rating corporate governance: the delicate balance between disclosure, compliance and performance

Rating corporate governance: the delicate balance between disclosure, compliance and

performance

Daniel MalanHead: Unit for Corporate Governance in AfricaKPMG Special Advisor: Ethics and Governance

Unit for Corporate Governance in Africa

• Our mission– To develop both the compliance and the performance aspects of

directors’ attitudes, knowledge and skills, as well as the link between corporate governance, business ethics and total organisational performance

• From our manifesto– Effective corporate governance is the key to building stable and

healthy institutions in a nation. These institutions include listed and unlisted companies, central government departments and agencies, state-owned enterprises, regional and local government organisations, family businesses, charities and non-profit organisations

PIC Corporate Governance Rating Matrix

• Joint venture: PIC & Unit for Corporate Governance in Africa

• Developmental tool, aimed at assisting companies to improve their corporate governance performance and reporting

• Will have an impact on PIC investment decisions• 2009 – Pilot Version

– Top 40 companies– No public disclosure of results

The Team

• Experts– Bob Garratt– Philip Sutherland– Tom Wixley– Kwanele Gumbi

• Unit– Thina Siwendu– Daniel Malan– Glen Davison– Matseko Mohlaba– Anna Yortt– Adrian Bertrandt

• PIC– Deon Botha

• Issue specific input– Stephen Davies (Yale)– Paul Lee (Hermes EOS)– Jako Volschenk (USB)

• Statistical validation– Martin Kidd (Centre for

Statistical Consultation, Department of Statistics and Actuarial Sciences, University of Stellenbosch)

The Model

The Matrix

The Way Forward

• 2010– Top 40 companies– Changes based on experiences during pilot– Changes based on King III– Possibly public disclosure of results

• 2011 and beyond– Public disclosure– Top 100 companies– Comparative information

The learning board basic framework

Business Brain

Ext

ern

alIn

tern

al

Long term

Accountability

Board conformance

Supervising management Strategic Thinking

Board performance

Policy formulation

Source: Bob Garratt (Thin on Top)

Short term

The learning board basic framework & King III

Boards and Directors

Ext

ern

alIn

tern

al

Long term

Accountability

Board conformance

Supervising management Strategic Thinking

Board performance

Policy formulation

Short term

Audit committeeIntegrated reportingCompliance

Stakeholder management

Ethical leadership andCorporate citizenship

RiskITInternal audit

daniel.malan@usb.ac.za083 5611292

www.governance.usb.ac.za