CORPORATE GOVERNANCE

CORPORATE GOVERNANCE AT NICOX COMPANY By (Students name)

Pr !ess rs name C urse "n#$ers#ty name %ate

CORPORATE GOVERNANCE Corporate Governance Outline

1.0.

&

Introduction 1.1.
1.2.

Corporate Governance Objectives Principles of Corporate Governance

1.2.1. Performance Orientation 1.2.2. Nomination and Compensation Committees

1.2.3. Disclosure 1.2.4. Conflicts of Interest

1.2.5. Conduct of t e Directors 1.2.6. !esponsibilities of Investors

1.3.

Corporate governance merits

1.3.1. !emar"able !elations ip #it $ are olders 1.3.2. %ana&ement 1.3.3. 'ransparenc( 1.3.4. )enefits to $ are olders 1.3.5. )enefits to t e National *conom(

1.4.

Demerits of Corporate Governance

1.4.1. Corporation+s success dependence on decisions of its board of directors 1.4.2. Costs of %onitorin&

2.,.

Nicox Company 2.1. 2.2. Compan(+s board of directors. Nico- Compan( mana&ement 2.2.1. .udit Committee

CORPORATE GOVERNANCE 2.2.2. Compensation Committee

2.2.3. Corporate Governance committee

'

3.,.

Conclusion

CORPORATE GOVERNANCE Corporate Governance

1.0.

Introduction C r) rate * $ernan+e a++ rd#n* t t,e "- and "S m de.s #s ass +#ated /#t, , .d#n* t,e

0a.an+e 0et/een s +#a. * a.s and e+ n m#+ * a.s as /e.. as t,e 0a.an+e 0et/een + mmuna. and #nd#$#dua. * a.s1 T,e m de. /as des#*ned t ,a$e a !rame/ r2 t,at )r m te t,e e!!#+#en+y #n t,e use res ur+es and re3u#res t,e a++ unta0#.#ty ! r t,ese res ur+es ste/ards,#)1 T,e +entra. #dea 0e,#nd + r) rate * $ernan+e #s t a.#*n t,e #nterests ! + r) rat# ns4 s +#ety4 and t,e #nd#$#dua.s1 C r) rate * $ernan+e ensures su)er0 re.at# ns,#) 0et/een t,e + r) rate mana*ers4 )r $#ders ! e3u#ty4 d#re+t rs4 #nst#tut# ns4 and t, se )e ).e /, #n$est and sa$e t,e#r +a)#ta. /#t, t,e a#m t earn t,e returns (V#$es4 &555)1 T,#s ! rm ! * $ernan+e *#$es t,e + m)any d#re+t rs t,e mandate t )ursue t,e + r) rate 06e+t#$es and t ensure t,at t,e + r) rate + n! rms t t,e .a#d re*u.at# ns and .a/s1 A++ rd#n* t Internat# na. C,am0er ! C mmer+e4 + r) rate * $ernan+e dea.s /#t, )r +edures4 .a/s4 #m).#+#t ru.es and )ra+t#+es t,at esta0.#s, t,e + m)anys ) tent#a. t underta2e t,e #n! rmed mana*er#a. de+#s# ns t,at /#.. !a$ r t,e s,are, .ders4 +ust mers4 em). yees as /e.. as #ts s,are, .ders (Garratt &55')1 1.1. Corporate Governance Objectives

T,e 06e+t#$es ! + r) rate * $ernan+e are *eared t /ards a *. 0a. + nsensus ! ma7#m#8#n* . n*9term s,are, .der $a.ue1 Trans)aren+y as an 06e+t#$e +a)tures t,e + n!#den+e ! #n$est rs and s,are, .ders #n any *#$en 0us#ness su+, as N#+ 7 C m)any1 N#+ 7 + m)any use SAP system /,#+, *#$es an )) rtun#ty ! r n.#ne rea.9t#me a++ess t +ru+#a. #n! rmat# n t,at #s used #n t,e de+#s# n9ma2#n* )r +ess1 Be! re any transa+t# n #s made4 #t #s a re3u#rement t,at any )r +ess t,at .eads t a transa+t# n #s made trans)arent1 N#+ 7 C m)any uses #nternat# na. :#nan+#a. Re) rt#n* Standards (I:RS) /#t, re*ard t su!!#+#ent d#s+. sure ! !#nan+#a. statements1

