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Introduction Introduction Dr Paul Flather Secretary- General, the Europaeum, and Fellow, Mansfield College, University of Oxford As Enron, WorldCom, Tyco, HealthSouth, Parmalat, Hallinger and others, entered our everyday lexicon from the late 1990s and early 2000s, the company crashes revealed that all was far from well in the world of international corporations. Certain CEOs on the make, most non-executives frozen out, shareholders too often treated like cannon fodder, lawyers and auditors duped In this climate, the failures of a few had a disproportionate, though understandable, impact on market confidence. A raft of new reforms and measures were designed to rebalance corporate governance, to bring back trust and integrity, and to lay down clear lines of accountability, to company boards, to shareholders, to governments and to international authorities. Of course in Washington and New York, in London and Paris, in Brussels and Tokyo, there were different approaches reflecting different perceptions and differing local arrangements. As new legislation was enacted - regulation after regulation by the Securities and Exchange Commission, the Sarbanes Oxley Act in the US, the 2004 amending legislation and the revised Combined Codes in the UK, derived from the Higgs and Smith’s reviews, and so forth - so the debates continued. From this, though, a new focus emerged on whether good corporate governance was not just prevention against disaster, but could also strengthen corporate performance. Questions arose about whether such regulations and new priorities addressed the roots of corporate misdeeds or whether they misallocate accountability and distract board members from their ‘proper responsibilities’. Against this background, the Europaeum decided to hold a seminar of policy-makers, company leaders, experts, practitioners and academics to discuss three critical areas of concern in the field of corporate governance – the balance between shareholder activism and boardroom decision-making; the balance between prescriptive and enabling strategies; and the balance between ‘European’ and the ‘Anglo-American’ policy agendas. A policy seminar was organised at the University of Oxford, hosted by the fast emerging Said Business School, and coordinated under the auspices of a new bilateral programme being fostered by Leiden and Oxford, which aims, specifically, to mount programmes that aim to ‘bridge the gap’ between academe and business. Some 100 key figures from the fields of business, academe, politics, and policy-making were invited, with almost 70 took part, representing at least 13 major companies, and five major European universities, all part of the Europaeum association, in an all-day seminar. There were seven key-note speeches by such eminent figures on the CG landscape as Alastair Ross Goobey, in the forefront of shareholder activism; Sir Ronnie Grierson, so long at the helm of one of Europe’s super companies; David Jackson, distinguished company secretary of BP; George Dallas, head of the Governance Services Unit at Standard and Poor’s, particularly welcome as one of the world leaders in this area, joining us from the US; Guy Jubb, energetic head of corporate governance at Standard Life; Antonio Borges, both Vice-Chair of Goldmann Sachs and Chairman of the burgeoning European Institute of Corporate Governance, joining us from Brussels; not to mention our very own Colin Mayer, one of the driving professors at the Said Business School (and soon to become the new Dean of the SBS itself). Each contribution was dissected, in turn, by a distinguished discussant and followed by lively discussion. By all accounts, it was generally agreed that the day had fairly fizzed with ideas. The debates evoked are now fully reproduced in this report, with the kind permission of all participants. The following quotes, a random collection taken from my own notes during the day, make 2
Introduction this point most clearly. “Get the tanks off company lawns!” “Compliance… is all form” “Trust has moved away from companies.” “Corporate governance is most about complex chains.” “We need to go beyond a simple theoretical model in Europe.” And finally, “Boards can be too blinkered to make the necessary changes.” Proceedings culminated in a most enjoyable dinner that seemed to bring key participants closer – even while they continued to debate some of the finer points raised in the day’s discussions. We also came up with some important ‘answers’ to particular questions in our roundtable discussions, and finally we did identify some key pointers for further thought and research. These included looking at the particular role of independent directors; the relationship between corporate governance and economic performance; the role of shareholder sovereignty and its relation to capital; how to deliver real transparency; and the continuing need to define a European framework. The Europaeum hopes, in time, to return to some of these important themes, perhaps with a follow up event later this year. The Europaeum would also like to explore setting up an international research project, linking a number of its distinguished universities, to produce collaborative, multi-disciplinary, comparative work in this field. Paul Flather Oxford, June 2006 3
Page 1 and 2: Restructuring Corporate Governance:
Page 3: Contents Contents Introduction.....
Page 7 and 8: Introduction The Said Business Scho
Page 9 and 10: Welcome context of the Europaeum, w
Page 11 and 12: Institutional Activism talking to o
Page 13 and 14: Institutional Activism associated w
Page 15 and 16: Institutional Activism information
Page 17 and 18: Institutional Activism Ihave been d
Page 19 and 20: Institutional Activism provided sub
Page 21 and 22: Strategies and Balance SESSION II S
Page 23 and 24: Strategies and Balance kets, but we
Page 25 and 26: Strategies and Balance in our exper
Page 27 and 28: Strategies and Balance the non-exec
Page 29 and 30: Strategies and Balance Discussion T
Page 31 and 32: Strategies and Balance Bebchuck sho
Page 33 and 34: Anglo-American and European Models
Page 47 and 48: Round Table Discussions Round Table
Page 49 and 50: Concluding Remarks Perhaps we shoul
Page 51 and 52: Appendix B APPENDIX B Biographies o
Page 53 and 54: Appendix C APPENDIX C Participating
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Appendix D APPENDIX D Profiles of C
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The Europaeum Vision As the pace of
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