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Archive for September, 2014

A report on boards compensation in Spain, 2013.

September 27, 2014 Leave a comment

The Spanish CNMV, (the equivalent of USA Sec) has recently released the report on Boards remuneration in the biggest Spanish public firms, (those belonging to the index Ibex-35).

Here you will find its main conclusions:

  • The average compensation per board and director has been slightly reduced in 2013,
  • Fixed compensation amounts to 55% of the total, whereas variable pay is made up of shares granted and stock options exercised, (34%), and assistance payments,
  • Bigger capitalization companies pay more for the same kind of responsibility in the job, (Ceos, other executives, independents), but there is not a clear connection between financial results and pay levels.
  • As for fixed pay, there is an uniform pay design.
  • Short-term (annual) variable pay shows a certain convergence in metrics, (usually two that reflect volume and profitability) and a third of firms also use a qualitative metric. Only in a few cases, (mainly banks), risk management has been included into the metrics pool.
  • Long term incentive plans are not generally adopted, and when they are, retirement plans are prefered.
  • Although all firms`s compensation plans have been approved for more than 70%, some companies have introduced changes pursuing a more long-term approach and conflict of interest avoidance.
  • Compensation Committees are generally receiving external advise.

The report can be found here,

http://www.cnmv.es/DocPortal/Publicaciones/Informes/RemuneracionesIBEX2013.pdf

Corporate Governance and Social Welfare

September 21, 2014 Leave a comment

In the last decades, Corporate Governance (CG) has invaded the academic and regulatory worlds, as it has been considered a (at least partially) solution for many social problems, such as gender inequity, inequality, systemic risk, etc.

Mariana Pargendler, a visiting professor at Standford, published an article in september 2014 where she investigates the origin and consequences of this dominance. (1) Read more…

General Motors, risk management and lessons from the unfortunate ignition swith event.

September 16, 2014 Leave a comment

I would like to bring forward the case of firms that, when managing risks, deal with the most valuable human asset, life. The case of the automobile industry, the airlines and so many other sectors.

When we analyse the dramatic events these companies are forced to face, we may simply think of these tragedies as accidents; but they generally offer a number of lessons that help other managers, boards and companies to avoid any other future similar circumstances. This is the case of General Motors and the defects in some of their vehicles that have apparently caused several life losses in a long period of time without the company noticing it at the top nor doing anything effective to stop the casualties. In particular, risk oversight and management systems in the company have been put into question. Read more…