CORPORATE GOVERNANCE :u.. d#s+. sure #n$ .$es !u.. + m).#an+e /#t, ru.es and re*u.at# ns /,#.e d#s+. s#n* any 2#nd ! #n! rmat# n t,at #s ! #m) rtan+e t t,e s,are, .ders1 T,e $ers#*,t ! t,e + m)any #s su)) sed t 0e d ne 0y #nde)endent d#re+t rs t ensure un0#ased de+#s# n es)e+#a..y #n matters ra#s#n* + n!.#+t ! #nterest (Bu<.er &55')1 C r) rate * $ernan+e )r#n+#)a. 0.#*at# n #s t 0r#n* e!!#+#en+y and e!!e+t#$eness #n 0us#ness )r +esses and )erat# ns ! an ent#ty1 Bus#ness )r +esses and )r +edures are + nt#nua..y re$#e/ed t ensure e!!e+t#$eness #n .#ne /#t, t,e + r) rate strate*y and 06e+t#$es1 Pr +esses t,at + r) rate * $ernan+e see2s t re$#e/ ! r e!!#+#en+y #n+.ude st +2ta2#n* and )er# d end +. s#n*1 C r) rate * $ernan+e ad$ +ates ! r + nt#nu us assessment4 m n#t r#n* and + m).#an+e /#t, t,e set ru.es and re*u.at# ns1 N#+ 7 0 ard ! d#re+t rs ensures t,at t,e set re*u.at# ns are ad )ted and ad,ered1 N#+ 7 C m)any ,as !#$e 0 ards ! d#re+t rs /, !a+#.#tate + r) rate * $ernan+e t t,e s,are, .ders1 T,#s 0 ard ! d#re+t rs +. se.y /at+,es any d#s+re)an+#es and any t,er ma.!un+t# n#n* ! t,e + m)any1 T,e !#$e d#re+t rs #n t,e N#+ 7 C m)any !a+#.#tate e3u#ta0.e treatment ! a.. t,e s,are, .ders #n t,#s + m)any ensur#n* *
1.2.

d + r) rate * $ernan+e1

Principles of Corporate Governance

1.2.1. Performance Orientation

T,e )r#n+#)a. 06e+t#$e ! N#+ 7 C m)any #s t en,an+e *

d e+ n m#+ $a.ue ! r a..

+ m)any s,are, .ders 0y ma2#n* t,e m st e!!#+#ent 0est use ! res ur+es1 T,e + m)any meets t,#s s,are, .der $a.ue +reated 06e+t#$e t ,a$e mu+, *reater #nterna..y *enerated res ur+es4 and t #m)r $e #ts )r s)e+ts ! r meet#n* #ts + mmun#ty4 en$#r nment4 and s +#a. 0.#*at# ns su+, as )ay#n* ta7es4 tra#n#n*4 and reta#n#n* #ts 2ey sta!! mem0ers t,ere0y en,an+#n* em). yees sat#s!a+t# n (=a8 n#+24 > OSu..#$an4 &555)1

CORPORATE GOVERNANCE
1.2.2. Nomination and Compensation Committees

T,#s #s a 2ey su++ess !a+t r #n t,e 3ua.#ty ! .eaders,#) ! N#+ 7 C m)any1 C r) rate * $ernan+e +a..s ! r n m#nat# n + mm#ttees t,at /#.. )erate under /r#tten mandate and terms ! re!eren+e #n rder t ensure se.e+t# n ! C,#e! E7e+ut#$e O!!#+er (CEO) and #nde)endent d#re+t rs ! an e7+e)t# na. +a.#0er1 T,e + mm#ttee #s su)) sed t + m)r#se ! #nde)endent d#re+t rs /#t, a /r#tten #nde)enden+e de!#n#t# n t,at #n+.udes 0 t, 06e+t#$e and su06e+t#$e +r#ter#a1 N#+ 7 C m)any ,as #ts + m)ensat# n + mm#ttee t,at ensures t,ere #s a + m)ensat# n ) .#+y ! r + m)any d#re+t rs and #ts sen# r mana*ement1 T,e set + m)ensat# n #s )r ) rt# nate t t,e )er! rman+e t,at #s e$a.uated a*a#nst t,er #ndustr#es r 0y t,e use ! )er! rman+e #nd#+at rs su+, as e+ n m#+ $a.ue added t t,e + m)any (C,e/ &55@)1 1.2.3. Disclosure N#+ 7 annua. re) rts ensure + m)any trans)aren+y as t,ey d#s+. se !a#r and a+tua. a++ unt#n* #n! rmat# n t,at ,as 0een )re)ared a++ rd#n* t a)).#+a0.e * $ernan+e standards1 T,e re) rt d#s+. ses and e7).a#ns a.. mater#a. r#s2s4 d#s+. ses t,e rat# na.e ! r mater#a. est#mates and s, /s t,e + m).#an+e #n a++ rdan+e t + des ! + r) rate * $ernan+e1 T,e re) rt !urt,er d#s+usses t,e )r *ress4 ).ans4 and #ts * a.s #n add#t# n t d#s+. s#n* #n! rmat# n a0 ut s,are, .ders s, /#n* t,e#r /ners,#) 0ene!#ts1 T,e d#s+. sures !r m N#+ 7 C m)any are ade3uate and t#me.y t ena0.e ana.ysts and #n$est rs t assess t,e .e$e. ! + r) rate * $ernan+e #n t,#s + m)any1 1.2.4. Conflicts of Interest N#+ 7 %#re+t rs /e a !#du+#ary duty t t,#s + m)any re3u#r#n* t,em t a+t #n t,e 0est #nterest ! t,#s + m)any1 P tent#a. and a+tua. + n!.#+ts ! #nterest are #dent#!#ed4 d#s+. sed4 and e7).a#ned #n ade3uate deta#.s t ena0.e d#re+t rs t ma2e $a.#d 6ud*ments + n+ern#n* t,e#r

