Since the 1980's we have been talking and issuing guidance on 'corporate governance'. Peter Drucker would have observed that if you keep on having to re-issue the subject there must be something fundamentally wrong. As a set of financial statements relies upon 'organisitional integrity' why not change the thinking and have th auditors confirm that , indeed the organisation has functioned with integrity? Equally if it does not chnage its procedures it will continue to operate with integrity. Doesn't the results as depicted by the financial statements show that, management does know what it is doing, will words change the figures? Business is to provide customers with products that they need, continued sales proves the 'model' works. Where is the real value contribution for economic growth?

Here in local government we're finding that the 'annual governance statement' process and statement itself can be a really useful way of bringing together 'organisational' thinking and reporting about risk and significant governance issues. Whilst we don't have NEDs, we do have those interesting conversations and conundrums about long-term success and short-term gain, about appetite and tolerance for risk in its widest sense, and about how to explain to a wide and general audience just what we're up to behind the scenes. Getting the whole finance community actively involved in this has many benefits:

* helps keep risk-management rooted in practicality, with constant review of cost vs. benefit;

* reminds the rest of the entity that finance professionals are really rather good at cost-effective risk-management;

* helps remind operational finance people that there are strategic implications to all that they do.

So the way I've been supporting "the Board" in this is to get my finance community up-to-date with the relevant skills, involved in all the relevant working parties, focussing their reports on the key risk-areas identified through the governance process and including long-term trend analysis and outcomes, and talking with their audiences to make sure the messages are understood both ways. And sometimes we're best-placed to remind people that the right decision still carries the risk of the wrong outcome - investing in Icelandic banks was part of a prudent and balanced strategy, but didn't quite get us where we'd planned!

I'm very impressed by your 'tennis' plans - personally, I'm off to hunt down every last mince-pie I can find! 

Hi, I was thinking of this and would like your thoughts on this:

Can Non Executive Directors get remuneration in the form of shares. I have read somewhere that they can but would like to find out what CIMA has to says about this. I guess it is quite normal for executive directyors to partake in a share scheme but is this extended to the Non Exectutives.

Thanks.

Hi, I was thinking of this and would like your thoughts on this:

Can Non Executive Directors get remuneration in the form of shares. I have read somewhere that they can but would like to find out what CIMA has to says about this. I guess it is quite normal for executive directyors to partake in a share scheme but is this extended to the Non Exectutives.

Thanks.

Derick

No and Yes.  The UK Corporate Governance Code is explicit that NED's should not be remunerated through performance based measures.  However, I am not aware of any legal restriction of issuing performance based rewards to NED's although any company doing so would need to be clear on the reason for doing so - the rewards should not undermine the NED's independance.

 

Regards 

Wayne James