Full Results: Emerging Markets | Developed Markets | By Country | By Sector
Euromoney surveyed targeted western European, North American, and emerging market companies in one of the following categories as of 2003:
the largest 500 companies as measured by market capitalization according to the MSCI Emerging Markets index
emerging market equity indices: Shanghai Composite (China); Hang Seng (Hong Kong); Seoul Composite (Korea); KLSE Composite (Malaysia); Philippine Stock Exchange; Straits Times Index (Singapore); Taiwan SE Weighted Index; SET (Thailand); PX50 (Czech Republic); HEX Tallinn (Estonia); BUX (Hungary); BSE 30 (India); RIGA Stock Exchange (Latvia); National Stock Exchange of Lithuania;Wig 20 (Poland); RTS-I Interfax Index (Russia); ISE (Turkey); Merval (Argentina); Bovespa (Brazil); IPSA (Chile); IGCB (Colombia); IPC (Mexico); IGBVL (Peru); IBC (Venezuela); BSE (India); CASE 30 (Egypt); JSE (South Africa);
western European and North American equity indices: CAC 40 (France); DAX (Germany); Borsa Italiana; AEX (Netherlands); PSI 20 (Portugal); IPEX 35 (Spain); FTSE 100 (UK); NYSE & Nasdaq (US)
Replies were received from the 187 companies listed above. The survey consisted of multiple-choice questions, providing for a variety of responses, yes/no, and short answer questions. Space was provided for respondents to insert comments. We did our best to produce a survey that took into account local laws and regulations that applied to the wide range of respondents.
All surveys received were reviewed for completeness and accuracy by checking company websites and annual reports. When necessary, companies were contacted again to confirm information, and to request documentation to support statements on questionnaires.
Scores were calculated by assigning specific weights to each response, then compiling the numbers to produce a final score calculated to three decimal places. A breakdown of the survey components and scoring system are provided in detail below.
We would like to thank all the companies that took the time to complete our survey.
Scoring scheme Section 1 (15%): Ownership transparency and rights
How much of the total issued equity is held by the single largest shareholder or voting bloc? (Less than 10% – 3 points, 10% to 25% – 2 points, 25% to 50% – 1 point, more than 50% – 0 points).
How much of the total issued equity is held by the five largest shareholders or voting blocs? (Less than 10% – 3 points, 10% to 25% – 2 points, 25% to 50% – 1 point, more than 50% – 0 points)
What is your notification period, in days, for purchases, disposals or changes of 1% or more of its share capital? (Less than 2 days or country regulation – 1 point, 0 to 2 days – 2 points).
In the last financial year, did your company provide specific information in reports to shareholders on any of the following: special voting rights; significant cross-shareholding relationships and cross-guarantees; beneficial ownership of controlling or large blocks of shares? (yes – 2 points, no – 1 point, not applicable – 3 points).
Does your company charter contain a provision granting pre-emptive rights of purchase to shareholders? (yes – 5 points, no – 0 points)
Do all shares issued carry one vote each? (yes – 5 points, no – 0 points).
As a percentage of the total, how many votes do special voting rights represent? (Less than 5% – 3 points).
Section 2 (25%): Financial transparency
Within how many months of the end of the group’s latest financial year (2002 or 2002/3) were audited consolidated financial statements made available to shareholders? (Less than 2 months – 3 points, 2 to 4 months – 2 points, 4 to 6 months – 1 point, longer than 6 months – 0 points).
Within how many weeks of the end of the most recent six-month financial period were interim accounts published? (Less than 1 month – 3 points, 1 to 2 months – 2 points, 2 to 3 months – 1 point, longer than 3 months – 0 points)
Please indicate any of the following in operation at your
company: an audit committee (1 point); nominating committee (1 point); remuneration committee (1 point); register of directors’ material interests (1 point).
Expressed as a percentage of the total members of the audit committee, how many members are: qualified accountants; non-executive directors of the company? (25% or more – 7 points, 10 to 24.99% – 5 points, 0 to 9.9% – 3 points).
For which of the following does your most recent annual consolidated financial statement provide breakdown figures? (turnover – 2 points, operating profit – 2 points, net income – 2 points, total assets – 2 points, earnings per share – 2 points, total shareholder returns – 3 points).
Section 3 (20%): Board structure and process
Expressed as a percentage of each committee’s total membership, how many non-executive directors of your company sit, if applicable, on the following: remuneration committee; nominating committee, executive board? (25% or more – 6 points, 10 to 24.99% – 5 points, 0 to 9.9% – 4 points).
Please indicate which of the following your company discloses to shareholders? (Executive remuneration policy – 2 points, individual directors’ remuneration – 2 points, total directors’ remuneration – 2 points).
Please indicate which of the following must be approved by shareholders at an AGM? (Executive remuneration policy – 2 points, individual directors’ remuneration – 2 points, directors’ stock option schemes – 2 points, total directors’ remuneration – 2 points).
When appointments or nominations to the board of directors are made, which of the following do you disclose about that individual? (professional backgrounds – 1 point, overall qualification for the job – 1 point, other board memberships – 1 point, length of director’s contracts – 1 point, other factors affecting director’s contracts – 1 point).
How often, in years, are directors of your company required to stand for re-election? (1 year – 3 points, 2 years – 2 points, 3 years – 1 point)
Section 4 (15%): Stakeholder relations
How many days before an AGM are shareholders sent a convening notice? (Less than 30 days – 6 points, 21 to 30 days – 4 points, Less than 21 days – 2 points).
In what languages are convening notices provided? (3 points for 3 or more languages, 2 points for 2 languages).
Is proxy voting and voting by post allowed for all non-executive shareholders? (Yes – 4 points, no – 0 points)
Can binding resolutions at AGMs be passed by a show of hands? (Yes – 0 points, no – 4 points).
Can voting be carried out by secure telecommunication or other electronic channels? (Yes – 4 points, no – 0 points)
What are these secure channels? (Company’s electronic voting platform – 2 points, telephone system – 2 points, other electronic voting platforms – 2 points).
Section 5 (25%): Managerial interests
In the past three financial years how much free cashflow has been returned to shareholders? (Top decile – 10 points, next decile – 7.5 points, other non-zero responses – 5 points)
What is the average length of directors’ contracts? (one year – 5 points, 1 to 2 years – 3 points, more than 3 years but not open-ended – 2 points, contracts are open-ended – 0 points)
Expressed as a percentage, how much of overall CEO remuneration is contractually related, in total, to share price, cashflow, economic value added, EPS, or total shareholder return? (20 or more % – 9 points, 10 to 19.99% – 5 points, 0 to 9.9% – 4 points).
What percentage of the total issued share capital is owned by current board members? (Top decile – 10 points, next decile – 7.5 points, other non-zero responses – 5 points)
Has your company explicitly committed itself to good corporate governance? (yes – 5 points, no – 0 points).
Does your company have a formal code of conduct, available to shareholders, enforcing directors’ fiduciary duties? (Yes – 4, no – 0)
A 5% bonus was added to each sub-section for companies that responded quickest to the survey.