CORPORATE GOVERNANCE ad$erse #m)a+t1 T,e )ers ns /, + n!.#+ted are ne$er *#$en a +,an+e t )art#+#)ate #n t,e d#s+uss# n and de+#s# n ma2#n* ! t,e #ssue #n 3uest# n4 ne#t,er are t,ey ent#t.ed t $ te ! r r a*a#nst any res .ut# n /,ere t,ey /ere ! und t + n!.#+t (%#*nam &55@B %ems2#4 &55')1
1.2.5. Conduct of t e Directors

T,e d#re+t rs ! t,e + m)any ).ay a $#ta. r .e #n en,an+#n* and )reser$#n* t,e s,are, .ders $a.ue1 T,ey are .e*a..y em) /ered #n add#t# n t ,a$#n* atta#ned re3u#s#te 3ua.#!#+at# ns t s#t #n 0 ard + mm#ttees t 0e e!!e+t#$e #n t,e r .e t,ey ).ay1 T,ey are *#$en t,e a))r )r#ate d#re+t rs,#) tra#n#n*4 ,a$e a r#*,t t )r ) se a*endas4 and +an + nsu.t ea+, t,er n + m)any #ssues )r#$ate.y #n t,e a0sen+e ! e7e+ut#$e d#re+t rs and t,e sen# r mana*ement1 T,e s,are, .ders ,a$e t,e r#*,t t 0e #n! rmed n + m)any matters t 0e e!!#+#ent #n t,e#r m n#t r#n* r .e and t e$a.uate t,e )er! rman+e ! t,e + m)any d#re+t rs1 T,e d#re+t rs are d#.#*ent and )r a+t#$e1
1.2.6. !esponsibilities of Investors

T,e #n$est rs #n N#+ 7 C m)any4 !und mana*ers4 *enera. )artners ,a$e a !#du+#ary duty and res) ns#0#.#ty t m n#t r and $ te ! r r a*a#nst +r#t#+a. #ssues t,at + n+ern t,e su++ess ! t,#s + m)any1 T,e + m)any + mmun#+ates /#t, t,ese #n$est rs #n t#me t de.#$er d#s+. sed re) rts1 T,e + m)any rem $es any ! rm ! #m)ed#ments !r m $ t#n* ! a.. s,are, .ders /,#.e ta2#n* t,e mer#ts ! m dern + mmun#+at# n ! .. /#n* ne $ te ! r ne s,are ) .#+y (< )t &55;)1 T,#s ensures !a#r treatment ! t,e m#n r#ty s,are, .ders t,ere0y )ursu#n* s,are, .ders r#*,ts1 T,e + n+e)t ! + r) rate * $ernan+e ,as + nt#nua..y 0een attra+t#n* t,e #nterest ! )u0.#+ attent# n ! r 3u#te s me t#me1 T,#s ! rm ! * $ernan+e ,as 0een ! und /#de a++e)tan+e due t #ts re.e$an+e and #m) rtan+e t t,e + m)anys and nat# na. e+ n my at .ar*e1 T,e * $ernan+e

CORPORATE GOVERNANCE + ntr#0utes t n t n.y t,e e!!e+t#$eness and e!!#+#en+y ! a + m)any4 0ut #t a.s + ntr#0utes #n a

.ar*e e7tent t t,e *r /t, and )r *ress ! a nat# ns e+ n my1 D#t, ,#s re*ard4 N#+ 7 C m)any ,as $ .untar#.y ad )ted systems ! * 1.3. d + r) rate * $ernan+e t rea.#8e #ts ad$anta*es1

Corporate governance merits

1.3.1. !emar"able !elations ip #it $ are olders

N#+ 7 C r) rate * $ernan+e + nst#tutes ! a set ! ) .#+#es4 )r +esses and .a/s t,at + ntr#0ute t t,e /ay #n /,#+, t,#s + m)any #s adm#n#stered1 C r) rate * $ernan+e !!ers t,e #m) rtan+e ! s,are, .dersE /e.!are t,ere0y su)) rt#n* t,e re.at# ns,#)s 0et/een t,e .a#d strate*#+ * a.s ! t,e + m)any and #ts set ! sta2e, .ders1 T,#s !a$ r#n* re.at# ns,#) !a+#.#tates #n susta#n#n* ! t,e + m)any ! r a . n*er )er# d (=a P rta4 = )e89de S#.anes4 S+,.e#!er4 > V#s,ny4 &555)1 1.3.2. %ana&ement G d + r) rate * $ernan+e *#$es t,e uts#ders an )) rtun#ty t assess t,e + m)any n

t,e /e.. 0e#n* #ts * $ernan+e1 T,e + re ! + r) rate * $ernan+e #s , / /e.. #t #s a0.e t d#s+. se #ts )r#n+#).es and s, / trans)aren+y1 G d + r) rate * $ernan+e ,as ut+ mes #n terms ! 0ene!#ts t,at are measura0.e1 G d + r) rate * $ernan+e #s s, /n t,r u*, atta#n#n* ! ,#*,er

