Regional Score Card Initiative
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Regional Score Card Initiative. Private Sector Initiatives and CG in East Asia 13 September 2006. Background. Thai IOD started a CG base - lining evaluation in 2001 . McKinsey & Company assisted in developing the evaluation criteria .

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Regional score card initiative

Regional Score Card Initiative

Private Sector Initiatives and CG in East Asia

13 September 2006


Regional score card initiative

Background

  • Thai IOD started a CG base-lining evaluation in 2001.

  • McKinsey & Company assisted in developing the

    evaluation criteria.

  • The World Bank provided funding for data gathering

    and report compilation.

  • The evaluation criteria and scoring template was

    adopted by the Philippines, Hong Kong, China and

    Indonesia.


Regional score card initiative

Evaluation Criteria

Based on Five OECD Principles

Criteria

Weight (%)

2006

2005

2001

  • Rights of Shareholders 7 23 23 20

  • Equitable Treatment 1013 13 15

  • of Shareholders

  • C. Role of Stakeholders in Corporate 4 8 9 15

  • Governance

  • D.Disclosure and Transparency 17 32 32 25

  • Board Responsibilities 1642 45 25

  • Total 54118122100

  • Companies Scored 133371402


Regional score card initiative

Evaluation Method

  • Based onpublicly available information

  • (Annual Report, report to regulators, Notice and

  • Minutes, Website)

  • Minimize subjectivity in scoring:

  • - Scoring template, scoring methodology.

  • - Commission Sasin Business School.

  • Not dependent on companies’ willingness to participate.

  • Not as detailed as conducted by a rating agency.


2005 results thailand

2005 Results - THAILAND

2005

CG Score by Category

Average

100

Best CG

97

97

97

92

92

100

83

80

75

69

69

66

60

53

51

48

40

45

37

20

23

0

0

E. Board

Responsibilities

B. Equitable Treatment of Shareholders

D. Disclosure and

Transparency

C. Role of Stakeholders

A. Rights of

Shareholders

Overall

Worst CG


2005 vs 2003 thailand

2005 VS 2003 - THAILAND

2003

2005

CG Score by Category

Average

Best CG

+ 6

+9

- 6

+ 26

+18

+ 8

100

83

80

75

72

69

69

69

66

65

60

60

53

45

43

40

20

0

E. Board

Responsibilities

C. Role of Stakeholders

D. Disclosure and

Transparency

B. Equitable Treatment

of Shareholders

A. Rights of

Shareholders

Overall

Worst CG


2005 score by quartile

2005 Score by Quartile

Overall CG Score

Best CG

100

92

90

80

80

75

75

71

68

70

68

66

63

60

63

58

50

40

Worst CG

45

Quartile

0

Q 2

Q 1

Q 4

Q 3


Regional score card initiative

2005 TOP QuartileCompanies–By Sector


Regional score card initiative

2005 Results Thailand


Board responsibilities

Board Responsibilities

Percentage of analyzed Thai companies with best possible evaluation

100%

E.18.1

- Appoint Audit Committee.

96%

E.12

- Provide risk management policy.

92%

E.22

- The company has Non – Executive Directors > 50%.

Strong

88%

E.17

- Chairman is not also a CEO.

84%

E.6

  • The internal audit function has a

  • reporting line to the Audit Committee.

E.14

8%

- The board conduct annual self assessment.

E.23

8%

- The company has Independent Director > 50%.

Weak

  • The company conducts annual performance

  • assessment of CEO.

5%

E.15

  • The company provides an option scheme with

  • period over 3 years and price above market.

4%

E.26

2%

E.8

- The company provides orientation to new directors


Regional score card initiative

2005 - Thailand

Average Tobin’s Q Values By Corporate Governance Quartiles

Top Quartile

2nd Quartile

3rd Quartile

Bottom Quartile

Corporate Governance Quartiles


Regional score card initiative

Companies Scored


Regional score card initiative

Countries Scored


Regional score card initiative

Regional Scorecard

  • Observation :

  • Generated awareness and better understanding

  • of CG practices.

  • Stimulated companies to enhance their CG.

  • Endorsement from countries regulators critical

  • to success.

  • Provided a common metrics to measure CG progress and synergy in the region.


Regional score card initiative

Regional Scorecard

  • What next?

  • Expand companies and countries.

  • Develop core criteria for a “Regional Score Card”

  • Raise funds for expansion

  • Regional Conference and recognition

  • Consolidated reporting

  • Regional CG Awards


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