Presentation given at the Challenge of change – New challenges, 25th conference of the Zagreb Stock Exchange, 11th Conference of the Fund Industry in Rovinj Croatia October 2017

1. The role of Institutional Investors
in Corporate Governance
David Doughty
CEO Excellencia
The Corporate Governance experts
Challenge of change – New challenges
25th conference of the Zagreb Stock Exchange
11th Conference of the Fund Industry
Rovinj, October 2017

2. Question
What is the role of your organisation?
a) Pension fund
b) Insurance company
c) Mutual fund
d) Other institutional asset owner
e) Bank
f) Other financial institution
g) Public sector
h) Other
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

3. Governance Model
Chief
Executive
Senior
Management Team
Staff
Shareholders
Board
Chair
Accountable
to
Delegates
Direction &
Control to
Sets Objectives
for
Reports progress
to
StrategicOperational
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

4. The Principle
The OECD Principles of Corporate Governance
embrace the underlying assumption that
shareholders can best look after their own
interests, provided they have sufficient rights
and access to information.
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

5. The Expectation
The increased presence of large institutional
investors in the
last decade fostered the expectation that a new
breed of highly skilled and well resourced
professional shareholders would make
informed use of their rights, promoting good
corporate governance in companies in which
they invest.
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

6. Question
In your jurisdiction Institutional Investors are
encouraged to exercise ownership rights by:
a) Statutory Regulation
b) Voluntary Codes
c) Other Instruments
d) Not known
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

7. The Problem
Institutional Investors
are not like other shareholders but have a unique
set of costs, benefits and objectives.
Accordingly, they have not always behaved as
desired.
• Engagement
• Incentives
• Motivation
• Executive Pay
• Ethical/Environmental/CSR
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

8. Notification of General Shareholder
meeting

10. Disclosure by Institutional Investors
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

11. Conflicts of Interest
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

12. Stewardship
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

14. Volkswagen

16. Sky Plc
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

17. The Solution
• Leave alone (do nothing)
• Codes – comply or explain
• Collaboration with regulators
• Legislation
• Tax Incentives
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry

18. Question
Which solution do you think will be most
effective in encouraging Institutional Investors
to promote good Corporate Governance?
a) Leave alone (do nothing)
b) Codes – comply or explain
c) Collaboration with regulators
d) Legislation
e) Tax incentives

19. Thank you
david.doughty@excellencia.co.uk
www.linkedin.com/in/daviddoughty
www.facebook.com/DavidWDoughty
@daviddoughty
Challenge of change – New challenges 25th conference of the Zagreb Stock Exchange
Rovinj, October 2017 11th Conference of the Fund Industry