mar2et $a.uat# n1 C r) rate * $ernan+e #n#t#at#$e ensures t,at t,e mana*ement and 0 ard ! ! .. / t,e ne+essary sta*es and t,at t,ey are m t#$ated t /ards t,e #nterest ! t,e + m)any1
1.3.3. 'ransparenc(

d + r) rate * $ernan+e en+ ura*es e7+e..ent trans)aren+y ! t,e + m)any

transa+t# ns4 ,e.)#n* #t t atta#n t,e trust ! t,e sta2e, .ders1 T,#s trans)aren+y #s tr#**ered and #n#t#ated 0y #m)r $#n* a++ess t !#nan+#a. and +a)#ta. mar2ets1 Ra#s#n* ! !unds and +a)#ta. a.s 0e+ mes eas#er due t + m)any e7er+#ses * utstand#n* su)) rt t,e + m)any atta#ns !r m #ts sta2e, .ders1 I! t,e d + r) rate * $ernan+e4 #t ma2es #t eas#er t d#$ers#!y #ts assets t,r u*,

CORPORATE GOVERNANCE a+3u#s#t# n and mer*ers1 A + r) rate * $ernan+e )ra+t#+e ensures a system ! #nterna. + ntr . t,at .eads t 0etter )r !#t mar*#ns1 In su+, a +ase4 + m)anys + r) rate * $ernan+e #n#t#at#$es ensure t,at t,e + m)any #s #n a 0etter ) s#t# n t attra+t ) tent#a. e3u#ty #n$est rs1 T,e ad )t# n !* d + r) rate * $ernan+e )ra+t#+es #n+reases t,e + r) rate $a.ue ! t,e + m)any1 In a +ase

/,ere an #n$est r at e7) sure ! t/ + m)an#es t,at ,a$e + m)ara0.e !#nan+#a. re+ rds4 t,e #nst#tut# na. #n$est rs /#.. )re!er t #n$est #n t,e ne t,at ,as s, /n and )r $ed #ts * * $ernan+e (Bar2er &515)1
1.3.4. )enefits to $ are olders

C r) rate * $ernan+e #n#t#at#$es ass#st t,e mana*ement and 0 ard ! + ntr . t / r2 n 06e+t#$es t,at 0est !a$ rs t,e #nterest ! 0 t, t,e s,are, .ders and t,e + m)any1 T,e s,are, .ders en6 y *reater se+ur#ty n t,e#r #n$estments t,ey ,a$e made /#t, a + m)any e7er+#s#n* * d * $ernan+e 0e+ause ! trans)aren+y and ease ! a++ess t t,e#r #n$estment

deta#.s1 T,e s,are, .ders are t#me.y and 0etter #n! rmed n a..9#m) rtant mana*ement de+#s# ns4 su+, as amendments t art#+.es and t,e sa.e ! assets (A*.#etta > Re0Fr# u74 &55;)1
1.3.5. )enefits to t e National *conom(

I! a + untry #s +,ara+ter#8ed 0y *

d re)utat# n ! r su)er0 * $ernan+e )ra+t#+es4 #t /#..

!!er *reater + n!#den+e #n t,e ! re#*n #n$est rs4 /, /#.. #n turn .eads t an e7+e..ent !. / #n +a)#ta.1 T,e a++ unt#n* and re) rt#n* standards t,at a + untry ad )ts are s#*n#!#+ant !a+t rs t,at 0r#n* #n #n$estments1 C ns#der#n* a.. t,ese * 0ene!#+#a. t + untryEs nat# na. e+ n my1 G d C r) rate G $ernan+e standards /#.. add + ns#dera0.e + r) rate $a.ue t t,e d + r) rate * $ernan+e )ra+t#+es #s + ns#dered

)erat# na. )er! rman+e ! su+, a + m)any 0y #m)r $#n* t,e strate*#+ t,#n2#n* !r m t,e t ) mana*ement t,r u*, #ndu+t# n ! #nde)endent d#re+t rs /, are su)) sed t 0r#n* #n a ne/

CORPORATE GOVERNANCE

15

e7)er#en+e and #deas1 T,#s /#.. a.s 0e en,an+ed t,r u*, + nstant m n#t r#n* ! r#s2s t,at a !#rm !a+es *. 0a..y4 rat# na.#8#n* #ts mana*ement and assur#n* #nte*r#ty ! !#nan+#a. re) rts (Gu*.er4 &551)1
1.4.

