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AIBstudentIDnumber:
Studentname:
JasonGraham
Coursename:
MasterofBusinessAdministration(Finance)
Subjectname:
CorporateGovernance
Subjectfacilitator:
Mr.WayneWood
TeachingCentre:
SchoolofHigherEducationLimited,SanFernando,Trinidad
No.ofpages:
24
Wordcount:
2737
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(tobecompletedbytheexaminer)
Studentname:
JasonGraham
Coursename:
MasterofBusinessAdministration(Finance)
Subjectname:
CorporateGovernance
Assessor/marker:
COMMENTS
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Gapanalysisonthecorporategovernancepracticesasitrelatestotheconformanceof
GuardianGrouptocorporategovernancecodeofTrinidad&Tobago
Assignment Statement
Conductareviewofthegovernanceofyourorganization(oronewithwhichyouarefamiliar)
andwriteareportwithyourfindings.Usetheconcepts,toolsandtechniqueslearnedinthis
subjecttoreviewthestructure,processandeffectivenessofthegovernanceofthe
organization,andtomakerecommendationsforappropriateimprovements.Thesefocus
questionscouldguideyouinwritingyourreport:
1. Inwhichaspectsofcorporategovernancehasyourorganizationbeenreasonably
successful?Discusswhathasledtothesuccessandhowitcouldbesustained.
2. Inwhichaspectsofcorporategovernancehasyourorganizationfailedorbeenless
successful?Discussthereasonsforthisandwhatcanbedonetoaddressthem.
Approach
Inthisassignment,Iveadoptedtheroleofanindependentconsultanttotheboardofdirectors
ofGuardianGroup.Aspartofthegroupspolicy,anindependentreviewoftheboardandits
operationsismandatedtooccureverythreeyears.Thisreportisthedeliverablefromthe2015
review.Itisexpectedthatafterbeingreviewedbytheboardofdirectorsitwouldbepresented
tothekeystakeholdersasanassurancethatgoodcorporategovernanceisbeingadheredtoo,
andwheregapsareidentified,adefinedplanofactionisinplacetoaddressthedeficiencies.
3|P a g e
JGConsultantsLimited
1MoreauRoadMarac
Moruga
18thJune,2015
TotheChairman,
GuardianHoldingsLimited(GHL)
Report
Gapanalysisonthecorporategovernancepracticesasitrelatestotheconformanceof
GuardianGroupitscorporategovernancecode
4|P a g e
ExecutiveSummary
Whenwealthislost(profits,financialperformance),verylittleislost;whenhealthislost(an
unviablebusinessmodelorplan),somethingislost;butwhencharacterislost(integrity),
everythingislost.
ThisfamousquotebyevangelistBillyGrahamisnotedandadoptedbyTerrenceMartinsinhis
commentaryoncorporategovernanceasitrelatestoinvestmentanalysisandcreditratings.It
isanaptstarttoadiscussiononcorporategovernanceassuchissuesifnothandledadequately
couldquicklyresultinaruinedcompanyreputationandconsequentialdropinsharepricesas
seenwithEnron,WorldComandTyco.Suchconsequenceshavepropelledthecurrent
institutionallogiconcorporategovernanceawayfromafocusontheorganizationintoarealm
whichfocusesonshareholders.Organizationneedtobecarefulhoweverwithimplementing
structuresandpolicythatonlyappeartosatisfyregulatoryrequirementforgoodgovernance
whileinessencenotembracingthespiritthatemanatesfromsaidregulations.
GuardianHoldingsLimited(GHL)hasbeenabletomaintainastablelongtermcreditratingover
thelastseveralyears.Aslocallawsbecomemorestringenttoensurenationalcompliancewith
internationalfinancialagencies,GHLcouldseethisratingfalliffailstotrulycomply.Ananalysis
ofitscorporategovernancepracticesrevealsminordeficienciesaroundthestructureofkey
boardcommitteesandtheannualperformanceassessmentthatisrecommendedinthe
Trinidad&Tobagocorporategovernancecode.
Thesituationisevaluatedagainstcontemporaryliteratureonthesubjectofcorporate
governanceandseveralrecommendationsarepresented.Theseinclude
1. Assignmentofanindependentdirectortoleadthecoreremunerationandnomination
committee.
