresentativegovernanceBarney concepts Frank originating and outside Senator the Charles United States Schumer. have Recently,a historythe of moving S.E.C. into finalized the American the rules mainstream on say-on-pay rather quickly. and say-ongoldenparachutessider“shareholder say on pay,” which grew out of a 1999Con-white Even paper an offhand by the British comment cabinet can minister fuel regulatory Stephen Byers flames.When suggesting the Deutsche that shareholders Bank chief have executive, a more active Josef role Ackermann, in overseeinghe companies hoped that by “someday” requiring a his “nonbinding board would shareholder be “moresaidcolorful advisory vote and on prettier, remuneration.” too,” it In sparked 2002, the discussion British gov- aboutnew ernment restrictions adopted and the Directors’ even quotas. Remuneration Angela Merkel Report opposes Regulations,for which the made number annual of women pay votes on mandatory. boards, even By 2004, thoughquotasGermanysay-on-payhasspreadthe poorestto continentaltrack recordEuropeinasEuropethe Netherlandsfor femalerepresentation. France passed a law this year requiringmade it a requirement. It had moved to Norway, Sweden,companies with more than 500 employees and moreSpain, Portugal, Denmark, France, Germany and Australia bythan $68 million in sales to have women in 40 percent2007, when institutional investors in the United States filedof the supervisory board positions within six years. Spainshareholder proposals at 44 companies. In the financial overhaul,Dodd-Frankhas the same requirement. Women remain a minority inboardrooms in thereconciledUnited Statesprevious(15proposalspercent)byandRepresentativeBarney the percentage Frank and Senator has stagnated Charles Schumer. at 12.5 percent Recently, forBritain,wherethree the S.E.C. years finalized running. the Norway rules on is say-on-pay often cited and for say-on-goldenparachutes.that 40 percent of company directors beits mandatoryrequirementwomen. Even Yet an offhand it took comment 12 years can for fuel Norwegian regulatory companiesflames.to When meet the the Deutsche quota, Bank which chief got executive, its biggest Josef boost Ackermann, when aconservative said he hoped minister that “someday” of economics his board supported would be the “more quota colorfuland interest prettier, of good too,” it business. sparked discussion about new restric-inthetions Diversity and even is quotas. on the Angela minds Merkel of opposes American quotas directors, for theaccording number of to women the recent on boards, annual even corporate though Germany directors’ has survey theinteresting...BUZZWORDS READY FOR RETIREMENTA recent analysis of LinkedIn profiles has revealedthat the most clichéd and overused buzzwords usedby job-hunters are:“Extensive Experience” – U.S., Canada, Australia“Dynamic” – Brazil, India, Spain“Motivated” – U.K.“Innovative” – France, Germany, Italy, NetherlandsSource: LinkedIn3 . 2 0 1 1by PricewaterhouseCoopers, which found that 45 percentof them cited difficulty in finding qualified women andnonwhites with expertise in technology. A whopping 86percent of directors said they used their own networkof contacts to recruit new board members. Given thepoorest track record in Europe for female representation.possibility of quotas for women on United States companyFrance passed a law this year requiring companies with moreboards and the new rules for greater transparency indescribingthan 500 employeesthe competenciesand moreofthanboard$68members,million indirectorssales are have well women advised in 40 to percent look more of the broadly supervisory for board board candidates positionsor within else shareholders six years. Spain may has propose the same their requirement. own candidates Women inproxy remain access. a minority in boardrooms in the United States (15percent) Directors and are Britain, responsible where the for percentage culture has and stagnated compliance, atfor 12.5 “infusing percent for related three years values running. into their Norway decision-making,”often cited foraccording its mandatory a requirement recent Rand that report, 40 percent but they of are company “hampered directorsa lack be women. of training Yet it and took awareness.” 