Demerits of Corporate Governance

1.4.1. Corporation+s success dependence on decisions of its board of directors

:r m t,e )r# r de!#n#t# n4 + r) rate * $ernan+e #s t,e te+,n#3ue 0y /,#+, a + r) rat# n #s d#re+ted4 0us#ness )ra+t#+es + ntr ..ed4 and $#s# n ! r #ts su++ess + mmun#+ated t t,e s,are, .ders (Is2ander &555)1 T,e )r#mary . ), .e ! r t,#s met, d ! .eaders,#) /#.. ar#se !r m a .a+2 ! $ers#*,t4 ,#*, + st ! +,an*#n* a.ready made de+#s# n n+e a )r# r de+#s# n )r $es t 0e #ne!!e+t#$e and sent#menta. 0us#ness de+#s# ns #n#t#ated 0y entren+,ed 0 ard ! d#re+t rs1
1.4.2. Costs of %onitorin&

: r e!!e+t#$e * $ernan+e ! a )u0.#+.y traded + r) rat# n4 a.. s,are, .ders must a+t and s)ea2 /#t, ne $ #+e t ena0.e t,em ,a$e en u*, $ tes t,at a.. / t,em t ,a$e any rea. /e#*,t #n de+#s# n9ma2#n*1 T,#s re3u#res s,are, .ders /, ,a$e a + ..e+t#$e $#s# n ! r t,e + m)any t #n$est m re m ney #nt t,e + m)any #n rder t *a#n a + ntr ..#n* s,are1 T,#s )r +ess +an 0e ,#*,.y + rru)t and ) .#t#+a.4 s#n+e + ntr ..#n* s,are, .ders t,at sense ) ss#0#.#ty ! a , st#.e ta2e $er /#.. attem)t t 0uy u) m re ! t,e s,ares #n rder t stay #n ) /er t,ere0y 2ee)#n* t,e m#n r#ty )arty s#.ent1 C r) rate * $ernan+e at t,#s .e$e. may )er,a)s *r#nd t a ,a.tB t,#s /#.. dr#$e st +2 )r#+es . /er and ,#nder t,e + m)any r + r) rat# nEs a0#.#ty t ma2e smart +r#t#+a. de+#s# ns (= u*,rey &511)1

CORPORATE GOVERNANCE 2.,. Nicox Company 2.1. Compan(+s board of directors.

11

N#+ 7 C m)any #s a 0# te+,n . *y + m)any /, se .eaders + m)r#ses ! a team ! s2#..ed and e7)er#en+ed )r !ess# na.s1 T,#s .ead#n* team ! s2#..ed )r !ess# na.s ,a$e + m0#ned e7)ert#se t,at + $ers +.#n#+a. de$e. )ment4 mar2et#n*4 resear+, re*u.at ry #ntera+t# ns4 0us#ness4 !#nan+e4 and + r) rate de$e. )ment4 + mmer+#a. a!!a#rs4 a..#an+e mana*ement and + mmun#+at# n .eads N#+ 71 T,e s2#..s /#t, t,ese .eaders /ere a+3u#red #n t,er .ead#n* 0# te+, + m)an#es su+, as N $art#s4 S+,er#n*9P. u*,4 and A..er*an t,at ,a$e ad )ted t,e use ! "-G"S m de. ! + r) rate * $ernan+e1 T,e .eaders,#) team a.s #n+.udes t/ N#+ 7 + 9! unders M#+,e.e and E.#sa0et,1 T,e .eaders,#) team #s as ! .. /sH M#+,e.e Garu!# #s a N#+ 7 + m)any C,#e! E7e+ut#$e O!!#+er and C,a#r)ers n1 P,#.#))e Mas3u#da T,e E7e+ut#$e V#+e9Pres#dent1 <e #s a.s t,e Mana*#n* %#re+t r ! Internat# na. and Eur )ean O)erat# ns Er#+ Casta.d# /, #s t,e C,#e! :#nan+#a. O!!#+er E.#sa0et, R 0#ns n a C 9! under1 S,e #s t,e Pres#dent * $ern#n* N#+ 7 Resear+, Inst#tute Sr. Ierry St Peter #s t,e E7e+ut#$e %e)uty Pres#dent and , .ds t,e ) s#t# n ! Genera. Mana*er ! N#+ 7 + m)any Ga$#n S)en+er E7e+ut#$e V#+e9Pres#dent ! C r) rate %e$e. )ment1 2.2. Nico- Compan( mana&ement

N#+ 7 C m)any B ard ! %#re+t rs ,as a0#ded t t,e .a#d ru.es and re*u.at# ns t,at * $ern t,e 0 ards !un+t# na.#ty and t,at ! + mm#ttees t,at #t sets1 T,e sa#d ru.es and re*u.at# ns are 2e)t u) t date #n a++ rdan+e /#t, A:EP9ME%E: *u#de.#nes1 In rder t + ntr .

CORPORATE GOVERNANCE

1&

t,e 0 ard ! d#re+t rs #nde)enden+e4 t,e + m) s#t# n ! d#re+t rs s, u.d ensure t,at at .east ,a.! ! t,#s + m)any 0 ard mem0er #s #nde)endent1 T,e 0 ard n t,e 0as#s ! +r#ter#a t,at are )r# r )r 6e+ted 0y t,e + r) rate * $ernan+e + mm#ttee assesses t,e#r #nde)enden+e annua..y1 Su06e+t t e7+e)t# ns and .#m#ts t,at t,e .a/ )r $#des4 0 ard mem0ers are deemed t attend a.. 0 ard meet#n*s /#t, re*ard t t,e ma6 r#ty and 3u rum1 T,e mem0ers are su)) sed t ta2e )art #n meet#n*s t,r u*, te.e+ mmun#+at# n r V#s# + n!eren+e /,#+, ensures e!!e+t#$e )art#+#)at# n and #dent#!#+at# n1 : r t,#s + m)any and as )er t,e "S and "- m de.s ! + r) rate * $ernan+e4 te.e+ mmun#+at# n and V#s# + n!eren+e are n t )erm#tted ! r meet#n*s t,at + n+erns a))r $a. ! mana*ement re) rts r re$#e/ ! + ns .#dated !#nan+#a. annua. returns1 In t,#s + m)any4 t,e 0 ard mem0ers ,a$e t 0e )r $#ded /#t, t,e r#*,t #n! rmat# n re*u.ar.y + n+ern#n* t,e +as, ) s#t# n4 !#nan+#a. s#tuat# n4 and !#nan+#a. + mm#tments ! t,e + m)any1 T,e 0 ard +,a#r)ers n ,as an 0.#*at# n t + mmun#+ate t t,er mem0ers any

