Corporate Eye

Best Companies Corporate Governance

IR Global Rankings is one of the few firms that analyze companies for Corporate Governance practices. They published their ratings for the top 30 global companies.

Rating criteria include —

  • Management Accountability (15 points)
  • Board of Directors (25 points)
  • Minority Shareholders Protection (22.5 points)
  • Controlling Shareholders and Shareholders’ Meetings Procedures (20 points)
  • Other Policies (12.5 points)
  • Financial Statements and Disclosure (5 points)

While seemingly overall similar to the more popular rating agencies, notable are such evaluation statements as —

Those willing to go the extra mile, presenting additional information not required by law, such as the expensing of stock options and comprehensive information on estimates used in the accounting (for example to estimate future revenues and expenses related to pension benefits) should outperform others.

Despite the absence of a “right” approach to the use of cash generated, the company should establish and clearly state its policy and why it was adopted.

PROS

In the top 5 are two companies that I know have superior corporate governance practices, Nexen and Infosys. Visit Nexen’s Corporate Governance site and you will see a comprehensive display of policies and practices. Be sure to look at their Corporate Governance Roadshow.

Infosys also has a good display of Corporate Governance practices and policies and —

The primary purpose of corporate leadership is to create wealth legally and ethically. This translates to bringing a high level of satisfaction to five constituencies – customers, employees, investors, vendors and the society-at-large. The raison d’être of every corporate body is to ensure predictability, sustainability and profitability of revenues year after year.

N. R. Narayana Murthy
Chairman of the Board and Chief Mentor

Also visit their Beyond Business section.

CONS

IR Global missed the Tata Group which clearly should be on their list. See my post on the Tata Group.

Despite this oversight, IR Global has a Corporate Governance rating process that stands out.

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Ed Konczal has an MBA from New York University's Stern School of Business (with distinction). He has spent the last 10 years as an executive consultant focusing on human resources, leadership, market research, and business planning. Ed has over 10 years of top-level experience from AT&T in the areas of new ventures and business planning. He is co-author of the book "Simple Stories for Leadership Insight," published by University Press of America.
 
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