12 years for Further, Norwegian their companies ability tobyovercome to meet the this quota, means which “gathering got its biggest the information boost when they a conservativereally minister understand of economics their firms, supported as well the as quota related in the risks,needtostrategies interest of and good operational business. concerns.”Ubben Diversity complains is on the that minds professional American and directors, nonshareholder accordingto the recentdirectors have noannualsensecorporateof urgency.directors’Mostsurveyboards,by PricewaterhouseCoopers,which found that 45 percent of themhesays, make decisions based on emotion or on supportingthe status quo, rather than on fact-based information,cited difficulty in finding qualified women and nonwhitessince what most boards receive is dependent on the CEOwith expertise in technology. A whopping 86 percent of directorssaid they used their own network of contacts to recruitor management’s position. Ubben’s team turns a valueanalystfocus on the company, digging through filings to getinformationnew board members.on competitors,Given thedevelopingpossibilityaofmorequotaslegitimateforpicture women of on the United company’s States company current growth boards and and the its new prospects, ruleswhich for greater is often transparency quite different in describing from what the competencies management of hasbeen board presenting.members, directors are well advised to look morebroadly Similarly, for board Whitworth candidates said, or “If else I shareholders didn’t have may my staff, proposetheir feel own overwhelmed candidates in on proxy one of access. these boards.” WhenIwouldboard Directors members are like responsible Ubben or for Whitworth culture and have compliance, questions, forthey “infusing find the related answers, values even into their if it means decision-making,” hiring consultants accord-orusing to their a recent own Rand staff report, members’ but they time. are Professional “hampered by directors a lackare of training limited and by awareness.” the information Further, that their management ability to overcome givesthem. this means “We“gathering enough the information independent they need information to really understandtheir CEO, firms, and as well it’s not as related a bad thing,” risks, strategies Ubben said. andtochallengeoperational For all the concerns.” tinkering that the government has done totry toUbbenmakecomplainsboards morethataccountableprofessionalandandtransparent,nonshareholder“I’dtrade it all for more shareholder directors,” Whitworth said.directors have no sense of urgency. Most boards, he says, makeManagement and shareholders need not be adversarial.decisions based on emotion or on supporting the status quo,The key is to getting enough shareholder directors to breakrather than on fact-based information, since what most boardsthe logjam to enable other directors to see that shareholderreceive is dependent on the CEO or management’s position.directors can bring valuable insights to the board and tomanagement.Ubben’s team turns a value-analyst focus on the company,digging “By the through same filings token, to get there information are a number on competitors, of activistshareholders developing a more who legitimate have taken picture positions of the company’s on how currentgrowth should and its proceed prospects, on which some issue often based quite on different a sliverthecompanyof from information,” what management Ubben has said. been “They presenting. don’t know what theydon’t Similarly, know. The Whitworth activist shareholder said, “If I didn’t could have be my proposingstaff, Isomething would feel overwhelmed very complex on when one of these it is boards.” a series When of small, boardmundane members like adjustments Ubben or that Whitworth could really have questions, bring value they to find thecompany.” the answers, Still, even there if it means is much hiring that consultants activist shareholdersor using theircan own learn staff members’ from shareholder time. Professional directors directors like Whitworth are limited andUbben. by the information They will not that be management perfect and will gives make them. mistakes, “We gather butthey enough will independent help governance information become to more challenge responsive the CEO, to and theowners. it’s not a Proxy bad thing,” access Ubben is a governance said. tool that needs to beusedForresponsiblyall the tinkeringand effectively.that the governmentNominatinghasadonedirectorto tryisone thing, but getting a majority of the shareholders’ votes(continued on page 73)T h e K o r n / f e r r y i n s T i T u T eHal Mayforth
article fiveTravis Fostermaking boards better(continued from page 26)means to make appealing boards more to a accountable broad group and of investors who will beable transparent, to see the “I’d candidate’s trade it all for dedication more to good governance.shareholder While most directors,” directors Whitworth disparage said. the work of proxyadvisory Management services, and shareholders the response need from activist investorsand not even be adversarial. asset managers The key is is to more getting complimentary. CharlesMcQuaid, enough shareholder chief investment directors officer to break of Columbia Wanger AssetManagement, the logjam to enable told members other directors of the to National Association ofCorporate