Rating corporate governance: the delicate balance between disclosure, compliance and performance Daniel Malan Head: Unit for Corporate Governance in Africa KPMG Special Advisor: Ethics and Governance

Unit for Corporate Governance in Africa Our mission –To develop both the compliance and the performance aspects of directors’ attitudes, knowledge and skills, as well as the link between corporate governance, business ethics and total organisational performance From our manifesto –Effective corporate governance is the key to building stable and healthy institutions in a nation. These institutions include listed and unlisted companies, central government departments and agencies, state-owned enterprises, regional and local government organisations, family businesses, charities and non-profit organisations

PIC Corporate Governance Rating Matrix Joint venture: PIC & Unit for Corporate Governance in Africa Developmental tool, aimed at assisting companies to improve their corporate governance performance and reporting Will have an impact on PIC investment decisions 2009 – Pilot Version –Top 40 companies –No public disclosure of results

The Team Experts –Bob Garratt –Philip Sutherland –Tom Wixley –Kwanele Gumbi Unit –Thina Siwendu –Daniel Malan –Glen Davison –Matseko Mohlaba –Anna Yortt –Adrian Bertrandt PIC –Deon Botha Issue specific input –Stephen Davies (Yale) –Paul Lee (Hermes EOS) –Jako Volschenk (USB) Statistical validation –Martin Kidd (Centre for Statistical Consultation, Department of Statistics and Actuarial Sciences, University of Stellenbosch)

The Model Performance Compliance Disclosure

The Matrix BOARD INDIVIDUAL DIRECTORS EXECUTIVE MANAGEMENT REMUNERATION SHAREHOLDER TREATMENT RELATED PARTY TRANSACTIONS AUDITING AND ACCOUNTING DISCLOSURE AND REPORTING CORPORATE BEHAVIOUR TRANSFORMATION ENVIRONMENTAL BEHAVIOUR HEALTH AND SAFETY CORPORATE RESPONSIBILITY CORPORATE CULTURE

The Way Forward 2010 –Top 40 companies –Changes based on experiences during pilot –Changes based on King III –Possibly public disclosure of results 2011 and beyond –Public disclosure –Top 100 companies –Comparative information

The learning board basic framework Business Brain External Internal Long term Accountability Board conformance Supervising managementStrategic Thinking Board performance Policy formulation Source: Bob Garratt (Thin on Top) Short term

The learning board basic framework & King III Boards and Directors External Internal Long term Accountability Board conformance Supervising managementStrategic Thinking Board performance Policy formulation Short term Audit committee Integrated reporting Compliance Stakeholder management Ethical leadership and Corporate citizenship Risk IT Internal audit