2. Periodicevaluationofthedirectors,theboardanditscommittees.
3. Improvedreportingoncorporategovernanceissues
5|P a g e
TableofContents
AssignmentStatement..................................................................................................................................3
Approach.......................................................................................................................................................3
ExecutiveSummary.......................................................................................................................................5
Introduction..................................................................................................................................................7
CompanyBackground...................................................................................................................................9
Problemstatement.....................................................................................................................................10
DataCapture...............................................................................................................................................10
LiteratureReviewandAnalysis...................................................................................................................12
BoardStructureandComposition..........................................................................................................12
TheGovernanceProcess.........................................................................................................................16
Recommendations......................................................................................................................................18
Conclusion...................................................................................................................................................19
Appendix1Unitaryvs.TwoTierboardstructure....................................................................................20
Appendix2OrganizationalStructure........................................................................................................21
References..................................................................................................................................................22
ListofFigures..............................................................................................................................................24
ListofTables...............................................................................................................................................24
6|P a g e
Introduction
UnliketheSarbanesOxleyActof2002whichimposed,oncompaniesincorporatedinUS,
mandatoryrequirementsaimedatprotectingshareholderscompaniesinTrinidadand
Tobagocanchoosetocomplywiththecorporategovernancecodeorexplainwhytheyhave
notorcannotcomply.Thiscomplyorexplainapproachhingesonthephilosophythata
standardizedapproachtogovernancewillnotfitallorganizationsandassuch,hopesthat
organizationswouldacceptthespiritofthecodebyintegratingitintopoliciesthatare
applicabletotheorganization.Thisapproachreliesheavilyontheconscienceofshareholders
whoareexpectedtopenalizeorganizations,whofailtocomplywithoutajustifiablereason,by
sellingtheirstakeintheseorganizations(Walker,S,CorporateGovernance:ItseffectonShare
Price,2013).
Thisrelianceonshareholdersiscentraltothecurrentinstitutionallogicofcorporate
governancewhichspeakstomaximizingshareholderswealth(Joseph,J,Ocasio,W&
McDonnell,MH,2014).Afterall,corporategovernanceissueswerebirthedinthewakeofthe
separationofcorporationownershipandcontrol.Thecontrollers(management,boardof
directors)areimploredtoactinthebestinterestoftheowners(shareholders)(OECDPrinciples
ofCorporateGovernance,2004).Fromthiswederiveadefinitionofcorporategovernanceas
being
Asetofrelationshipsbetweenacompanysmanagement,itsboards,itsshareholdersand
otherstakeholders,whichalsoprovidethestructurethoughwhichtheobjectivesofthe
companyaresetandthemeansofattainingthoseobjectivesandmonitoringperformanceare
determined(OECD)
Themainobjectiveofsuccessfulcompaniesisattainingandsustainingcompetitiveadvantage,
evidencedbyahealthysharepriceandannualprofits.Thephilosophyofgoodcorporate
governancesuggestsadherencetofivekeyprinciples,isthebestmeansthroughwhichthis
objectiveshouldbepursued.TheseprinciplesformtheheadlinesoftheTrinidad&Tobago
corporategovernancecode(TTCGC).
1. Leadership
2. Effectiveness
7|P a g e
3. Accountability,
4. Remunerationand
5. Relationshipwithshareholders
GuardianHoldingsLimited(GHL)believesthatadherencetothecodefacilitatesactiveco
operationbetweenthecompanyanditsstakeholdersincreatingasustainableandfinancially
soundenterprises(GHLCGReport,2013).GHLbeensuccessfulinimplementingseveralkey
aspectsoftheTTCGC,howeverthereareseveralimportantareaswhereitshouldseek
improvement.Thisreportanalyzestheseareasandmakesrecommendationsonhowthese
shortcomingscouldbeaddressed.
8|P a g e
CompanyBackground
(GuardianGroupWebsite;InvestorRelationspage)
GuardianHoldingsLimited(GHL)isaholdingcompanyformedin1982andbecameapublicly
listedcompanyinTrinidad&Tobagoin1996.GHLssubsidiariesprovidefinancialservices
throughtheproduction,distribution,andadministrationofinsuranceandinvestmentproducts.