see that shareholder Directors directors (N.A.C.D) can that bring the compilation of databy valuable Institutional insights Shareholder to the board Services and to Inc. is impressive, eventhough management. he and his staff make their own decisions based onreading “By the same proxies token, of there every are company a numberof activist Some shareholders institutional who have investors outsource theirin which they makeinvestments.governance taken positions through on how I.S.S. the and company Glass Lewis, an independentgovernance should proceed analysis on some and issue proxy based voting firm. “It’s not ideal,but on the a sliver proxy of advisers’ information,” work Ubben is effective said. at creating the basisfor “They an informed don’t know decision,”Whitworth what they don’t know. said.The In activist the meantime, shareholder there could are be too proposingon something the sidelines. very They’ve complex been when burned by the financialmany investors who aresittingcrisis. it a They series wake of small, up to mundane see more adjustmentsis that a lack could of confidence really bring value in the to regulatory system, a lackaccounts of massive fraud.Thereof the confidence company.” in board governance to provide managementoversight. Still, It there is a long is much road that to activist restore and rebuild confidence.shareholders Baby boomers, can learn who from pulled shareholderare directors not likely Whitworth to return — and they are reluctant to putout of the market during thecrash,their Ubben. reduced They will portfolios not be perfect at risk. and Anyone will who invested from1982 make to mistakes, 2000 bought but they into will a help boom governancethe become benefit more of responsive long-term to stock the investing. As morein equities that attestedtoAmericans owners. Proxy jumped access into is a the governance stock market, they bid up theprice tool that of stocks. needs to Stock-price be used responsibly increases fueled expectationsof and further effectively. growth, Nominating with investors a director expecting to earn annualrates is one of thing, return but of getting 20 or 30 a majority percent. of Until 2008.the CEOs shareholders’ seldom votes participate means appealingto a In broad more group than of investors half the who cases, the CEO is also thein the national governancedebate.chairman. will be able CEOs to see say the that candidate’s they get dedicationboards. to good JetBlue’s governance. former CEO, David former Neeleman, CEO, David said Neeleman, boards said with he specialised intelligence strategic and communication collective experience counsel.“plenty of input” fromtheirWhile most directors disparage ignored his board at his own peril. on expanding his capabilities mightthe work of proxy advisory services, the Neeleman was the founder and knew actually make sense. He probably won’tresponse from activist investors and where he was taking the company. After make more money. He could makeeven asset managers is more complimentary.Charles McQuaid, chief in-the board forced him out, and he real-a poor reaction to the ice storm in 2007, history.vestment officer of Columbia Wanger ized how little he had cultivated hisKaren Kane, former board secretary for theAsset Management, told members of board because he was “too busy runningthe company.” Chastened, Neele-CEOs and corporate boards with specializedFederal Reserve Bank of Chicago, providesthe National Association of CorporateDirectors (N. A.C.D) that the compilamanlater said he should have worked strategic communication counsel.he ignored his board at his own peril. Neeleman was thefounder and knew where he was taking the company. Aftera poor reaction to the ice storm in 2007, the board forcedtion of data by Institutional him out, ShareholderServices Inc. is impressive, board because even he was It usually “too busy takes running a crisis for the boards company.”and he realized more closely how with little his he board. had cultivated histhough he and his staff make Chastened, their own Neeleman to act. later Directors said like he being should directors. have It workeddecisions based on reading more the closely prox- with his an board. elite club, the cap of a great professionala crisis career. for Even boards as they acknowledgeto act. Directorsies of every company in which It usually they takesmake investments. Some like institutional being directors. the It increased is an elite workloads, club, the most cap directors of a greatinvestors outsource their professional governance career. are Even looking as they for another acknowledge board seat. the Most increasedthrough I.S.S. and Glass workloads, Lewis, an independentgovernance analysis seat. and Most proxy universities well as and the N. business A.C.D. provide schools board as well train-as