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A Little Plain Speaking Goes A Long Way For Good Governance

Posted on March 8, 2016 at 4:50 PM

One doesn't often hear much plain speaking at conferences. Excel, this year's venue for the annual corporate governance held by ICSA does feel like going to another country. But despite the plain speaking, I am pretty sure we were still in London.

Now quietly rebranded as 'The Governance Institute', ICSA kicked off its  #ICSAConf16 on #IWD2016 with Dame Fiona Woolf, erstwhile Lord Mayor of the City of London (my FT interview with her here on the website under 'Women At Work' - "'If you behave like a doormat, you get treated like a doormat").

Dame Fiona Woolf gives the keynote at #ICSAconf16, London March 8,2016

She spoke - as you might expect -about The City, and the essential task of restoring trust through better governance. But, asked at the end by a member of the audience how she felt about quotas for boards on gender diversity, she also said, with great honesty - and recorded by my Twitter stream @dinamedland

It is, indeed "all taking a very long time." Don't forget to look at my #IWD2016 coverage on Forbes.


But once you allow powerful people the podium, you never know what they might say if they choose to be honest.

Sacha Sadan, director of corporate governance at Legal and General Investment Management (LGIM) is a master of the insightful question, softly phrased. His moderation of a panel on the relationship between the Chair and the Company Secretary in the boardroom was useful on that front, but also yielded some excellent blunt truths about boardrooms and governance in general.

Sacha Sadan (on left) w/Rob Bellhouse Governance Professionals Ltd, Derek Woodward Group Company Secretary Worldpay Group plc and on right Robert Walker, Chairman Travis Perkins plc. #ICSACONF16 London March 8, 2016

We need more chairmen like Robert Walker. He asked for a show of hands on how many company secretaries were also general counsel. It wasn't that many, which is a relief. Because it was clearly "a conflict of interest" he said - a subject I have addressed before, for the International Bar Association.

There were quite a lot of softly spoken hard-hitting truths from Mr Sadan, witness: "Every investor i have ever spoken to says they are in it for the long-term."

So when he started talking about the frustration investors feel about board evaluation  - and the important role of company secretaries here - it came truly alive, as plain speaking for better governance.

Mr Walker spoke his mind : "I would like to see a Code of Conduct on board evaluations" he stated, beautifully simply. There was talk on the panel of how much they cost, how useless they often are, (see me on Tesco at Forbes) ,how investors have no indication whether companies act upon the recommendations within them - only about 25% of the FTSE 100 even mention them in annual reports.... and fundamentally, on who conducts them.

A "cottage industry" has grown up of those who provide board evaluations, said Mr Walker - and most of them are not worth a penny.

Speaking privately (but not off the record) to me afterwards he was even more frank - naming a short list of easily recognisable names of those he has used in the past, with complete frustration and total dismissal. When I suggested Chairmen have a habit of sticking with the same evaluator when they move jobs, he laughed - and agreed.

Board Talk has covered this issue of evaluation repeatedly in the past - most recently here.

ICSA says they are working on a Code of Conduct. But they do, as far as I know, also provide evaluations - which would be a conflict of interest. Any code has to be drawn up independently, or with collaboration. The only reason I can think of as to why we do not have one yet is that there are too many vested interests who like the system just the way it is.....it took about nine months for headhunters to draw up a very flimsy 'voluntary code of conduct' when the 'women on boards' effort by the UK government was launched in 2011.

Recruitment and evaluation (and often it's the same people performing both tasks which is farcical) cost publicly listed businesses a lot of money and have a critical impact on corporate governance- yet even the most feeble exhortation to 'comply or explain' is missing.

I shall have to ask Mr Walker what he thinks another time. But we need more panels like that one, for true conversation around change for the better.

Categories: Chairmen, Investors, Scrutiny