GHLsoperationsareconductedprimarilythroughouttheCaribbean.Howeverseveralservices
areselectivelyprovidedworldwidethroughtheGroupsinternationalbusinesssegment.There
arethreemainbusinesssegments:
1. LifeandHealthInsurance,andPensions
2. PropertyandCasualtyInsuranceand
3. AssetManagement.
GHLisratedbyratingfirm,A.M.BestCompanyInc.(AMB),andoverthelastcoupleyearshas
consistentlyreceivedalongtermcreditratingofBBB.ThisratingdescribedbyAMBas
adequate,isthelowestacceptableratingonitsInvestmentGradescale.ItmeansGHLhas
adequateabilitytomeetthetermsoftheobligation;howevertheissueismoresusceptibleto
changesineconomicorotherconditions(GuidetoBestsDebtandIssuercreditrating,2014).
In2014,thecompanyrealizedaprofitofover$TT400million($US62M)andanearningsper
share(EPS)of$TT1.62.
9|P a g e
Problemstatement
Inthewakeofseverallargeinternationalscandals,therootcauseofwhichhasbeen
determinedtobepoorcorporategovernance,theinstitutionallogicofcorporationshasforcibly
developedakeenfocusonsecuringshareholdersinterest.Thelocallegalresponse,the
TTCGC,providesguidingprinciplesbutminimaltemplatesforimplementation.Assuch,itleaves
itselfopentoindividualinterpretation.TheboardofGHLhasmadeaconcertedeffortto
developstructures,processesandpoliciesthatdemonstratecompliancetotheTTCGC.
However,thereareseveralkeyareaswheretheyseemtomissthespiritofthecode;
1. Theindependenceofthechairmanforakeyboardcommittee
2. Theperiodicevaluationoftheindividualdirectorsandtheboardasawhole
3. Thereportingofkeycorporategovernanceissuestoitsshareholders
DataCapture
AsGHLislistedontheTrinidad&Tobagostockexchange,manyofthedocumentsrequiredto
executethisanalysisareeitherinthepublicdomainoravailablefromthecompanyswebsite.
Thefollowingdocumentswereobtained
1. Guardiangroup2013corporategovernancereportwhichdetailsthecorporate
governancepolicyadoptedbyGHLinJanuary2013.Thepolicyisadirectresponseto
GHLsadoptionoftheTTCGC.Italsoexplainsthestructureandcompositionofthe
boardanditscommittees.Init,the2013committeesreportsarepresented.
2. Guardiangroup2014Annualreport.Thisreportwaspresentedandapprovedatthe
companys2014annualmeetingofshareholders.Thefinancialstatementcontained
thereinisonlyasummaryandtheexternalauditorscarefullynotedthatThesummary
consolidatedfinancialstatementsdonotcontainallthedisclosuresrequiredby
InternationalFinancialReportingStandards.Readingthesummaryconsolidated
financialstatements,therefore,isnotasubstituteforreadingtheauditedfinancial
statementsoftheGroup(GHLconsolidatedfinancialstatement,2014).Thisis
10|P a g e
reminiscentoftheSOX(section302&906)whichmandatesthatannualfinancialsbe
certifiedbytheprincipalfinancialofficer.Fromthisdocumenttheorganizations
financialperformanceisgivenaswellastheboardcommittees2014reports.
3. TheorganizationstructureofGHLandprofilesofitsdirectors
Toassessthedataobtained,thefollowingdocumentswereused
TheTrinidad&Tobagocorporategovernancecode2013(TTCGC)
TheUKcorporategovernancecode2014(UKCGC)
TheSarbanesOxleyActof2002
TheCadburyreportof1992
TheanalysisofthedatacollectedsuggestthatGHLhascompliedwiththeTTCGCasfarasit
relatesto
Acceptableboardstructure
Annualfinancialreportingtostakeholders
InclusionofshareholdersinannualmeetingsandtheuseofProxyvotingtofacilitate
shareholderinvolvement
However,italsohighlightsseveralkeydeficienciesasnotedintheproblemstatementabove.
11|P a g e
LiteratureReviewandAnalysis
Figure1Possibleevolutionofboardcomposition(InfluencedbyWilliamPoundslectureon
corporategovernance.ViewedonYOUTUBEhttps://youtu.be/PC_acEzfL9Q)
Thoughtheliteraturedoesnotalludetothebestboardcomposition,itnotesthatmostpublicly
listedcompanytendstohaveaunitary,mainlynonexecutiveboard.GHLshasaunitaryboard
composedofamajorityofnonexecutivedirectorshavingelevendirectors,onlythreeof
whomareexecutivedirectors(SeeTable2below).