re.e$ant )#e+e ! #n! rmat# n t,at + n+erns t,e + m)any su+, as re) rts !r m !#nan+#a. ana.ysts4 )ress re) rts and any ! rm ! )ess#m#st#+ #n! rmat# n *#$en 0y e7terna. r*an#8at# ns a*a#nst t,#s + m)any1 T,e mem0ers ! t,e 0 ard are ent#t.ed t re+e#$e d +uments /#t, any #n! rmat# n ne+essary ! r t,e#r duty )er! rman+e #n t,e + m)any and +an meet t,e mem0ers ! + m)anys mana*ement #n t,e a0sen+e ! t,e +,a#r)ers n t d#s+uss matters + n+ern#n* t,e + m)any1 T,e 0 ard ! d#re+t rs +an set u) + mm#ttees t,at #n+.ude s me ! t,e d#re+t rs t )re)are t,e / r2 ! r t,e 0 ard1 T,e 0 ard ,as a + ..e+t#$e res) ns#0#.#ty t,at !#7es t,e + mm#ttee !un+t# ns1 T,#s + mm#ttee ,e.)s #n t,e )re)arat# n ! s me ! t,e de+#s# ns t,at t,e 0 ard #s su)) sed t ma2e 0y *#$#n* ad$#+e r ma2#n* re+ mmendat# ns + n+ern#n* t,ese de+#s# ns1 T,e + mm#ttee ,as t,e ) /er t meet and d#s+uss #ssues t,at are /#t,#n t,e#r *r und ! + m)eten+e 0ut t,e +,a#r)ers n r mem0ers ! t,e 0 ard +an se#8e t,ese meet#n*s (M#t+,e.. &55@)1

CORPORATE GOVERNANCE

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2.2.1. .udit Committee N#+ 7 aud#t + mm#ttee #s + m) sed ! #nde)endent d#re+t rs /, ,a$e re3u#s#te 2n /.ed*e and e7)er#en+e #n !#nan+#a. ana.ys#s4 a++ untan+y4 and + m)anys !#nan+#a. re) rt#n*1 T,e + mm#ttee ,as mem0ers /, ,a$e a /r#tten mandate and terms ! re!eren+e1 T,e aud#t #n$ .$es #nterna. + ntr . and r#s2 mana*ement systems em0edded #n t,#s + m)any1 T,e + m)any !urt,er ,as /e.. /r#tten + de ! 0us#ness + ndu+t #n a++ rdan+e t "S and "- m de. ! * $ernan+e ensur#n* * d ad,eren+e ! a.. a)).#+a0.e ru.es1 d 3ua.#ty

In N#+ 7 + m)any4 #ts t,e res) ns#0#.#ty ! t,e Aud#t C mm#ttee t ensure *

! #ns#de + ntr . and t,e + ns#sten+y ! #n! rmat# n )r $#ded t + m)anys s,are, .ders and t,at )r $#ded t !#nan+#a. mar2ets1 T,#s Aud#t C mm#ttee #s remar2a0.y t,e ne t,at #s #n9+,ar*e ! m n#t r#n* t,e )r +ess #n$ .$ed #n *at,er#n* ! t,e !#nan+#a. #n! rmat# n4 m n#t r#n* ! t,e e!!#+#en+y ! #nterna. + ntr . systems1 T,e + mm#ttee a.s m n#t rs t,e .e*a. + ntr . ! statut ry am n* t,er + ns .#dated a++ unts 0y t,ese Statut ry Aud#t rs ensur#n* t,at t,e Statut ry Aud#t rs are #nde)endent1 T,e + m)anys Aud#t C mm#ttee + m)r#ses ! at .east t,ree mem0ers1 It #s + m)r#sed ! #nde)endent mem0ers4 ! r /, ,a$e a++ untan+y and !#nan+#a. + m)eten+es1 T,e C,a#rman > t,e CEO #s n t an Aud#t + mm#ttee mem0er t,at #s su06e+t t a++e)t a re$#e/ ! t,e #nterna. aud#t re) rts (Mart#n &55?)1 2.2.2. Compensation Committee T,e res) ns#0#.#t#es ! t,e C m)ensat# n C mm#ttee + n!er t t,at ! "- and "S m de. as t,ey are #n$ .$ed #n ma2#n* )r ) sa.s + n+ern#n* *enera. remunerat# n ) .#+y ! #ts + r) rate !!#+ers #1e1 !#7ed and $ar#a0.e4 se$eran+e )a+2a*es and 0ene!#ts #n ! rm ! ret#rement1 T,ey a.s )r $#de )r ) sa.s n !ree s,ares a.. +at# n4 /arrants4 and st +2 )t# ns1 T,e + mm#ttee

