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AMAG Services Presentation: Corporate Governance Assessment

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Corporate Governance assessment is our flagship product that we recommend to all issuers when they start considering amending their existing Corporate Governance practices. Full assessment covers all ...

Corporate Governance assessment is our flagship product that we recommend to all issuers when they start considering amending their existing Corporate Governance practices. Full assessment covers all areas of Corporate Governance and gives the company an excellent overview of the current state/quality of the systems in place. AMAG uses its own methodology and works closely with the issuer throughout the process. The assessment becomes the point of reference for improvement and further development of the Corporate Governance framework within the company.

We can also perform a tailor-made in-depth analysis (“deep dive”) of selected key areas within the Corporate Governance framework, e.g. board of directors, remuneration, etc. The assessment approach is the same and the final report will contain company-specific solutions and recommendations for improvement in the assessed area.

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AMAG Services Presentation: Corporate Governance Assessment AMAG Services Presentation: Corporate Governance Assessment Presentation Transcript

  • Corporate Governance Assessment Product Presentation Aneta McCoy Advisory Group Copyright©2013 AMAG Ltd., All Rights Reserved
  • CG Assessment: Outline and Timing 1st month 2nd month 3rd month 1. Project Initiation • Intelligence gathering (analyst reports; reports by proxy advisory firms; perception studies) • Meeting with Company to discuss project outline, expectations, and deliverables 2. Assessment • Context Assessment - Business environment - Company history - Shareholder base - Share price performance • CG Assessment - Peer group selection - Data collection - Provision of missing information and clarification of uncertainties - Initial identification of potential concerns - Meetings with Company management and Board to discuss identified concerns and gain more insight into Company’s CG practices 3. Deliverables • • • • • • Preparation of preliminary assessment report Presentation of preliminary report to Client Finalization of assessment report Preparation of presentation for Client’s Board Presentation of assessment results to Board Development of CG improvement plan AMAG and Company Management/Board Aneta McCoy Advisory Group 2 AMAG Copyright©2013 AMAG Ltd., All Rights Reserved
  • Why Benchmark? Competitive Advantage • Deeper understanding of Company’s positioning within the industry and among best practice peers (relative positioning) • Access to competitive intelligence on peers • Monitoring of competitors’ practices and solutions • Peers’ positioning versus one another • Evaluation of impact of governance changes introduced by peers Direction for Changes • • • • • • Identify peers with excellent and recognized CG practices and solutions Ascertain and assess gaps between Company’s CG practices and best-governed peers Identify CG solutions and assess their applicability Assess success rate of CG solutions applied by best-governed peers Determine direction of CG improvement Learn from and utilize peers’ governance experiences Looking Forward • • • • • • Remove “paradigm blindness” Set CG improvement goals based on broad external perspective Discover emerging governance trends Understand implications of CG solutions and don’t repeat peers’ mistakes Know your potential for improvement Understand the benefits of good governance Aneta McCoy Advisory Group 3 Copyright©2013 AMAG Ltd., All Rights Reserved
  • Approach to Peer Group Formation Market Capitalization Industry List of Peers • Float-adjusted market capitalization within the range of ±60 percent • Stock must have a three-month average daily value trade above USD 5 million Global Industry Peers • • • • Corporate Governance Track Record • At least three years since IPO • No “FT risks” in the past few years Same and Adjacent Industries • • • • • Russian Market Oil & Gas Commodities Non-Commodities Finance Others Best Practice Best Practice • FTSE 100 and/or S&P 500 companies with focus on CG • High reputation among institutional investors • History of good governance • A total of 3-5 companies Publicly Listed Companies • Peer companies must be listed on at least one stock exchange Aneta McCoy Advisory Group Russian Peers • Companies from same and adjacent industries • Companies with similar financial results • A total of 2-6 companies Diverse Geographies • Developed • Emerging Client’s main global competitors Key players from adjacent industries Diverse geographies A total of 5-8 companies 4 Copyright©2013 AMAG Ltd., All Rights Reserved
  • Collection of Data and Other Information Collection of Information from Open Sources • • • • • • • • • • • • • • Web sites Statutory documents CG policies Internal codes Minutes of board meetings Minutes of shareholder meetings Annual reports Financial statements Proxy statements Shareholder meeting materials Stock exchange filings Corporate presentations Conference calls Sustainability reports 2 weeks Aneta McCoy Advisory Group Filling in Gaps • Identification of missing or incomplete information • Identification of additional documents to be provided by the Issuer • Request to the Issuer for additional disclosure • Request to the Issuer for clarification of any problematic areas and ambiguous disclosure • Meetings and discussions with the Issuer, if necessary • Filling in the gaps with additional disclosure provided by the Issuer 2 weeks 5 Data Verification • All collected data is verified for its: - Accuracy - Consistency - Completeness - Relevance - Usability - Clarity - Timeliness • Any inconsistencies are identified, verified, and eliminated • Data is prepared for analysis 1 week Copyright©2013 AMAG Ltd., All Rights Reserved