12|P a g e
Composition TypicalApplicability
Defining
Characteristic
Advantages
Entirely
executive
Smallfirms,familyrun
companies,startup
business
Directorsarealsotop
management
personnel
Easy tosynergize
strategy
formationwith
execution
Mainly
executive
Growingbusiness
requiringrefinedstrategy
andmoreexternal
financing
Availabilityof
perspective
independentof
management
Mainlynon
executive
Publiclylistedcompanies
Somedirectorsare
experiencedsubject
matterexperts
recruitedtoassist
board
Stakeholderscan
influenceappointment
ofindependent
directors
Directorsdrawnfrom
interestgroups
Greaterboard
independence
Increasedaccess
toexternal,low
costcapital.
Different
perspectives
represent
stakeholder
interest
Board
independence
Entirelynon
executive
Nonprofitentities
Subsidiarycompanies
Disadvantages
Noboard
independence
CEOand
Chairman
typicallythe
sameperson
Lowboard
independence
Executive
directors
interfacewith
company&have
alotofpower
Otherwise
employed
directorshave
limitedtime
dedicatedto
governing
organization.
Heavyreliance
onCEOfor
interfacewith
management
Table1Comparisonofboardcomposition
TheTTCGCmakesspecificrecommendationonboardcompositionbutnotitsstructure.The
recommendationsarebasedontheprinciplethatthereshouldbeabalanceofindependence
anddiversityofskills,knowledge,experience,perspectivesandgenderamongdirectorssothat
theBoardworkseffectively(TTCGC2013).
TheUKCGCalsoexpoundstheimportanceofboarddiversity.Diversityallowsvarying
perspectivesthatleadstobetterdiscussions.Itallowsvaryingstakeholderintereststobe
represented(Kang,H,ChengM&GraySJ,2007).Tocomplywiththecode,boardsareadvised
to
1. Becomposedofenoughindependentdirectorstofacilitateunbiaseddecisionmaking
untaintedbyundisclosedconflictsofinterest.Theuseofenoughisvagueandopento
interpretation.GHLdefinesenoughasatleast30%oftheboard(GHLCorporate
13|P a g e
governancereport2013).Oftheelevendirectors,fourareindependent(36%)satisfying
therequirement.IncontrasttothistheUKCGCrequireshalftheboardoflarge
companiestobenonexecutive,independentdirectors.
2. Balanceitsindependenceagainstnecessaryskills,knowledge,experience,perspectives
andgender.Table2demonstratesthatthereappearstobeabalanceoftherequired
skillsetandexpertiseontheboard.However,thereisonlyonefemaledirector.Itcould
bearguedthatGHLdoesnotsatisfytherequirementforgenderdiversityexcepthe
TTCGCdoesnotofferabenchmarkagainstwhichgenderdiversitycanbemeasured.
3. Ensurethechairpersonisanonexecutivedirectorandpreferablyanindependent
director(theUKCGCmandatesthatthechairmanbeindependent).Wherethe
chairpersonoftheboardisnotanindependentnonexecutivedirector,theboard
shouldappointaleadindependentdirector.Thecurrentchairmanisnotan
independentdirector,basedonthedefinitionofindependenceadoptedbyGHL.
Compliancewiththerequirementisachievedbytheappointmentofthedeputy
chairmanastheleadindependentdirector.
4. Establish,ataminimum,threesupportingcommitteescomprisedmainlyof
independentdirectors.Thesecommitteesaretheaudit,nominationandremuneration
committee.GHLhasestablishedtheAuditcommitteeasrequiredbytheTTCGC.They
havecombinedtheRemunerationandNominationcommitteesintoone.This
committeeisnotchairedbyanindependentdirectorasisrequiredbytheTTCGC.
