Firstrand again scoops Deloitte good governance award

South Africa's high-profile listed companies were subjected to close scrutiny by analysts and the media during the past year and the winners of the 2007 Deloitte Good Governance Award, in association with Moneyweb, were announced today at a ceremony in Sandton.

The overall winner was FirstRand Limited for the second consecutive year and also scooped the category award for Remuneration Practices. The winner in the category Corporate Integrity and Ethics was African Oxygen Limited, while MTN Group Limited won the award for Risk Management Practices and Kagiso Media the award for Broad Based Black Economic Empowerment and Transformation.

In accepting the award, Paul Harris, CEO of FirstRand, said, "The credit for this award must go to all the people in our company.  We believe in decentralisation, in breaking the company into small pieces and entrenching an owner/manager culture.  That means that accountability is devolved downwards to all levels in the company.  Aside from our hard assets, good corporate governance is part of the social capital of our company.  What we have to do throughout the country is build social capital by doing the right thing."
 
The awards form part of Deloittes strategic objectives of promoting good corporate governance in South Africa.  Corporate governance is assuming ever-greater importance in the eyes of the investing public and fund managers. It is essential to ensure that business is accountable to its shareholders, and also plays its proper role in society to promote economic, social and environmental sustainability by demonstrating respect for all its stakeholders," says Grant Gelink, Chief Executive of Deloitte.

The five judges are respected asset managers from major asset management companies, namely Wayne McCurrie of Momentum, David Shapiro of Sasfin, Stephen Mildenhall of Allan Gray, Piet Viljoen of Regarding Capital Management and Malcolm Gray of Investec Asset Management.

They were asked to nominate listed companies in the four award categories and then, under the oversight and guidance of Deloitte and Moneyweb, based on their knowledge, experience and observations of the companies, select ten finalists in each category.  Each judge then compiled individual scorecards for each finalist based on a number of relevant criteria within each category.  The individual category and overall winners are those companies with the highest cumulative scores from the judges.

Commenting on the category Broad Based Black Economic Empowerment and Transformation won by Kagiso Media, Stephen Mildenhall said, "Significant progress has been made in the last couple of years in terms of broad-based empowerment transactions. As a result, there were some very strong finalists in this category.  As the name suggests, the category also focused on transformation rather than just equity transactions. In this respect there are some companies that, while not having significant empowerment equity ownership, are finalists as they continue to deliver on transforming their businesses from within."

David Shapiro, commenting on the category Corporate Integrity and Ethics won by African Oxygen, said, "When it comes to deciding upon a companys ethics or strategy, I always look at ethics. A good business plan is important for success but without entrenched values a corporate will not sustain its progress."   

Commenting on the category Remuneration Practices won by FirstRand, Malcolm Gray said, "Aligning shareholder interests with company management is key to achieving long-term value for both parties.  All the candidates in this category have a track record of striving to achieve this.  It is not an easy task, as they have had to have a focus on the long term, sometimes beyond many modern managers' time horizons of 3 5 years.  Many of these candidates have a management team and ethos with a much longer track record. In addition, management often has a direct stake and are not given too many options, while their packages are realistic and commensurate with the industry, the risks and the delivery."
 
When assessing the finalists in the Risk Management category won by MTN Group, Wayne McCurrie said, "Today, although most companies are paying more attention to risk management principles, many of them have yet to translate this increased awareness into effective actions to address the threats.  Risk management needs to be seen as a means of achieving a better run business and gaining competitive advantage rather than as something the management is obliged to do in order to comply with regulatory imperatives.  Risk management is now a critical issue for CEOs and boards as regulatory authorities and stock exchanges promulgate new disclosure and listing requirements calling for more explicit information on risks and the risk management practices of the company."

Roy Shough, Director Enterprise Risk Services at Deloitte, concluded, "We are very pleased with the standard of corporate governance set by this years finalists.  Through our awards, the participating companies and ourselves can continue to promote and increase the awareness of good corporate governance standards.  What is vitally important to me is that organisations practice good governance for the right reasons, to derive the benefits of good corporate governance, rather than doing it because regulation requires them to.  Good corporate governance should be embedded in organisations as simply the way we do business around here.  Practised properly, good governance should enable our corporates, our public administration and our public entities to enhance their business delivery and their accountability to shareholders and stakeholders."