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?”
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.
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!
”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.
”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.
A personal perspective from 25 years in risk management
The world is getting smaller, more intense, and risks are amplified for the same reasons. All business operates within interlinked networks we refer to as an eco-system. The business eco-system has similarities to the ones found in nature, notably the mutual interdependence of many ostensibly autonomous participants, the flow of energy, information – and money – and the subtle interplay of supply chains. This interdependence and complexity – as well as the possibility of harmful predators, unanticipated disruptions, man-made or natural – provide a broad set of ongoing challenges for corporate management, in Japan and elsewhere. Collectively, we can categorize these challenges as risk management.
In this essay I will examine the multiple roles and tasks of the independent outside Director in a Japanese company with publicly listed shares, but these observations apply to many senior managers in supervisory roles. There is a saying, where you stand depends on where your sit. The independent Director sits near the top of the company’s decision-making and control apparatus but as a rule does not have executive or functional responsibility. He stands apart from active management in an oversight role. Let’s take a closer look at this role.
Pity poor Hitachi.
In 2015 Hitachi, accustomed to the forgiving corporate governance culture of Japan, acquired control of Italian railway operator Ansaldo STS, a publicly listed company, without fully comprehending the traps for the unwary that lurk in corporate governance environments outside Japan. The shareholder list of Ansaldo STS, it turns out, was loaded with sophisticated hedge funds that have cleverly exploited their “rights” as minority shareholder “victims” to try to shake down Hitachi for more cash. The case for victimhood made by the hedge funds is superficially appealing, but on closer analysis unpersuasive.
”…Based upon the data collected from the first global survey to capture the voice of cyber security professionals on the state of their profession, this final report of the two-part series, titled “Through the Eyes of Cyber Security Professionals: Annual Research Report (Part II),” concludes:
- The clear majority (92%) believe that an average organization is vulnerable to some type of cyber-attack or data breach.
- People and organizational issues contribute to the onslaught of security incidents.
- Most organizations are feeling the effect of the global cyber security skills shortage.
- Cyber security professionals have several suggestions to help improve the current situation.
- Sixty-two percent (62%) believe critical infrastructure is very vulnerable to cyber-attacks.
- Sixty-six percent (66%) believe government cyber security strategy tends to be incoherent and incomplete.
- Eighty-nine percent (89%) of cyber security professionals want more help from their governments
On December 15th, 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 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.
We are planning to hold the next course on February 17th. Sign up early!
Here is an article I wrote in 2001, about the topic in the title. It makes interesting reading some 15 years later. While I may have made correct call… obviously I was a bit too early! It has taken a lot more work, by many persons, for Japan to move as far as it has come in the past years…and the job is not done yet.
“Last month, the Life Insurance Association of Japan published a survey of 561 public companies and 122 institutional investors, focusing on corporate governance and investor relations practices. The results exploded some myths regarding the supposed lack of support for modern corporate governance concepts among institutional shareholders in Japan. Japanese investors are in effect saying: “We want transparency and clear accountability, independent outside directors on boards, and independent board committees.”
The very fact that the survey addressed these topics is a breath of fresh air. Japan’s institutional investor community is weighing in on the emerging debate over corporate governance. It is none too late. Although they should be the most directly motivated constituency, institutional shareholders had been conspicuously quiet. Like most of Japan’s institutional investors, insurance companies have feared a backlash if they took a stance opposed by certain senior executives and politicians. They feared imperiling governmental assistance with industry cleanup, as well as losing insurance and pension business from companies in which they hold stock.
Logic and hard realities are finally coming to the fore. And the investor community will become more vocal as competition heats up in the fund management industry. Investment advisor companies, known as (toshi komon ), compete on the basis of investment returns and prudent decision-making, and do not have other businesses that might fear adverse repercussions.