Vol 7 Issue 7 April 22 2009

  • Date:22 Apr 2009
  • Type:Boardroom Report

Australia to hold up better than most – Stevens

Like many countries elsewhere, Australia is in recession, but its long‑term economic prospects remain good and it is likely to weather the storm better than most, Reserve Bank of Australia Governor Glenn Stevens told an AICD lunch in Adelaide yesterday.

“It is very rare for Australia to escape an international downturn and there is no precedent for avoiding one of this size,” he said. “We, like most countries, have trade and financial linkages to the rest of the world... Whether or not the next GDP statistic due in early June shows another decline, I think the reasonable person, looking at all the information available now, would come to the conclusion that the Australian economy, too, is in recession.”

D&O access an Australian first

In what appears to be an Australian first, a court has ordered a company to allow a shareholder to inspect its directors’ and officers’ (D&O) policies.

A shareholder of Style Ltd wanted to inspect the company’s records, under section 247A of the Corporations Act, in order to determine whether its directors had breached their duties to the company and if so, whether it was worthwhile suing them.

Peter Mann MAICD, a partner at Clayton Utz in Sydney, observes: “As is usual in this type of case, inspection of a wide range of documents was sought. However, there was one unusual group of documents that the shareholder wanted to see: the company’s D&O insurance policies.

Simple checks to recession proof your SME

Small to medium-sized enterprises (SMEs) are not doing enough to prepare for a predicted downturn in the economy and if they fail to prepare for the worst they could find themselves in trouble, warns David Kenney, chairman of Hall Chadwick Chartered Accountants and Business Advisors.

He believes SME directors should be measuring the performance of their companies and questioning whether they really do need all of the products, services and procedures that add to their expenses. ``It is more about attitude and changing the way you manage a business in good times and bad,” he says.

Tempering pay expectations

Boards should do more to recalibrate the remuneration packages – as well as CEO and senior management expectations of these – to ensure they are appropriate and properly linked to sustainable organisation performance.

So says Nicholas Barnett MAICD, chairman of Insync Surveys, which recently polled 625 Australian and New Zealand directors on their views on CEO remuneration. Around 20 per cent of the 79 boards involved were of ASX-listed companies.

Senior public servants should view ethical issues as “business as usual” and not as an “add on” to their activities, notes Dr Ruth Shean FAICD, Commissioner for Public Sector Standards (WA).

Ethics should be “business as usual”

Senior public servants should view ethical issues as “business as usual” and not as an “add on” to their activities, notes Dr Ruth Shean FAICD, Commissioner for Public Sector Standards (WA).

She says: “For over eight years, I headed two large government agencies –first the Disability Services Commission and then the Department for Community Development. While I was concerned about ethical dilemmas, by far the biggest challenge was the day-to-day operational machine which needed constant attention to keep running. All too often, the ethical concerns which came along were presented as being peripheral to core business. I always tried to incorporate ethics into every operational decision, but this can be difficult unless there is support for such an approach.”

 

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