Discussion Forum

PRI Publishes “Japan Roadmap” Regarding Fiduciary Duty in Japan

PRI published a “Japan Roadmap” suggesting improvements in Japan regarding fiduciary duty and ESG practices. (http://bit.ly/2pmrbus)  The Roadmap cited BDTI’s recent joint research with METRICAL with regard to our analysis showing that lower cross-shareholders correlate with better corporate performance.

Quote from the PRI’s introduction of the Roadmap: “Japan’s governance reforms will fail unless more asset owners join in, and all the talk about stewardship is accompanied by analysis, action and sweat,” said Nicholas Benes, representative director, The Board Director Training Institute of Japan. “The Japan Roadmap makes sensible recommendations to turn governance goals into realities.”

What Correlates with Superior Corporate Performance? (Summary of Research)

BDTI and METRICAL conducted joint research regarding the governance structure/practices and related corporate actions that correlate with superior firm performance in Japan, and reported on the preliminary results at seminars hosted by BDTI on March 16th and by Goldman Sachs on April 4th. Our research is still underway, but the preliminary results are intriguing and provide useful guidance for the next stage of analysis.

BDTI and METRICAL believe that corporate governance is not functioning effectively unless it leads to superior strategy, fine-tuning of capital allocation and capital structure, and other value-creating corporate actions.  Therefore, in our research we have sought to identify the apparent linkages and correlations between board practice, key corporate actions, and value creation.

In Phase 1 of our analysis, we studied the TOPIX100 Index composite (large 100 companies) to see whether scores we assessed for each company’s nomination policy, training policy, compensation policy, board evaluation policy, and the % of independent directors significantly correlate with ROA and ROE.

2017 OECD Corporate Governance Factbook

(Orrick) – “Corporate Governance Features for Silicon Valley and San Francisco Bay Area Public Companies”

(17-page report  Ed Batts, Global Chair of Orrick’s M&A and Private Equity group.)   – ”Corporate governance features have Executive Summary become increasingly prominent for public companies. This has accelerated as economic-oriented activist investors team with institutional investors to serve as catalysts for change. We are often asked by clients in the course of our practice:

What do other companies do?

We thought it would be useful to compare the three primary governance documents – certificate/ articles of incorporation, bylaws and corporate governance guidelines – of Silicon Valley and San Francisco Bay Area publicly traded companies.

We focused on three general areas:
• Board of Directors
• Shareholder Actions
• General Provisions

Varieties of “Independent” Director in Asia 

As this working paper reveals, however, the meteoric rise of the ‘independent director’ in Asia is considerably more complex than it initially appears. Although the label ‘independent director’ has been transplanted precipitously from the US (in some cases via the UK) throughout Asia, who is labelled an ‘independent director’ (i.e., the ‘form’ that independent directors […]

Corporate Governance in Japan 2017 – Report

This is an insightful report with some similar conclusions that recent analysis by BDTI and Metrical (Titlis) also reveals, which will be the subject of a seminar on 3/16.  In particular, the presence of large owners matters, foreign shareholders select well-governed and well-performing companies (a leading indicator for decades), and the quality of directors matters.  The latter point is the reason why BDTI is focused like a laser on director training. The pilot analogy has been in my materials since 2014. I am tickled pink if the FSA has adopted it.  Quote:  “Improving board behaviour is a mindset issue, not a regulatory one. A successful company should be willing to encourage open debate. More so for a company that has been struggling for years with its strategic direction. ….. Independent directors should not be viewed as an ‘unavoidable cost’ but as a ‘wise investment’ for firms. …Would an airline actively seek unqualified pilots to fly its passengers?”

https://newmanlive.files.wordpress.com/2017/03/corp-governance-in-japan-2017-analogica-kk1.pdf

CMi2i Global Governance Report: “ Asset Managers Expect to Meet with Directors”

CMi2i, one of Europe’s leading investor relations and corporate governance consultancies, canvassed the opinions of institutions managing over US$5 trillion of assets. This survey found that the majority of asset managers now expect to meet with executive management more frequently on issues such as remuneration, board structures, succession planning and cyber security.

February 17th Director Boot Camp – Another Successful Program! Next Course: April 20th

On February 17th, BDTI held its English Director Boot Camp , attended by a number of experienced participants. Participants from various companies heard lectures about corporate governance and related topics by Nicholas Benes and Andrew Silberman of AMT, and exchanged experiences and opinions at a spacious, comfortable room kindly donated for our use by Cosmo Public Relations, a leading communications and PR firm in Tokyo.

Thank you all for your active participation!

We are planning to hold the next course on April 20th. Sign up early!

 

”Global and Regional Trends in Corporate Governance for 2017” by Russell Reynolds Associates

”Russell Reynolds Associates recently interviewed numerous institutional and activist investors, pension fund managers, public company directors and other governance professionals about the trends and challenges that public company boards will face in 2017. Our conversations yielded a wide array of perspectives about the forces that are driving change in the corporate governance landscape.

”OECD Survey of Corporate Governance Framework in Asia”

”The Organisation for Economic Co-operation and Development (OECD) has recently released a report of a survey that was conducted based on the responses to a questionnaire on corporate governance frameworks that was disseminated to partner organisations in the 14 participating Asian jurisdictions in May 2016. These included Bangladesh, China, Chinese Taipei, Hong Kong, India, Indonesia, Korea, Malaysia, Mongolia, Pakistan, Philippines, Singapore, Thailand and Vietnam.

The survey which is a useful document to all stakeholders that are working towards  corporate governance reforms in the region is a reflection of current status of practices and standards. Role of stakeholders, disclosure of related parties, shareholder rights, board and ownerships structures are some of the key areas highlighted.”

Read the  full report here.