However,thecodedoesallowfortheboardchairmantoheadthesecommitteesso
technically,GHLisnotinbreachofthecode.As75%ofthecommitteecomprises
independentdirectors,GHLasksthestakeholderstoacceptthatthiscompositionwould
resultinthecommitteesdeliberationsbeingindependent.Notablyhowever,the
chairmanoftheboardandofthispowerfulcommitteeisthe4thlargestshareholder
(6.29%ofshares)andhasamaterialinterestinthelargestshareholderofthecompany
(TeneticLimited15.46%ofshares)(GHL2014AnnualReport)
14|P a g e
Director
Independent
Executive
Audit
Mr.ArthurLokJack;Chairman(CM)
Mr.RaviTewari(CEO)
Mr.DouglasCamacho
Mr.RichardEspinet
Mr.MaximRochester
Mrs.MarianneLoner
Mr.ImtiazAhamad
Mr.PeterGanteaume(DeputyCM)
Mr.PhilipHamelSmith
Mr.AntonyLancaster
Mr.SelbyWilson
NO
NO
NO
NO
NO
NO
NO
YES
YES
YES
YES
NO
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
x
x
CM
COMMITTEES
Remuneration Corporate
&Nomination Governance
CM
x
x
x
x
CM
x
x
Risk&
Compliance
x
x
x
CM
Table2AnalysisofGHLBoardCommittees
Director
Mr.ArthurLokJack(CM)
Mr.RaviTewari(CEO)
Mr.DouglasCamacho
Mr.RichardEspinet
Mr.MaximRochester
Mrs.MarianneLoner
Mr.ImtiazAhamad
Mr.PeterGanteaume(Dep.CM)
Mr.PhilipHamelSmith
Mr.AntonyLancaster
Mr.SelbyWilson
AreaofExpertise/KeySkillset
Entrepreneurship
HealthandPensions
Insurance
Insurance
Accounting
Finance&Banking
BusinessManagement
Finance,AccountingandAuditing
Law
Insurance
Finance&Accounting
BoardAppointment
Directorsince1997,Chairmanin2004
Directorsince2014
Directorsince1998
Directorsince2014
Directorsince2014
Directorsince2014
Directorsince2003
WasapreviousCEOofGHL(1999)
Directorsince1997
Directorsince2003
Directorsince1997
Table3AnalysisofGHLBoardofDirectors
Theimportanceofnonexecutivedirectorsbeingindependentisathemethatresonates
throughoutthegovernancecodes.Consequentlythecodesoffersadefinitionofindependence
thataddressesthepossibletiesthatthedirectormayhavehadorhavewiththecompany.They
explore
Prioremployment
Priorboardmembership
Familytiestokeypersonnel
Ownershipofsharesormaterialinterestinthecompany
Theessenceofwhichistoensurethatthedecisionmakingprocessisfreefromconflictof
interest.
15|P a g e
Inthewakeofseveralglobalscandals,thepublicexpectscorporategovernancetopreventthe
reoccurrenceofsuchscandals.SirAdrianCadburyoffersthatthecorporategovernance
frameworkistheretoencouragetheefficientuseofresourcesandequallytorequire
accountabilityforthestewardshipofthoseresources(SirAdrianCadbury,Corporate
GovernanceForum).Itishopedthatthestructurewouldensurethatcorporationsaremade
responsivetotherightsandwishesofstakeholders(DembandNeubauer,1992).
Todothisthis,theCadburyreport(1992)suggestthefollowingbedone
1. Increaseduseofindependentornonexecutivedirectors.Asnotedabove,ofGHLs
elevendirectors,eightarenonexecutive.Oftheseeight,fourareindependent.
2. Thecreationofthreekeycommittees.FulfilledbyGHLasnotedabove.
3. SeparationofthechairmanandCEOrole.ThechairmanoftheGHLboardisnotthe
ChiefExecutiveOfficer(CEO)ofthegroup.Note,thisisalsorecommendedbyboththe
UKCGCandTTCGC.
4. Adherencetoadetailedcodeofconduct.GHLhasadefinedvaluestatementpublished
ontheirwebsitethatspeakstothecodeofconducttheyfollow.Intheory,thisvalue
statementsatisfiestherequirement.Thespiritofthecodehowever,wouldrequirethe
directorstolivethevaluesdaytodaybeforeboastingofcompliance.
Therecommendations,listedabove,areexpectedtoguidetheboardintheexecutionoftheir
keyroleswhichcomprisebutarenotlimitedto
Strategyformulation
Maintainingaccountability
Policymaking
Supervisionofexecutiveactivities
AccordingtotheTTCGC,boardscanfacilitatethisaccountabilityby
16|P a g e
1. Definingaprocessbywhichtheopinionandviewofstakeholderscouldbesolicited.
GHLhasputaproxysysteminplaceforinclusionoftheshareholdersinthevoting
process.Theproxyformisverystructuredandtheoneviewedduringmyresearchdoes
notfacilitatesolicitationofshareholdersviewsoutsideoftheissuebeingvotedon.