CORPORATE GOVERNANCE

1(

e7am#nes a )r ) sed year.y sa.ary ra#se and m n#t rs t,e +r#ter#a and + nd#t# ns .ead#n* t !ree s,ares attr#0ut# n1 T,#s + mm#ttee + m)r#ses ! t,ree t !#$e mem0ers /, are + ns#dered #nde)endent and may re3uest ! r d +uments and aud#t# n ! a.. )ers ns !r m t,e +,a#r)ers n1
2.2.3. Corporate Governance committee

N#+ 7 C m)any ,as de!#ned t,e res) ns#0#.#t#es ! t,e C r) rate G $ernan+e + mm#ss# n t + ns#st ! )r ) s#n* +r#ter#a t 0e used #n t,e e$a.uat# n ! B ard mem0ers #nde)enden+e1 T,e + mm#ttee e$a.uates t,e e!!#+a+y and + m)eten+e ! + r) rate * $ernan+e )r +edures4 su0m#ts re+ mmendat# ns t,at are a#med at !a+#.#tat#n* an #m)r $ement #n + r) rate * $ernan+e /#t,#n N#+ 7 C m)any1 T,e#r mandate a.s #n+.udes ma2#n* ! )r ) sa.s re*ard#n* t,e C mm#tteeEs + m) s#t# n and t,e#r attr#0ut# ns and e7am#nes t,e +and#da+#es ! #m)end#n* B ard mem0ers and t,at ! r t,e ).anned mana*er#a. !un+t# ns1 T,e C r) rate G $ernan+e C mm#ttee + m)r#ses ! at .east t,ree mem0ers1 <a.! ! + r) rate * $ernan+e + mm#ttee mem0ers are + ns#dered #nde)endent1 T,e C,a#r)ers n and CEO #s n t mem0er ! t,e + m)anys C r) rate G $ernan+e C mm#ttee 0ut #s a.. /ed t ta2e )art #n t,e se.e+t# n ! )r ) sed + r) rate !!#+ers and B ard mem0ers (N#+ 7 n1d1)1 T,e )r +edure ad )ted ! r t,e de+.arat# n ! any transa+t# ns made 0y + m)anys B ard mem0ers n t,#s C m)anys s,ares ensures a.. t,at Genera. Mana*ers and B ard mem0ers de+.ares #n ! rm /r#t#n* t t,e :ren+, JAut r#tF des Mar+,Fs :#nan+#ers1 T,#s #s d ne /#t,#n !#$e / r2#n* days and #s e!!e+t#$e ! r a.. transa+t# ns ass +#ated /#t, C m)any s,ares (Tr#+2er &555)1 N#+ 7 + m)any 0 ard ! d#re+t rs ,as ad )ted a strate*y t,at #s a#med at t,e + r) rate !!#+ers and em). yees a#med t a$ #d #ns#der trad#n*1 T,e strate*y ra#ses a.. t,e )re+aut# ns t,at sa!e*uard t,e se+re+y ! + m)anys sens#t#$e #n! rmat# n1 T,e strate*y re+ mmends a de.ay !

CORPORATE GOVERNANCE ne 0us#ness day 0e! re 0uy#n* and se..#n* ! + m)any s,ares a!ter t,e )u0.#+ ann un+ement1 T,#s ,e.)s #n sa$#n* ! r /arrant e7er+#se r#*,ts and a$ #ds 0uy#n* and se..#n* ! s,ares ! r a s, rt )er# d (Van :reder#2s.ust &55C)1 3.,. Conclusion

1;

:r m t,e a0 $e ana.ys#s ! "S and "- + r) rate m de. ! * $ernan+e and t,at ! N#+ 7 C m)any4 #t #s e$#dent t,at t,#s + m)any s, /s + n$er*en+e /#t, re*ard t "-G"S m de. ! + r) rate * $ernan+e1 T,#s #s e$#dent !r m t,e re.at# ns,#) t,at #s /#tnesses #n 0 t, N#+ 7 and "SG"- m de.s #n$ .$#n* + r) rate * $ernan+e + mm#ttee mandates + m)ensat# n + mm#ttee mandate as /e.. as aud#t + mm#ttee )erat# n )r +edures am n* t,er + mm#ttees (Bar+a and Be+,t4 &55&)1 N#+ 7 C m)any *. 0a.#8es #ts /ners,#) and )erat# ns 0y ad )t#n* t,#s #nternat# na..y ad )ted m de ! * $ernan+e ena0.#n* t,em t + m)ete !a#r.y /#t, t,er + m)an#es #n$ .$#n* 0# te+,n . *y1 N#+ 7 + m)any ,a$#n* ad )ted t use t,e "-G"S m de. ! + r) rate * $ernan+e /#.. 0ene!#t !r m e+ n m#+ su++ess and + r) rate su++ess1 T,#s /#.. ma2e t,#s + m)any t ma#nta#n t,e + n!#den+e ! #n$est rs and s,are, .ders and rea.#8e t,e ease ! ra#s#n* #ts +a)#ta. e!!e+t#$e.y and e!!#+#ent.y1 T,e + m)any +a)#ta. + st /#.. . /er due t * d + r) rate * $ernan+e and /#..

