What are some best governance practices of award-winning companies?

 

I recently served on a governance awards judging panel ^[2] assembled by the Canadian Society of Corporate Secretaries (CSCS). Winners of the awards ^[3] were announced at this organization’s annual conference in Halifax last month. I participated in a plenary discussion to discuss some of the winning practices, and governance generally.

Here are the six award-winning companies, the categories ^[4] under which they won, and their governance practices and results that they have that are, in my view, exemplary, in no particular order:

Shoppers Drug Mart ^[5] – Best practices in managing boardroom diversity

• Five out of eleven Directors are female, with two of three women Committee Chairs;
• Continuous review of a robust director competency matrix, including focusing on board dynamics and decision-making;
• Detailed director recruiting using precise director profile output resulting from the competency matrix assessment;
• Board does not require CEO experience, and Board recruits and appoints first-time Directors;
• Prospective Directors includes individuals not previously known to incumbent Directors;
• Rigorous director interviews, including assessing capacity for constructive challenge, and comprehensive, tailored onboarding process; and
• Limits on board tenure, over-boarding and interlocks.

Bank of Montreal ^[6] – Best use of technology in governance, risk and compliance

• Board portal with encrypted materials on a secure intranet site, secure email, user friendly interface, paperless iPad, and separate Director education iPad App;
• Global entity records and management systems, with searchability, real time accuracy and updates, customization, validation, aggregation, and comprehensive, enterprise-wide compliance monitoring and reporting;
• Investor relations alerts, conference calls and audio webcasts;
• Ethics, legal and compliance: interactive, tailored, training annually for select employees, and suppliers, with user guide and follow-up;
• Specialized regulatory training for senior management, all other employees, to educate, train, strengthen risk culture, using internal website, mandatory readings and eLearning;
• Online governance and director assessment by the Board;

BCE ^[7] – Best overall governance

• Individual annual director elections, majority voting, independent Chair, advisory vote on executive compensation, and director interlock and tenure guidelines;
• Internal audit and Risk Manager Officer report directly to Audit Committee Chair;
• Electronic voting at annual shareholder meetings;
• Comprehensive ethics program, focus on audit independence, and whistle-blowing policy;
• Full written governance mandates, board leader position descriptions, education, orientation, and comprehensive board evaluation process and governance disclosure;
• Focus on director competencies, geography and performance;

Tarion Warranty Corporation ^[8] – Best approach to board and committee support

• Annual work plan, consent agendas, skills matrix, terms of reference, position descriptions, and board portal;
• Third party governance review, including peer to peer review of Directors;
• Term limits for Board Chair and Directors, and guideline limits for Committee Chairs;
• Six Directors with board certification;
• Balanced score card and key performance indicators (KPIs) for company and CEO performance;
• KPIs presented to Board at each meeting in dashboard format, and reviewed in depth by Audit Committee;
• Stakeholder relations department to enhance focus on stakeholder satisfaction, engagement and communication;

Canada Council for the Arts ^[9] – Best shareholder / stakeholder engagement

• Highly consultative culture and stakeholder engagement, exemplary annual reporting, rotating meetings geographically;
• Strategic engagement (financial and non-financial), outreach, dialogue, surveys, consultation sessions and workgroups, with comprehensive, exemplary written shareholder and other stakeholder reporting, follow-up, and use of social media;
• Direct Board contact with artists, arts community, partners, leaders and other stakeholders;
• Directors as ambassadors at stakeholder outreach events, nationally and internationally;

TELUS Corporation ^[10] – Best sustainability, ethics and environmental governance program

• Board and Committee leadership to monitor corporate social responsibility (CSR), including environmental policies, enterprise energy strategy, ethics policy, whistleblower policy;
• Employee, environment and community engagement, culture and performance (numerous examples and leadership);
• Governance Reporting Initiative reporting on CSR performance since 2000, third party reporting verification, stakeholder solicitation, and CSR reporting recognition;
• Environment management system since mid-1990s, carbon footprint reporting early adopter, and alignment goal of ISO 14001:2004 compliant by 2014;
• CSR metrics integrated into strategic planning, and CEO and other executive performance objectives; and
• Supplier code of conduct in 2011 for business partner adherence.

It was an honor to serve on this judging panel and the above Canadian companies should be celebrated – as well as their Directors – for setting the ever-rising bar for effective corporate governance.