Nevertheless,thefactthatshareholdersareinvitedtoattendtheannualmeeting
showsthataforumisavailableforshareholderstointerfacedirectlywiththeboard
2. Developingaprocedureforperiodicevaluationofboardmembersindividualand
collectiveperformance.GHLhascreatedaCorporateGovernancecommitteewhich
wieldstheresponsibility,amongothers,ofdevelopingandimplementingprocesses
toassessboardandcommitteeeffectivenessThecharterofthecommitteewaslast
reviewedandapprovedinMarch2013.Thecharterdoesnotspeaktomandatory
reportingofboardevaluations.Furthermore,betweenMarch2013andDecember2014,
thecommitteemetonly6times(Seetable4below).Ithasfailedtoagreeonaprocess
forevaluatingtheperformanceofthedirectorsandtheboardasawhole.
3. Generate,ataminimum,annualreportsforstakeholderreview.GHLs2014annual
reportreferencedinthedatacapturesectionaboveisproofthatthisrequirementis
beingfulfilled.
4. Developandenforcepolicyre:materialdisclosureandexpressionofconflictofinterest.
GHLs2013corporategovernancereportreferencesaconflictofinterestpolicy.The
compliancewiththepolicyismonitoredbythecorporategovernancecommittee.No
conflictsofinterestarenotedinGHLs2014annualreport.
Independent
Meetingsin
Meetingsin
Chairman?
2013
2014
1
AuditCommittee
Yes
5
7
2
Remuneration&NominationCommittee
No
7
3
3
CorporateGovernanceCommittee
Yes
4
2
4
Risk&ComplianceCommittee
Yes
4
4
5
EnterpriseInvestmentCommittee
No
4
Notreported
Table4Analysisofboardcommitteeswithrespecttotheirchairmanandthenumberoftimethey
convenedaformalmeeting
#
Committee
17|P a g e
Recommendations
Itisrecommendedthatthefollowingbedone
1. Foremostanindependentdirectorshouldbeappointedtoleadtheremunerationand
nominationcommittee.ThoughtheTTCGCmakesnoattemptatdefiningwhatthe
chairmanoftheboardcommitteesshouldlooklike(exceptfortheAuditcommittee),
theCadburyreportandUKCGC,afterwhichtheTTCGCispatterned,recommendsthat
thechairmanofthesecommitteesbeindependentdirectors.GHLfailstohonorthe
spiritofthecodeandinsteadexploitsaloopholebyassigningitsboardchairman(whois
notindependent)toheadthiscommittee.
2. TheTTCGCandeventhecharterofGHLscorporategovernancecommitteespeakto
periodicevaluationoftheindividualdirectorsandboard,inclusiveofthechairman.The
UKCGCstatesTheboardshouldundertakeaformalandrigorousannualevaluationof
itsownperformanceandthatofitscommitteesandindividualdirectorsThis
requirementisnotbeingcompliedwithandnoexplanationhasbeengiven.Itis
recommendedthattheperiodicevaluationcommencesbeforetheendofthefinancial
year.Tomeasuretheeffectivenessofitsprocessesandpolicies,theGHLboardmust
definemeasurablegoalsandKPIsandperformperiodicassessmentsagainstthosegoals
andKPIstoascertainsuccess.ThoughitcouldbearguedthatGHLspositivefinancial
reportconfirmsgoodperformancebytheboard,thisisinsufficient.Evaluationsarea
coreprincipleoftheTTCGC&UKCGCandshouldbecompliedwith.Itisexpectedthat
theoutcomeoftheseevaluationsalsobereportedtothestakeholdersinanannual
report
3. Thereisminimalreportingoncorporategovernanceissueseventhoughasectioninthe
annualreportisdedicatedtoit.Instead,thereportonlycapturesthetheoryof
corporategovernance.Theactualreportingmustbeimprovedto
Listallconflictofinterestedfortheshareholderstoperuse
Demonstratethataninductionwasdoneforthenewlyappointedboardmembers
Speaktosuccessionplanningandhowitiscurrentlyprogressing
UpdatetheshareholdersonGHLscompliancewiththeTTCGC
18|P a g e
Conclusion
GHLhavemadeaconcertedefforttoensurecompliancewiththeTTCGCandtheinstitutional
logicofthedaythatfocusesonshareholdersinterest.However,justlikeinstitutionallogic
whichprovidesguidingprinciplesbutnodetailedtemplates,thegovernancecodeleavesitself
opentointerpretationandfacilitatesrangingvariationsinthewayitisimplemented.Assuch,
