0. What Makes the Most Admired Companies Great
Board Governance and Effective Human Capital Management

1. Richard Hardwick, Managing Director, Hay Group (Pacific)
Welcome
Why this is of interest to Hay Group
Why we think this will be of interest to you
Welcome
Richard Hardwick, Managing Director, Hay Group (Pacific)

2. Carlo Cataldo, Head of Risk, GE Money
The World’s Most Admired 2007: Denise Girdlestone
Carlo Cataldo, Head of Risk, GE Money
Working for the World’s Most Admired
Board governance and Human Capital: a key differentiator, Paul Meijer
Cheryl Batagol, Chair, Melbourne Water
The journey of a local board
Questions & Comments
9.15am close
WELCOME
The World’s Most Admired 2007
Carlo Cataldo, Head of Risk, GE Money
Working for the World’s Most Admired
Board governance and Human Capital: a key differentiator
Cheryl Batagol, Chair, Melbourne Water
The journey of a local board
Questions & Comments
9.15am close

3. The World’s Most Admired Companies 2007
Denise Girdlestone, Senior Consultant, Hay Group

4. Fortune Survey of Most Admired Companies
What is it?
Study of corporate reputations
Candidates: Fortune 1,000 and Global 500 companies
Companies rated both overall (All Stars) and relative to their industry peers (Industry)

5. Fortune Survey of Most Admired Companies
Attributes:
Ability to attract and retain talented people
Quality of management
Quality of products or services
Innovativeness
Long-term investment value
Financial soundness
Wise use of corporate assets
Social responsibility to the community and the environment
9. Effectiveness in conducting business globally

6. Why Study the Most Admired Companies?
Most Admired Companies outperform industry peers and the market as a whole, on total shareholder returns
Most Admired
S&P 500
19.6%
7.1%

7. “All Stars” for 2007 World’s Most Admired General Electric*
Toyota Motor*
Procter & Gamble*
Johnson & Johnson*
Apple*
Berkshire Hathaway*
FedEx*
Microsoft*
BMW
PepsiCo
* Company also included in Top 10 list in 2006.

8. A Different Perspective on the All Stars
Top Non-U.S. Companies
Top Per European Raters
Toyota Motor
BMW
Singapore Airlines
Nokia
Honda Motor
Nestlé
Toyota Industries
Tesco
Samsung Electronics BP

9. The 2007 WMAC Industry Honor Roll
Best of...
Computers
Entertainment
Food and Drug Stores
Household and Personal Products
Motor Vehicles
Petroleum Refining
IBM
Walt Disney
Tesco
Procter & Gamble
BMW
Exxon Mobil

10. Working for the World’s Most Admired Company:
Carlo Cataldo, Head of Risk, GE Money

11. The increasing role of Boards in Human Capital governance
Paul Meijer, Consultant, Hay Group

12. And then there was…..

13. Life on the Board has changed
Sarbanes-Oxley-Higgs-ASX-CLERP9
Liability of the Chair (Greaves Precedent)
Committees
Time
According to an American 2003 survey of corporate Directors, boards have
changed their Audit Committee policies and procedures (reported by 68% of participants),
changed their Board Governance policies and procedures (54%) and established Board
Governance Committees (40%). These dramatic changes are a direct reflection of the impact of
the Sarbanes-Oxley Act, new and pending Securities and Exchange Commission rules, and
proposed requirements on corporate boards by the New York Stock Exchange and Nasdaq. (source Kei Advisors LLC)
Increasing attention into Risk, Auditing and Compliance
Increasing number of committees
So what will be the next big thing
> 30 days annually spent by NEDS in Australia, more then in the US and UK (source Don Mercer)

14. So what do the Board of the World’s Most Admired do?
They are more directly focused on human capital issues
Message: they:
have become more involved in the oversight and management of human capital.
provide CEO and management regularly expertise on human capital issues
Review the human capital strategy
regularly receive information and metrics related to human capital management
By the way, our experience in Australia indicates that Boards here generally do this as well

15. So what do the Board of the World’s Most Admired do?
They are more directly focused on human capital issues
Peer Group
Most Admired
Human capital strategy has been reviewed and approved by the board. 82 69
Message: they:
have become more involved in the oversight and management of human capital.
provide CEO and management regularly expertise on human capital issues
Review the human capital strategy
regularly receive information and metrics related to human capital management
By the way, our experience in Australia indicates that Boards here generally do this as well 10 20 30 40 50 60 70 80 90
100
% Agree

