Sanchia Temkin
2 July 2009
Johannesburg — SOUTH African boards are ranked highly for their corporate governance practices compared with their European counterparts.
The recent Heidrick & Struggles corporate governance report, on board performance in 15 countries, found SA's boards had a high number of active committees, a respectable level of corporate governance, better gender diversity and were relatively larger than their counterparts in Europe and the Middle East.
The 10th anniversary report by the global executive search and leadership services firm is based on information gleaned mainly from annual reports, internet resources and data provided by company investor relations offices.
The South African sample was drawn from the top 40 companies on the JSE (at end-July last year). Companies in the report were rated individually on 41 weighted criteria, such as inertia factors (length of tenure, time on board and turnover), board independence and diversity on a scale of 100 points.
The report disclosed that SA was well advanced in its corporate governance practices and just above the European average with a score of 59.
In SA, while the performance evaluation of boards had risen, only 68% of the boards had performed an evaluation in the past two years.
Victor Prozesky, of Heidrick & Struggles, said: "Regular, at the very least annual, formalised evaluations of the board and its performance go a long way to benchmarking the board against international best practice, assuring stakeholders that the company is in good hands, and constantly on the lookout for room in improvement."
The report disclosed that transparency on SA's boards was relatively high. This was partly due to more shareholder activism and the recommendations contained in the King report on corporate governance and the JSE listing requirements.
"This is a good sign for South African business as a board's preparedness to submit to public scrutiny is a healthy indicator of their corresponding readiness to adapt themselves and their behaviour to ensure flexibility in turbulent times," Prozesky said.
In terms of gender diversity, 14,2% of board members in SA were women, compared with 10% in Europe, but one in 10 South African boards still had no women members.
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