How companies comply with good corporate governance practices has quickly become one of the key issues in the decision-making process of investors. IR Global Rankings evaluates corporate governance according to a company’s ability in creating, maintaining and managing value, while balancing shareholder interests.
The ranking is executed through the following technical criteria:
Board & Committees
One of the primary purposes of corporate governance is to align the interests of shareholders and managers. To achieve this, the regulation of the Board of Directors and of the Board of Executive Officers should be carefully established. Company policies on executive officer and board of directors´ responsibilities, commitment and succession plan.
A current focus of attention is executive compensation, particularly stock options and performance evaluation. This information and details on how the company avoids conflicts of interest regarding short and long-term performance are important. The procedures for the appointment of managers and their terms, as well as their professional backgrounds, are also evaluated.
The concentration/distribution and total free float of shares should be analyzed in terms of liquidity and concentration of voting and share pricing powers.
In certain markets, it is not uncommon for controlling shareholders to have decision-making powers that may be prejudicial to minority shareholders. IR Global Rankings evaluates companies’ efforts to protect minority shareholders.
IR Global Rankings evaluates procedures for facilitating the exercise of shareholders’ rights, related to such issues as extraordinary meeting call notices, proxy voting, quorum and minimum voting requirements.
IR Global Rankings also analyzes other items such as the existence of an adequate dividend policy, services provided by independent auditors and how related-party transactions are approved.
Corporate and Social Responsibility
This new part of the Corporate Governance evaluation specifically addresses the Corporate & Social Responsibility which is becoming an very important topic discussed among IRs. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.
IR Global Rankings evaluates procedures of the companys actions and its impacts through activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.