16. So what do the Board of the World’s Most Admired do?
They are more directly focused on human capital issues
Peer Group
Most Admired
Human capital strategy has been reviewed and approved by the board. 82 69
Message: they:
have become more involved in the oversight and management of human capital.
provide CEO and management regularly expertise on human capital issues
Review the human capital strategy
regularly receive information and metrics related to human capital management
By the way, our experience in Australia indicates that Boards here generally do this as well
Board is regularly given information and metrics related to human capital management 82 67 10 20 30 40 50 60 70 80 90
100
% Agree

17. So what do the Board of the World’s Most Admired do?
They are more directly focused on human capital issues
Peer Group
Most Admired 65 67 69 77 82 10 20 30 40 50 60 70 80 90
100
Human capital strategy has been reviewed and approved by the board
Message: they:
have become more involved in the oversight and management of human capital.
provide CEO and management regularly expertise on human capital issues
Review the human capital strategy
regularly receive information and metrics related to human capital management
By the way, our experience in Australia indicates that Boards here generally do this as well
Board is regularly given information and metrics related to human capital management
The CEO and management regularly draw on expertise of the board on human capital issues.
% Agree

18. Boards of the World’s Most Admired evaluate their CEOs differently
They look beyond strategy and finance
Message: all Boards evaluate the CEO on financial metrics and strategy implementation, the difference with WMA Boards is that they have a stronger emphasis in the evaluation process on success in developing human capital
Karyn, from your experience is there anything anecdotal we can say about this in the Australian context?

19. Boards of the World’s Most Admired evaluate their CEOs differently
They look beyond strategy and finance
Peer Group
Most Admired
In evaluating CEO performance, board focuses on strategy implementation. 97 92
Message: all Boards evaluate the CEO on financial metrics and strategy implementation, the difference with WMA Boards is that they have a stronger emphasis in the evaluation process on success in developing human capital
Karyn, from your experience is there anything anecdotal we can say about this in the Australian context?
In evaluating CEO performance, board focuses on financial success. 95 91 10 20 30 40 50 60 70 80 90
100
% Agree

20. Boards of the World’s Most Admired evaluate their CEOs differently
They look beyond strategy and finance
Peer Group
Most Admired 66 91 92 81 95 97 10 20 30 40 50 60 70 80 90
100
In evaluating CEO performance, board focuses on strategy implementation.
Message: all Boards evaluate the CEO on financial metrics and strategy implementation, the difference with WMA Boards is that they have a stronger emphasis in the evaluation process on success in developing human capital
Karyn, from your experience is there anything anecdotal we can say about this in the Australian context?
In evaluating CEO performance, board focuses on financial success.
In evaluating CEO performance, board focuses on success in developing human capital.
% Agree

21. WMA Boards manage CEO and Executive succession differently
By being better prepared for the loss of top executives

22. WMA Boards manage CEO and Executive succession differently
By being better prepared for the loss of top executives
Peer Group
Most Admired
We have a well defined plan to cover the emergency loss of the CEO. 91
There is of course the famous case of McDonalds were they unexpectedly lost their CEO in April 2004 and had to replace his successor in November of the same year, again under sorry and unexpected circumstances, but they did and we can’t say the business has suffered 65 10 20 30 40 50 60 70 80 90
100
% Agree

23. WMA Boards manage CEO and Executive succession differently
By being better prepared for the loss of top executives
Peer Group
Most Admired
We have a well defined plan to cover the emergency loss of the CEO.
There is of course the famous case of McDonalds were they unexpectedly lost their CEO in April 2004 and had to replace his successor in November of the same year, again under sorry and unexpected circumstances, but they did and we can’t say the business has suffered
We have a well defined plan to cover the emergency loss of other top corporate executives.
% Agree

24. So, a small checklist
Are you up to speed with the status of Human Capital in your organisation?
Is your CEO’s performance measured in regards to leadership development?
Do you know who your next CEO will be?
Do you have an emergency succession plan?

25. Cheryl Batagol, Chair, Melbourne Water
A Local Perspective: The Journey of Melbourne Water
Cheryl Batagol, Chair, Melbourne Water

26. Questions & Comments

27. Thank you