Words .....that work

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High Praise For UK Corpgov & Boardrooms

Posted on June 14, 2013 at 1:45 PM

Gerhard Roggemann has a lot of experience of boardrooms - in the UK and Europe.

If you click on the link above you will find his Bloomberg Business Profile. It also helpfully tells you "This person is connected to 89 board members in 7 different organizations across 15 different industries". (Click on more detail and you will see just how few of those 'board members' are women. But that's another story).

If you're just passing through in a rush all you need to know is : he is a senior adviser at Hawkpoint Partners Europe, is an ex JP Morgan banker with stacks of experience on the management boards of German Landesbanks, has been an independent NED at Friends Provident, F&C Asset Management and resolution Ltd and has been Deputy Chairman of the Supervisory Board of Deutsche Boerse since December 2008. In other words, he has a pretty good perspective on corporate governance - both in the UK and Germany.

And guess what? Looking across Europe, he is very positive about the way UK corporate governance is going ...compared to the rest.

"Even though you have a one tier board and Germany has two - the way in which British boards deal with conflict is very effective. You have a long tradition of doing it well. Before a board meetings you might have meetings with executives, for example, but they must always exit before the (board) agenda begins -there is never an issue if there is a conflict of interest. It is very clear why people might be precluded from (attending a) meeting" says Mr Roggemann.

"This distinction does not exist to such an extent in Germany, where it is considered  that when new directors are looked for there is not as clear a definition of what constitutes 'independence.' He qualifies what he has said by adding that it may be that he has only sat on FSA(as it was) regulated boards, but then says his experience suggests (this independence) is probably true everywhere" regarding UK boards.

"The German stock exchange is now very eager to set an example, but more self-discipline is also coming from companies in Germany on the quality of independent directors" he says. "From experience, this has not always been the case - for some companies independence is an issue" he says.

The German system of having employees on boards confuses the issues, says Mr Roggemann, as "the law says once you are elected you are not there to serve employee interests." 

In the UK, the clarity around shareholders as owners of the company and their appointed directors acting for shareholders makes for a much better process of corporate governance, he says. The differences in attitudes only become clearly visible, says Mr Roggemann, when you see takeover battles - such as Vodafone acquiring Mannesmann.

Another big point to note about NEDs on UK plcs is just how "hard" it is in terms of being time consuming, rigorous expectations of knowledge and finally, high levels of scrutiny from instituional investors.

As chairman of the remcom at Resolution, he says; "I found it very challenging to be so closely scrutinised. I did not want to be one of those to have had shareholder consultations and then resign after the AGM. But still, I was unprepared for just how much detail they had read - and how specific they were on wanting me to come back and discuss it again and again. It induced me to propose to my colleagues to make some changes so that alignment between the company and its shareholders became very close."

Jog your memory with:

Guardian story on 'Friends Provident accepts £1.86bn takeover by Resolution' (2009).

He is dismissive about the time taken over AGMs in Germany, where there are more formal to the extent that he says "We are thinking of laws in Germany designed to change AGMs."( While in the UK we do like to complain about our emphasis on tea and biscuits) 

This was an unexpected drop-in by Mr Roggemann to 'Board Talk' - and it was rushed - so this is impressionistic.It cheered me up.It is always good to have another perspective as we hit out at all the failings of our corporate governance and the frustrations of our boardrooms. But I won't stop blogging just yet.

One final point - a long time ago this blog was one of the very first  to identify the 'iPad marches into the boardroom' (the search function does work here) and the revolution it was bringing in its wake. The story originated with Vanda Murray, one of the female NEDs I spent a long time talking to and it came up because she was saying she no longer had backache from lugging papers around. (And she has endorsed this blog not once but twice).

On the benefits of new technology Mr Roggemann agrees avidly - and described it well here (with the help of Diligent Boardbooks) in 'How Portals are Transforming European Boardrooms'

When it comes to UK plc, the sceptic in me want to ask - really ? But Mr Roggemann has jetted off. So another time, and I thank you for chatting. Who wants to be next ?

Categories: Shareholders, Governance, Scrutiny