shareholdersmustbevigilantindetectingwhenboardsrespondtolegalrequirementsby
developingstructures,processesandpoliciesthatdemonstratecompliancebutmissesthe
spiritofthecode.(Joseph,J,Ocasio,W&McDonnell,MH,2014)
GHLhasbeengreatin
EstablishingaboardstructurethatiscomplianttotheTTCGCandtheUKCGC
Establishingtherequiredauditcommittee
EnsuringtheannualreportingtostakeholdersandtheuseofProxyvotingtofacilitate
shareholderinvolvement
However,thefollowingcouldbeimproved
Thecombinedremunerationandnominationcommitteeischairedbyadirectorwho
doesnotmeettheindependencecriteria.Thismustberectified
Notenoughevidenceisprovidedtotheshareholderstodemonstratethataconcerted
efforthasbeenmadebythecorporategovernancecommitteetodevelopand
implementprocessestoevaluatetheperformanceofthedirectorsandtheboardasa
whole
Reportingoncorporategovernanceissuesneedtomovefromsimplyidentifyingthe
theorywithwhichGHLagrees,toactuallyprovidingprogressupdatesonhowGHLis
complyingwiththetheory
Respectfullysubmitted
JasonGraham
LeadConsultantJGConsultantsLimited
19|P a g e
Appendix1Unitaryvs.TwoTierboardstructure
OneBOARD
(MainlyNonExecutiveDirectors)
SUPERVISORYBOARD
(MainlyNonExecutiveDirectors)
BOARD
MANGEMENTBOARD
(MainlyExecutiveDirectors)
COMAPNY
UNITARYBOARDSTRUCTURE
COMAPNY
TWOTIERBOARDSTRUCTURE
Figure2Diagrammaticrepresentationofaunitaryandtwotierboardstructure(Tricker,B,2012)
20|P a g e
Appendix2Organizational Structure
Copiedfrom:
http://trinidad.myguardiangroup.com/guardianholdingslimited/organisationstructure/
21|P a g e
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CaribbeanCorporateGovernanceInstitute,TrinidadandTobagoChamberofIndustryand
Commerce,TheTrinidadandTobagoStockExchangeLimited,Trinidad&Tobagocorporate
governancecode,2013
DembandNeubauer,1992
FinancialReportingCouncil,TheUKcorporategovernancecode,2014
GuardianGroup,CorporateGovernancereport,2013
GuardianGroup,Annualreport,2014
GuardianGroupwebsite,www.myguardiangroup.com
Viewed14thJune,2015
Joseph,J,Ocasio,W&McDonnell,MH2014,Thestructuralelaborationofboard
independence:executivepower,institutionallogics,andtheadoptionoftheCEOonlyboard
structuresinUScorporategovernance,AcademyofManagementJournal,vol.57,no.6,pp.
18341858.
Kang,H,ChengM&Gray,SJ2007,corporategovernanceandboardcomposition:diversityand
independenceofAustralianboards,CorporateGovernance:AnInternationalReview,vol.15,
no.2,pp.194207.
Martins,T,CorporateGovernance,InvestmentAnalysis&CreditRatings
http://www.caricris.com/index.php?option=com_commentary&view=articlecommentary&id=1
3&Itemid=41
Viewed14thJune,2015
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Organizationforeconomiccooperationanddevelopment(OECD),PrinciplesofCorporate
Governance,2004).
SenateandHouseofRepresentativesoftheUnitedStatesofAmericainCongressassembled,
TheSarbanesOxleyActof2002,2002
SirAdrianCadbury,theFinancialAspectsofCorporateGovernance,1992
Tricker,B,CorporateGovernancePrinciples,PoliciesandPractices,2ndEdition,2012
Walker,S,CorporateGovernance:ItseffectonSharePrice,2013
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List of Figures
1. Figure1Possibleevolutionofboardcomposition(InfluencedbyWilliamPounds
lectureoncorporategovernance.ViewedonYOUTUBEhttps://youtu.be/PC_acEzfL9Q)
2. Figure2Diagrammaticrepresentationofaunitaryandtwotierboardstructure
(Tricker,B,2012)
List of Tables
1. Table1Comparisonofboardcomposition
2. Table2AnalysisofGHLBoardCommittees
3. Table3AnalysisofGHLBoardofDirectors
4. Table4Analysisofboardcommitteeswithrespecttotheirchairmanandthenumber
oftimetheyconvenedaformalmeeting
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