Euromoney Audit Training

An intensive and highly practical course providing the delegates with the following.

• The core framework and essential elements of corporate governance, including recent reform efforts
• How the unique corporate governance challenges faced by financial institutions can be addressed
• Extent to which deficiencies in corporate governance contributed to the global financial crisis
• Principal drivers of board of directors effectiveness
• Shareholder rights, shareholder types, and how financial institutions can build a strong relationship with their investors
• Communicating corporate governance to shareholders and other stakeholders
• Structuring executive remuneration to create alignment with the long-term interest of the firm
• How corporate governance codes work in practice
• Implementing good corporate governance in a firm
  

Who should attend?

• Board directors
• Senior management
• Legal counsel and compliance officers
• Company secretaries
• Portfolio managers
• Regulators and legislators
• Research analysts
• Investor relations officers

Agenda

Day 1

Introduction, corporate governance and the global financial crisis, recent developments, and corporate governance approaches

Overview of corporate governance

• Definition and objectives
• The “principal-agent” problem
• The overall corporate governance landscape and framework
• Corporate governance and performance: What is the evidence

Unique characteristics of financial institutions and implications for their corporate governance

• Inherent complexity and opacity
• High leverage
• Intermediation role in the broader economy
• Explicit and implicit government support

Poor corporate governance as a contributing cause of the global financial crisis – What is the evidence on charges of:

• Incompetent boards
• Ineffective board oversight of risk management
• Poorly designed executive remuneration structure
• Shareholder passivity

Corporate governance trends and developments – Overall and financial institutions-focused

• National/regional: US, UK, European Union, BRICs, and others
• International: Bank for International Settlements (BIS), Financial Stability Board (FSB), OECD, World Bank/IMF, and others

Corporate governance approaches – Mandatory legislation vs. best practice codes

• Principal similarities and differences
• How to decide what belongs in a best practice code
• Key ingredients for effective implementation of a governance code
• Country example: The UK experience with the Combined Code

Evaluating corporate governance – How corporate governance is assessed by:

• International organizations and regulators
• Shareholders
• Creditors

Importing corporate governance practices from other countries: Potential benefits and pitfalls

• Why UK-US “best practice” is not always “best” for another country
• How to determine which corporate governance practices can be effectively transplanted across markets
• Country examples: Corporate governance reforms in Brazil and South Korea

Close of day sum-up

Day 2

The board of directors – Structure, composition, functioning, and dynamics

Roles and responsibilities of the board of directors

• The principal functions of a board
• Fiduciary duty: Definition and key components 
• Country example: UK requirements for all directors and bank directors
• The “business judgment rule”
• Debate: Is there a conflict between the board’s roles as shareholder watchdogs and advisers to management?

Shaping board structure and composition

• One vs. two-tiered boards – key differences
• Case examples:  Comparison of Citigroup, HSBC, Deutsche Bank, Mitsubishi UFJ Financial Group, UBS, and others
• Overview of the principal board committees
• When should a board establish committees
• Functions of core board committees – Audit, nomination, compensation, and risk committees
• How to determine optimal board size
• Why bank boards are typically larger
• How to achieve balance between executive and non-executive directors
• How to decide which executives should sit on the board
• Debate:  Should the chief risk officer be a member of a bank’s board?
• Case examples:  Comparison of Citigroup, HSBC, Deutsche Bank, Mitsubishi UFJ Financial Group, UBS, and others

Director independence and board leadership

• Director independence – Definition and key components
• Debate: Is there a trade-off between director independence and knowledge?
• Responsibilities of key leadership positions – Chairman, lead/senior independent director, and committee chairs
• Debate: Does the complexity of banks call for an executive chairman?
• Case examples: Bank of Montreal, HSBC, JP Morgan, and UBS

Recruiting and compensating directors

• How to evaluate the skills and experience required by the board
• Case examples: Barclays Bank and HSBC
• Best practice example: UK Walker Review recommendations for bank directors
• How to develop job descriptions for key roles
• Case examples: Bank of Montreal and Barclays
• How to search for suitable director candidates: Process and other considerations
• “Fitness” test for bank directors
• Country example:  UK FSA (strengthening bank director requirement)
• Compensating non-executive director – Overview of practices
• Case examples:  Bank of Montreal, HSBC, and UBS

Board induction and on-going knowledge development

• Process and key topics to cover in new director induction
• Case examples: BHP Billiton and Bank of Montreal
• How to ensure board members keep abreast of company and industry developments
• Key areas to cover in an on-going knowledge development program
• Case examples: BP, General Electric, HSBC and others
• Country examples:  Singapore and UK