  • CG Assessment Methodology: Key Principles • Our judgment is based on best practices… • … but we act within the specific context of each client • A look beyond regulatory guidelines • Ability to substantiate our recommendations Best Practices • While we view non-compliance negatively, we also do not reward companies for compliance • Non-compliant companies get negative scores, while compliant companies do not get “plus” scores • Compliance shall not become the focus of the CG system and related efforts at any company Focal Points Compliance Disclosure Issuer Involvement Wholeness • CG system is more than a sum of all parts; it is an evolving mechanism • We assess each and every component of a company’s CG system in its relation to other elements • We identify the impact of the “broken” elements on the functioning and perception of the entire system Aneta McCoy Advisory Group • Identify crucial components of the CG system: shareholder rights, independence, and audit opinions • Set boundaries and allocate in-between weights • Evaluate all CG components within this scope 6 • More disclosure is always better! • Non-disclosure is worse than noncompliance, as it prevents investors from understanding the underlying issue and substantially damages the perception of CG practices • We seek presumption of substance over form • We promote timely and efficient disclosure • We request and expect direct access to the board, management, corporate secretary, etc. • Meaningful contributions from company insiders are invaluable to ensure a thorough evaluation Copyright©2013 AMAG Ltd., All Rights Reserved
  • CG Assessment: Areas of Interest Leadership SHAREHOLDER RIGHTS • Influence of key shareholders • Equitable treatment of all shareholders • Control-enhancing mechanisms • • • • • • BOARD Structure/Independence Responsibilities Processes Effectiveness Self-governance Conflicts of interest MANAGEMENT • Responsibilities • Role and position of CEO • Relationship with other bodies within organization REMUNERATION • Adherence to best practices • Disclosure • Alignment with shareholder interests Communication Communications Control Control • • • • • • • • • • • • • AUDIT Internal audit functions Role of Audit Committee Independent audit Positioning and effectiveness Responsibility Intra-company relationships Compensation of external auditors CORPORATE VALUES & ETHICS • Communication of corporate culture and values • Corporate code of ethics • Monitoring • • • • • RISK MANAGEMENT Procedures and effectiveness Conflicts of interest Related-party transactions Management and supervision of risks Board’s role in risk management Disclosure of risk and management factors COMPLIANCE • Integrity and transparency of accounting and financial reports • Financial controversies • Enforcement actions Aneta McCoy Advisory Group 7 COMMUNICATION Communication policy and strategy Scope and objectives Effectiveness Communicators Channels and feedback systems • • • • • • • • DISCLOSURE Quality/Content Transparency Clarity Timeliness and frequency Access and channels Diversity of information Disclosure policies PR/Marketing value Copyright©2013 AMAG Ltd., All Rights Reserved
  • Our Deliverables: CG Assessment - Detailed Report 150-page report shows all strengths and weaknesses of a Company’s CG framework and demonstrates how the Company compares to its peers Aneta McCoy Advisory Group 8 Copyright©2013 AMAG Ltd., All Rights Reserved
  • Our Deliverables: Board Presentation on Results of CG Assessment Presentation for the Board outlines main conclusions of CG assessment: • • • Aneta McCoy Advisory Group 9 List and explanation of top-10 concerns Possible implications for the Company Outline of best practices Copyright©2013 AMAG Ltd., All Rights Reserved
  • Our Deliverables: Action Plan for CG Improvement Outline of necessary steps and actions, timing, goals, responsible parties, expected results, composition of the working group, etc. Aneta McCoy Advisory Group 10 Copyright©2013 AMAG Ltd., All Rights Reserved
  • AMAG Can Assist with Improvement of CG and Communication with Investors Improvement Assessment • • • • • Identify right peer group Select criteria Collect information Analyze gaps Identify interdependencies and priorities • Consider preliminary solutions • Prepare final report – reference for changes • • • • Monitoring Define scope, goals, and responsibilities Propose, discuss, and agree on solutions Allocate resources Implement solutions 6-8 quarters • Control procedures • Ongoing training • Proper motivation Communication • • • • Develop communication strategy Ensure materials and support Align execution with PR/IR activities Collect feedback from investors 8-10 quarters 2-3 months Ongoing Improvement and communication should be aligned to intensify their effectiveness and efficiency Aneta McCoy Advisory Group 11 Copyright©2013 AMAG Ltd., All Rights Reserved
  • Disclaimer This presentation has been prepared for information purposes only in connection with a possible offering of AMAG’s services. This presentation must not be reproduced, distributed or published (in whole or in part) for any purpose. No representation or warranty is given with respect to reliability, accuracy, validity or completeness of information contained in this presentation, and no entity or person may rely on the contents of this presentation. Information contained in this presentation may be updated, supplemented, corrected or modified or significantly altered. Neither AMAG nor any of its shareholders, affiliated parties or representatives is obligated to update the information contained in this presentation. This presentation contains a number of forward-looking statements. Such forward-looking statements include statements regarding plans, tasks, goals, strategies, future events or results, and any other statements in relation to any of the facts that have occurred or may occur in the future. Forward-looking statements contained in this presentation are based on various assumptions. These assumptions are characterized by a high level of uncertainty and conventionality that are hard or impossible to predict and that are beyond reasonable control. This presentation is not intended for distribution or use by any person or organization which is a national of or is located in a place, state, country or another jurisdiction where such distribution, publication, accessibility or use would constitute a breach of statutory regulations or would require registration or licensing in respective jurisdiction. Neither AMAG nor any of its shareholders, affiliated parties, consultants or representatives bears responsibility (including responsibility arising from negligence or otherwise) for a loss of any kind incurred as a result of the use of this presentation or information contained therein or otherwise in connection with this presentation. Aneta McCoy Advisory Group 12 Copyright©2013 AMAG Ltd., All Rights Reserved