May 12, 2017 / Table Talk

Fidelio Board Breakfast – “Stop the Rot: Reframing Corporate Governance”

Corporate Governance is under extreme scrutiny. With the recent publication of the UK Government’s Corporate Governance Reform Green Paper and the BEIS Select Committee Report on Corporate Governance; the Financial Reporting Council’s announcement in February 2017 of a “fundamental” review of the UK Corporate Governance Code; and a slew of AGMs dominated by executive pay, the debate on effective Corporate Governance has acquired an immediacy for Chairmen,  Directors and Company Secretaries.

At this highly topical point in time, we were delighted to welcome Professor Bob Garratt, Visiting Professor, Cass Business School and Professor Extraordinaire, Chairman of the Centre for Corporate Governance in South Africa, University of Stellenbosch Business School – for a thought-provoking call to action with practical pointers on effective Corporate Governance.

The current system is in danger of emphasising compliance over effectiveness. Bob made the resounding case for stripping back 90% of the current Corporate Governance edifice, and returning to a focus on core Director’s Duties. He argued in favour of extending Corporate Governance to include the Directors, owners, regulators and legislators linked under a notion of public oversight and embodied in a public oversight committee.

Practical Steps for Boards – Reframing Corporate Governance for Board Effectiveness

Public debate rages on what shareholders and stakeholders expect from Boards. We nonetheless concluded there are practical steps that Boards can be taking to enhance effectiveness and governance and to allow them to focus on the long-term success of the business:   

1) There is a strong perception that the markets are too short-term. Fidelio recognises the pressures but argued that Boards have tools at their disposal to engage with long-term investors and can be substantially more proactive in architecting a shareholder base that will support the long-term interest of the company.

2) Rediscovering corporate purpose and the key values that underpin it was recommended by our guests as an alternative to ever more layers of compliance. We are certainly seeing Chairmen use Board Evaluation as a step towards building a common understanding of corporate purpose in the Boardroom and linking this to long-term objectives.

3) Clarity regarding role definition for the Board and Executive roles was deemed to be critical. In particular the pivotal nature of the Chairman’s role was flagged and the importance of ensuring that the Chairman is supported in leading the Board thereby enabling the Board to provide leadership and oversight for the company.

Fidelio is a keen advocate for public company Boards and public markets; our contribution to increasing Board effectiveness is through Board Search, Development and Evaluation. Here we are pleased to collaborate with Professor Bob Garratt.

If you are interested in further details about this Board breakfast, including how best to influence the Corporate Governance debate, or learning more about how Fidelio supports Boards, please do not hesitate to get in touch.

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