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2 Oxford 4 March 2005 Leiden Oxford Programme Restructuring Corporate Governance: The New European Agenda Guy R Jubb Investment Director, Head of Corporate Governance Standard Life Investments Which Model Works Better? Contrasting Anglo-American and European Models

3 The case of the fatal flaw The myths of models –does the Anglo-American model exist? –does the European model exist? Institutional investors: pivotal players –the gate-keepers of the governance chain –different strokes for different investors Engagement: the key to the codes –contrasting engagement styles Anglo/American/European –role of representative bodies “There is no such thing as the Anglo-American model”

4 The myths of models Models are a myriad of complex chains –basic governance chain –complex governance chain –different chains in different jurisdictions –different chains in the same jurisdiction Chains have same beginning and same end –you and me: are we the weakest link? –shareholder associations Governance DNA –each company has a unique governance DNA –DNA determines culture and style –DNA chain only as strong as weakest link “We are all part of the DNA”

5 Institutional investors: pivotal players Policy engagement and corporate engagement –lobbying on policy: government, media –proactive corporate engagement –reactive corporate engagement Touch and twist the chain –US: litigious, confrontational eg Walt Disney –UK: influential pressure points eg remuneration –Europe: friends of the family eg Telecom Italia Going global brings challenges –influence diluted –co-ordination difficult –cost and scale –playing away from home –US v Europe v UK “Institutional investors can control the chain”

6 Engagement: the key to the codes (1) Comply and explain –UK – generally accepted –Europe – gaining momentum –US – law and regulation Good communication aligns chains –UK: governance communication channels now established –US: regulation FD is a big barrier –Europe: breaking the ice “Policy makers should pay much more attention to the communicative aspects of corporate governance”

7 Engagement: the key to the codes (2) Representative bodies: strength or weakness? –US: CII, NACD, Conference Board –UK: ABI, NAPF, Corporate Governance Forum –Europe: Brussels focus, Private investor bodies It takes two to tango –attitudes need to be in tune –matchmakers wanted –the tone from the top “Policy makers should pay much more attention to the communicative aspects of corporate governance”

8 Oxford, we had a problem Governance chains are the reality –governance models are a myth Investors not companies should control the chains –spotlight moving down the chain Policy-makers must be communication catalysts –policymakers can be pacemakers “Oxford, we have a solution”

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