Vol 7 Issue 6 March 25 2011

  • Date:08 Apr 2009
  • Type:Boardroom Report

Time for the chair to step up

Many boards are not providing the leadership demanded by the global economic crisis, according to a McKinsey Quarterly survey on the board’s role in the current economic environment.

Just over a third of directors polled said their boards had not been effective in managing the crisis, while 14 per cent were unsure how to rate their boards’ effectiveness. At a personal level, roughly half said their boards’ chairs had not met the demands of the crisis, and a nearly equal percentage of chairmen believed the same about their board members.

Fair workload ahead for SMEs

Small to medium-sized enterprises (SMEs) should not underestimate the task of transitioning to the Fair Work Act, which comes into effect on 1 July 2009, warns Michael Byrnes, special counsel at Clayton Utz.

“The changes are quite dramatic and the transition provisions are rather complex,” he says.

A key area directors need to focus on is unfair dismissal. “It’s been a few years since SMEs had to worry about unfair dismissal, so there’s a fair bit to do in the transition,” says Byrnes.

At first glance, corporate downsizing could appear to be a logical path to improved profitability during tough times, but it could also cause long-term issues which are hard to recover from.

Is downsizing the right strategy?

At first glance, corporate downsizing could appear to be a logical path to improved profitability during tough times, but it could also cause long-term issues which are hard to recover from.

Di Worrall MAICD, principal of Worrall & Associates, says difficult times demand that we seriously re-think our strategies. Organisations that choose to do nothing may find themselves in serious trouble down the track. But proactive businesses may also find themselves in difficulty if they choose employee redundancy as their first strategy, instead of their last resort.

Chasing big pockets

The global economic crisis has created a culture and environment where everyone is looking for someone to blame and that someone is going to be the person with the deepest pockets.

That was the warning of Lloyd’s of London CEO Richard Ward at a recent AICD Leaders’ Edge luncheon in Melbourne.

“Liability is a serious business for companies,” he said. “We absolutely can’t ignore it. We’re faced now with product recalls around the globe. Barbie dolls with lead have to go back. Tainted milk has to go back. We’re faced with investor activism. We’re faced with angry shareholders. We’re faced with class action. So, it is a far more litigious world that we now live in where people are continually looking for someone to blame.”

ICGN calls for change

The International Corporate Governance Network (ICGN) has called on the US Securities and Exchange Commission (SEC) to support it on two proposals for change – separating the record date from the dividend record date and making shareholders’ meeting agendas public ahead of record dates.

In a letter to SEC, ICGN states: “A considerable part of lending activity involves dividend arbitrages. When, as is the custom, the record date for the dividend is the same as the record date for voting purposes, those who wish to engage in (or lend stock for the benefit of those engaging in) dividend arbitrage, must choose whether the value to them of voting outweighs the profit to be made from the arbitrage.

 

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