Board meeting essentials

• What is the appropriate frequency and duration of board meetings
• Who should be involved in setting the board meeting agenda
• Division of roles between chairman, lead directors, and CEO
• How to prioritize topics for discussion and structure presentations
• How to build a dynamic boardroom
• Case examples: General Electric, HSBC, and Asian financial conglomerate others

Facilitating board involvement in key areas

• Strategy development
• Performance monitoring: Company and senior leadership
• Risk management oversight
• Succession planning: Board and management
• Case examples: HSBC, General Electric, GlaxoSmithKline and others

Maintaining a high-performing board

• Company secretary: Role and key functions
• Why a company secretary is critical to an effective board
• What functions should a company secretary perform
• Case example: BP
• Conducting board evaluation
• How to decide the appropriate focus, type, content, and frequency of board evaluation
• Case examples:  Barclays, GlaxoSmithKline, and others
• Best practice example: UK Walker Review recommendations on the (use of external facilitators for bank boards)
• How to ensure the board’s focus and composition evolve with changing company developments
• Case examples: HSBC and others

Close of day sum-up

Day 3

Communication, shareholders, corporate social responsibility, executive compensation, and implementing good corporate governance

Communication and reporting on corporate governance

• What a communication statement/policy should contain
• Case examples:  CIBC and National Australia Bank
• The essentials of the investor relations function
• How to allocate responsibility for communication
• Country examples:  Practices in Germany, UK, and US
• Reporting on corporate governance arrangements
• What is a suitable explanation under the “comply or explain” approach
• Case examples:  Marks & Spencer and Standard Chartered Bank
• How to report on corporate governance arrangements and practices
• Case examples:  Citigroup, Deutsche Bank, HSBC, and others

Shareholder rights

• Overview of fundamental shareholder rights
• Recent developments in shareholder rights
• Advisory vote on remuneration – “Say on pay”
• Case examples: JP Morgan, Shell, UBS and others
• Shareholder involvement in director nomination
• Case examples:  Telecom Italia and Nordea

Understanding the investor landscape

• Diversity of shareholder types and investment approaches
• Intervention styles of different shareholders
• Changing ownership patterns across the world
• Increasing institutionalization of ownership
• Return of government as owners of financial institutions
• Case examples:  Citigroup, Deutsche Bank, HSBC, Mitsubishi UFJ Financial Group, UBS and others

Engaging with shareholders

• Overview of shareholder engagement practices and trends
• How to build a good relationship with shareholders
• Case examples:  GlaxoSmithKline, HSBC, Pfizer, and others
• How to deal with shareholder activists
• Debate: Is shareholder activism desirable in financial institutions?
• Case examples: ABN Amro, HSBC and others

Corporate social responsibility

• Recent trends and themes
• Principal sustainability standards and issues for financial institutions:
• Reporting on sustainability
• Case examples:  Barclays, HSBC, and UBS
• Responding to stakeholder campaigns
• Case examples: Barclays and UBS

Executive compensation

• Key trends and developments in executive remuneration
• Why performance-based pay has become the norm
• Key issues with compensation structures in financial institutions
• The essentials of designing an executive remuneration system
• Key considerations in developing executive compensation plan
• What executive pay in financial institutions should look like
• Best practice examples:  FSB Principles for Sound Compensation Policy and UK Walker Review and FSA recommendations
• Case examples: Credit Suisse, HSBC, Morgan Stanley, UBS, and others

Implementing good corporate governance in a firm

• Setting objectives and aspirations
• Conducting a corporate governance diagnostic
• Developing policies and codes
• Company-wide corporate governance code
• Board and board committee charters
• Implementing a corporate governance change program: Sequence and timing
• Case examples: HSBC, Infosys and others

Close of day sum-up 

 

 

 

 

 

• Simon C.Y. Wong

  Simon C.Y. Wong is a Partner at investment firm Governance for Owners and an independent advisor serving such institutions as the OECD and a leading strategy consulting firm on policy and corporate-related matters. Simon is also Adjunct Professor of Law at Northwestern University School of Law and Visiting Fellow at London School of Economics.

  Simon sits on the National Association of Pension Funds (UK) Shareholder Affairs Committee, Eumedion (Netherlands) Investment Committee, and Global Corporate Governance Forum (World Bank) Private Sector Advisory Group. From 2008-2010, Simon served as Chairman of the International Corporate Governance Network Shareholder Responsibilities Committee.

  Previously, Simon was Head of Corporate Governance in the London office of Barclays Global Investors and a management consultant at McKinsey & Company. Simon started his professional career as a capital markets lawyer with Linklaters and Shearman & Sterling, and also served as Principal Administrator/Counsel at the OECD.

  Simon speaks regularly on corporate governance and capital markets-related topics and has published articles in the McKinsey Quarterly, Financial Times, International Financial Law Review, and other journals.

Corporate Governance in Financial Institutions

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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