) s#t#$e.y #m)a+t n t,e + m)anys s,are )r#+e1 N#+ 7 + m)any /#.. rea.#8e redu+ed r#s2s4 /asta*es4 m#smana*ement and + rru)t# n +ases #ndu+#n* t,e mana*ers and t,e /ners t / r2 ,arder t a+,#e$e t,e + m)any 06e+t#$es t,at are 0ased n t,e #nterests ! t,e + m)any and t,at ! t,e s,are, .ders1 =ast.y4 t,#s m de. ! + r) rate * $ernan+e /#.. ena0.e N#+ 7 + m)any #n ! rmat# n ! a 0rand and #ts de$e. )ment and #n mana*ement t,at /#.. !a$ r t,e #nterests ! a.. sta2e, .ders1

CORPORATE GOVERNANCE Re!eren+e =#st

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A*.#etta4 M14 and Re0Fr# u74 A14 &55;1 Corporate Governance Adrift. A Critique of Shareholder Value1 C,e.ten,am4 "1-1H Ed/ard E.*ar Pu0.#s,#n*1 Bar+a4 :14 and Be+,t4 M14 &55&1 The Control of Corporate Europe1 O7! rdH O7! rd "n#$ers#ty Press1 Bar2er4 R1M14 &5151 Corporate Governance, Competition, and Political Parties Explaining Corporate Governance Change in Europe1 O7! rdH O7! rd "n#$ers#ty Press1 Bu,.er4 C1B14 &55'1 S Corporate Governance !eform" #mpact on $%SE&listed S'iss Companies1 Kur#+,H S+,u.t,ess1 C,e/4 %1<14 > G#..an4 S1=14 &55@1 .S. Corporate Governance1 Ne/ Y r2H C .um0#a "n#$ers#ty Press1 %ems2#4 I14 &55'1 C r) rate C n!.#+ts ! Interest1 (ournal of Economic Perspectives4 1A(&)4 19&11 %#*nam4 A1I14 > Ga.an#s4 M14 &55@1 The Glo)ali*ation of Corporate Governance1 :arn,am4 "1-1H As,*ate1 Garratt4 B14 &55'1 Thin on Top +h, Corporate Governance -atters and .o' to -easure and #mprove /oard Performance1 Yarm ut,4 MEH N#+, .as Brea.ey Pu01 Gu*.er4 -14 &5511 Corporate Governance and Economic Performance1 O7! rdH O7! rd "n#$ers#ty Press1 < )t4 -1I14 &55;1 Corporate Governance in Context" Corporations, States, and -ar0ets in Europe, (apan, and the S1 O7! rdH O7! rd "n#$ers#ty Press1 Is2ander4 M1R14 > C,am. u4 N14 &5551 Corporate Governance A 1rame'or0 for #mplementation1 Das,#n*t n4 %1C1H D r.d Ban21 =a P rta4 R14 = )e89de S#.anes4 :14 S+,.e#!er4 A14 and V#s,ny4 R14 &5551 In$est r Pr te+t# n and

CORPORATE GOVERNANCE C r) rate G $ernan+e1 (ournal of 1inancial Economics ;C4 '9&A1 =a8 n#+24 D14 and OSu..#$an4 M14 &5551 Ma7#m#8#n* S,are, .der Va.ueH A Ne/ Ide . *y ! r C r) rate G $ernan+e4 Econom, and Societ,4 &@(1)H 1'';1 = u*,rey4 I14 &5111 Corporate 2a',ers and Corporate Governance1 Cam0r#d*e4 Cam0r#d*e "n#$ers#ty Press1 Mart#n4 %1 M14 &55?1 Corporate Governance Practical Guidance on Accounta)ilit, !equirements1 = nd n4 T, r * d1

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M#t+,e..4 =1E14 &55@1 Corporate Governance1 :arn,am4 En*.andH As,*ate1 N#+ 7 (n1d1) Corporate Governance4 $#e/ed &? Au*ust &51' !r m ,tt)HGG///1n#+ 71+ mG#nde71),)GenG#n$est r9#n! rmat# nG+ r) rate9* $ernan+e Tr#+2er4 R1I14 &5551 Corporate Governance1 A.ders, tH As,*ate1 Van :reder#2s.ust4 R1A14 An*4 I1S14 > Sudarsanam4 P1S14 &55C1 Corporate Governance and Corporate 1inance" A European Perspective1 = nd nH R ut.ed*e1 V#$es4 X14 &5551 Corporate Governance" Theoretical and Empirical Perspectives1 Cam0r#d*eH Cam0r#d*e "n#$ers#ty Press1