Board Compensation On Websites
November 20, 2008
How much companies pay their Boards continues as a much debated and highly controversial subject. Even companies with overall good Corporate Governance practices seem to mask what their Board members are paid. There are some standout companies, for example an April 2007 Wall Street Journal article stated –
Nearly 30% of proxy statements filed so far this year contain supplemental pay information, estimates Mark Borges, a principal at Mercer Human Resource Consulting. El Paso Corp., Intel Corp., Corning Inc., EMC Corp. and Pfizer Inc. are among those disclosing more than the Securities and Exchange Commission requires.
Not bad but where are the other 70%?
With all the commentary about Governance Transparency, it should be a ‘no-brainer’ to use company websites to display Board compensation. As with most business issues there are a few trailblazers.
First there’s Omron, a Japan based conglomerate with 783 Billion Yen sales. On their website they describe how Directors are compensated in detail (see image alongside).
A visit to Omron’s Corporate Governance website will also show their clear description of their Governance System, including a very detailed review of how Directors are selected.
Another company of note is The St. Joe Company, one of Florida’s (USA) largest real estate operating companies and the state’s largest private landowner. Their website clearly displays how much Directors are paid (see image)
You may want to view their Governance Policies section for a very good display of what they practice.
These companies are noteworthy for their transparency in using their websites to explain and disclose Board compensation.
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Expose Your Board, Improve Your Corporate Governance
November 19, 2008
I remember one of my jobs when I had to organize and send the “Board Package” to members of the Board of Directors. Of course we knew their names, saw some of their pictures, heard about some senior managemet presentations and even knew of some of their characteristics. But, they always seemed elusive and removed. I’m glad to see that in some companies things have changed.
In the interests of improving Corporate Governance transparency, a few enlightened companies are exposing their Boards and their activities. For example Opnext, a high technology company that makes products for Telecom & Datacom. Defense & Security, Medical, Automotive Commercial & Industrial clients. On the Coporate Governance section, there is a comprehensive display of each Board Committee –
Look at the Audit Committee — not only are members identified, but the menu gives you access to descriptions of the Purpose, Meetings and Procedures and Powers and Responsibilities. Another good feature is that if you click on a members name, say Mr. Kendall Cowan, you are taken to an informative display of the compositon of all Committees and Mr. Kendall’s background.
Finally, Sun International, gaming, hotel and entertainment company in the Republic of South Africa, on their online Corporate Governance displays a report card of the attendance history of Board members –
Now that is transparency.
Corporate Governance Goes Multimedia
November 18, 2008
Multimedia is not just for entertainment. A few companies understand this and are using multimedia tools to communicate their Corporate Governance.
For example, Netflix uses their website to show videos of members of the C-Suite.
It is nice to see pictures of top managers and many companies show pictures of C-Suite members, but it is even better to see and hear them.
Netflix also uses multimedia to make available webcasts of significant events and presentations.
Note also that each page has an Investor Tools section that allows visitors to access other related documents. Nice job Netflix.
Another company using multimedia is Microsoft. They offer videos, webcasts of speeches, and presentations on more than financial matters. They have videos of a wide variety of corporate events.
But they go further. On the Press Pass page they have pictures, backgrounds and speeches from the entire C-Suite. Bravo Microsoft.
In their recent book Transparency, authors Bennis and O’Toole indicate –
The definition of transparent is simple enough it means capable of being seen through. Now as a free society, we long for our public institutions, our corporations, and other organizations to be honest and open about their dealings.
A overview video is available here.
Kudos to Netflix and Microsoft for taking an important step to enhance their transparency for stakeholders.
NEXEN — Corporate Governance Done Right
November 13, 2008
I briefly mentioned Nexen in a previous post, but I thought it worth a more detailed look. Let’s look at their comprehensive Corporate Governance site.
You will see a few items of note –
- INTEGRITY. HONESTY TRANSPARENCY is boldly displayed. They get it that these are the key to good Corporate Governance and they explain how they execute what they say.
- All relevant documents are easily accessible.
- Board meeting documents are also clearly displayed and accessible.
OK so far so good. Let’s take a closer look. The next navigation option is Integrity, click it and you see the CEO and the statement –
Integrity is not just a value at Nexen - it’s a way of life. Employees are educated to make ethical business decisions and are encouraged to ask questions about the integrity of a decision or course of action. Operating with integrity not only improves our reputation and helps our performance; we believe it’s the best way to successfully do business.
This is an excellent example of “tone at the top” being cascaded through the employee ranks. I find it noteworthy that the Code of Ethics is at the bottom of Integrity Navigation. Nexen first explains what it does to promote Integrity throughout the company.
An interesting feature is that in the Integrity Resources section (upper right), there is a link to Company Policies to “help employees and stakeholders comply with our core values”. This takes you to what has to be one of the most comprehensive displays of a company’s guidance on a wide variety of issues.
If you want a model of doing Corporate Governance right, look at Nexen. No wonder that they have recived awards for effective Boards and Governance.
Corporate Governance Award — Colgate
November 10, 2008
Colgate, the $12.2 billion maker of household, oral hygiene and personal products, received the 2007 Treasury and Risk publication Corporate Governance Award. This seemed to slip under the news radar,perhaps since Chairman Reuben Mark avoids media interviews. Still, this was a notable event. I was impressed when I visited Colgate’s Corporate Governance site.
First impression was that there is a comprehensive display of financial filings. In addition, as you look further there are more noteworthy items under their Principles:
- Open communication between and among directors and management fosters effective oversight. ( This is lacking in many companies.)
- Established policies guide governance and business integrity. Our Board plays an active role overseeing the integrity of the financial statements of the Company. (Bravo!)
- Good governance is the responsibility of all Colgate people. (This is exceptional and is a key component of effective Corporate Governance)
- Good governance thrives from continuous improvement. (Indeed)
Colgate provides links to documents that further describes each of these principles and in the Governance Commitment in Action section, there is a further elaboration of what actions the company is taking relative to each principle.
But wait, there’s more, Board members and their backgrounds are clearly displayed and How To Contact Board members is clearly defined. It is not surprising that Colgate received the award and they provide a model for other companies to follow.