Corporate governance in focus

Patrick Cairns

Corporate governance at stateowned enterprises has come under extreme scrutiny. What’s been critical is whether the boards have adequately performed their oversight role.

Poor corporate governance has also been behind the calls for change at Net1 UEPS after the social grant payment mess.

There have also been growing concerns about executive pay at listed companies and whether boards are managing this well enough.

In the past, most directors were part of the executive team. Now, the King Report requires having independent, outside directors. This is to ensure there is effective oversight.

Rob Lewenson of Old Mutual Investment Group says: “An effective, appropriately experienced and diverse board, coming from independent viewpoints, is the best way to ensure management is held to account for its practices and implementation of strategy to create long-term shared value.”

Brad Preston of Mergence adds: “You want to have independent directors to guard against the potential conflict where the board is all aligned to the management team and there is never going to be robust discussion.”

However, he also points out that an independent board which is not that invested in the business may not be as engaged or strong.