themost directors universities are and looking business for schools another as boardvoting firm. “It’s not ideal, N.A.C.D. but the provide proxy board ing and training a host of and individuals a host — of including individuals —advisers’ work is effective including at creating talented talented women women executives executives and capable and capable nonwhitethe basis for an informed professionals decision,” — nonwhite are attending professionals these — courses are attendingrecordWhitworth said. numbers to prepare these to courses become in board record directors.numbers to prepareto become that board boardrooms directors. are full ofIn the meantime, there Everyone are too acknowledgesmany investors who arebrightsittingpeople.on theThey want Everyone to do acknowledges a good job that in their boardroomsrole ofsidelines. They’ve been burnedoversight,by thebut they may notare fullhaveof brightthe rightpeople.incentiveTheyfor thefinancial crisis. They wakejob.upTheyto seedidn’t writewantatocheckdo a goodto participate.job in their role“Ifoftheyoversight,did, itmore accounts of massive fraud. Thereis not their primary asset,”butWhitworththey may notsaid.have the rightis a lack of confidence in the regulatoryThis is also not theincentiveprofileforofthesomeonejob. Theywhodidn’twillwritechallengeasystem, a lack of confidence in board check to participate. “If they did, it is notthe boss — the CEO-chairman. When a director asks agovernance to provide management their primary asset,” Whitworth said.question during a meeting, and other directors privatelyoversight. It is a long road to restoreThis is also not the profile of someonewho will challenge the boss — theconfide that he or she had the same question, it is clear thatand rebuild confidence.this is not an effective work group.Baby boomers, who pulled out of CEO-chairman. When a director asks aThe CEO-chairman could change all of this. He holds thethe market during the crash, are not question during a meeting, and otherlevers of power. He can give the board the budget and thelikely to return — they are reluctant to directors privately confide that he orindependence to create a small but powerful work group ofput their reduced portfolios at risk. she had the same question, it is cleardedicated advisers to help him to think through the manyAnyone who invested from 1982 to that this is not an effective work group.challenges of running a complex global business.2000 bought into a boom in equitiesThe CEO-chairman could changeOne day, a CEO will get it and spend the time to createthat attested to the benefit of long-term all of this. He holds the levers of power.a board worthy of his leadership. In the face of globalstock investing. As more Americans He can give the board the budget and thecompetition, complex issues and interdependencies, thejumped into the stock market, they bid independence to create a small but powerfulwork group of dedicated advisersidea of bringing together a group of leaders who can focusup the price of stocks. Stock-price increasesfueled expectations of further to help him to think through the manytheir intelligence and collective experience on expandinghis capabilities might actually make sense. He probablygrowth, with investors expecting to challenges of running a complex globalwon’t make more money. He could make history.earn annual rates of return of 20 or 30 business.percent. Until 2008.One day, a CEO will get it and spend..........................................................................................................CEOs seldom participate in the the time to create a board worthy of hisnational governance debate. Karen In Kane more leadership. In the face of global competition,complex issues and interdepen-than half the cases, the CEO is also thechairman. CEOs say that Karen they get Kane “plenty is the dencies, Former the board idea of secretary bringing for together the Federalof input” from their boards. Reserve JetBlue’s Bank of Chicago a group who of leaders provides who CEOs can focus and their corporate21BOARD VIEW_SEPTEMBER 2011B r I e F I n g s o n T a l e n T & l e a d e r s h I p Q 3 . 2 0 1 173
Page 2 and 3: CONTENTSEDITORIAL TEAMMALAYSIAN DIR
Page 4 and 5: FEATURED ARTICLES _ARTICLE ONEMALAY
Page 6 and 7: FEATURED ARTICLES _ARTICLE TWOMALAY
Page 8 and 9: article threeMALAYSIAN DIRECTORS AC
Page 10 and 11: article threeMALAYSIAN DIRECTORS AC
Page 12 and 13: article fourMALAYSIAN DIRECTORS ACA
Page 18 and 19: FEATURED ARTICLES _ARTICLE FIVEMALA
Page 22 and 23: BOOK REVIEWMALAYSIAN DIRECTORS ACAD
Page 24 and 25: PROGRAMME HIGHLIGHTS 2011MALAYSIAN
Page 26 and 27: PROGRAMME HIGHLIGHTS 2011MALAYSIAN
Page 28: AND OUR CLIENTS ARE...AgrobankAmana

September 2011 - MINDA Malaysian Directors Academy ...

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