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Oxford 4 March 2005

Leiden Oxford Programme Restructuring Corporate Governance: The New European Agenda. Which Model Works Better? Contrasting Anglo-American and European Models. Guy R Jubb Investment Director, Head of Corporate Governance Standard Life Investments. Oxford 4 March 2005.

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Oxford 4 March 2005

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  1. Leiden Oxford Programme Restructuring Corporate Governance: The New European Agenda Which Model Works Better? Contrasting Anglo-American and European Models Guy R Jubb Investment Director, Head of Corporate Governance Standard Life Investments Oxford 4 March 2005

  2. The case of the fatal flaw • The myths of models • does the Anglo-American model exist? • does the European model exist? • Institutional investors: pivotal players • the gate-keepers of the governance chain • different strokes for different investors • Engagement: the key to the codes • contrasting engagement styles Anglo/American/European • role of representative bodies “There is no such thing as the Anglo-American model”

  3. The myths of models • Models are a myriad of complex chains • basic governance chain • complex governance chain • different chains in different jurisdictions • different chains in the same jurisdiction • Chains have same beginning and same end • you and me: are we the weakest link? • shareholder associations • Governance DNA • each company has a unique governance DNA • DNA determines culture and style • DNA chain only as strong as weakest link “We are all part of the DNA”

  4. Institutional investors: pivotal players • Policy engagement and corporate engagement • lobbying on policy: government, media • proactive corporate engagement • reactive corporate engagement • Touch and twist the chain • US: litigious, confrontational eg Walt Disney • UK: influential pressure points eg remuneration • Europe: friends of the family eg Telecom Italia • Going global brings challenges • influence diluted • co-ordination difficult • cost and scale • playing away from home • US v Europe v UK “Institutional investors can control the chain”

  5. Engagement: the key to the codes (1) • Comply and explain • UK – generally accepted • Europe – gaining momentum • US – law and regulation • Good communication aligns chains • UK: governance communication channels now established • US: regulation FD is a big barrier • Europe: breaking the ice “Policy makers should pay much more attention to the communicative aspects of corporate governance”

  6. Engagement: the key to the codes (2) • Representative bodies: strength or weakness? • US: CII, NACD, Conference Board • UK: ABI, NAPF, Corporate Governance Forum • Europe: Brussels focus, Private investor bodies • It takes two to tango • attitudes need to be in tune • matchmakers wanted • the tone from the top “Policy makers should pay much more attention to the communicative aspects of corporate governance”

  7. Oxford, we had a problem • Governance chains are the reality • governance models are a myth • Investors not companies should control the chains • spotlight moving down the chain • Policy-makers must be communication catalysts • policymakers can be pacemakers “Oxford, we have a solution”

  8. Remember - past performance is no guarantee of future performance. Past performance is not necessarily a guide to future performance. The value of investments and any income from them may go down as well as up and cannot be guaranteed. Standard Life Investments Limited, tel. 0131 225 2345, is a company registered in Scotland (no. SC 123321) Registered Office 1 George Street Edinburgh EH2 2LL. The Standard Life Investments Group includes Standard Life Investments (Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate Funds) Limited and Standard Life Investments (Private Equity) Limited. Standard Life Investments Limited acts as Investment Manager for The Standard Life Assurance Company and Standard Life Pension Funds Limited. Standard Life Investments may record and monitor telephone calls to help improve customer service. All companies are authorised and regulated by the Financial Services Authority. 2005 Standard Life Investments

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