Requirement:
The assessment focuses on firms’ compliance with government regulations and practices which are a controversial topic in today’s business.
Corporate governance compliance assessment
As junior risk and compliance analyst, you have been asked to complete a review of VODAFONE PLC complies to the UK code of corporate governance (2018)?
Find VODAFONE PLC most recent corporate governance report (usually part of the annual report and accounts, but sometimes published separately). Critically review the compliance of the chosen company based on the following criteria:
1. Discuss the firm relations with its shareholders: Assess the extent of the company communications with shareholders in terms of culture, company’s purpose, values and strategy? Justify if the compliance to code requirements is evidenced? Also, critically appraise in the implication section the role of the business purpose on the firm financial performance? Reflecting on the case of VODAFONE do you think that this is achieved? (15 Marks)
The answers should be structured as follows:
Company purpose and communication with shareholders Approach
Did the Company comply with the code? Explain/Provide Evidence from the codes as well as the VODAFONE annual report Implications
Communications with shareholders (Culture, purpose and strategy)
2. a. Evaluate the VODAFONE’s approach to ensuring effective leadership as suggested by the UK Code of Corporate Governance? Does the company separate the role of the CEO and chairman? In the implication, section discuss the importance of the separation of these two roles and assess the case of VODAFONE? (10 Marks)
The answers should be structured as follows:
Board characteristics Approach
Did the Company comply with the code? Explain/Provide Evidence from the codes as well as the VODAFONE annual report Implications
Separated roles of CEO/Chairman
b. Discuss the extent of the VODAFONE compliance with the requirements for board independence? In the implication section, critically appraise the importance of independence on the board performance? i.e. How do you think Independence affects board performance in particular and firm performance in general? Reflect on the case of VODAFONE? (10 Marks)
The answers should be structured as follows:
Board characteristics Approach
Did the Company comply with the code? Explain/Provide Evidence from the codes as well as the VODAFONE annual report Implications
Independence
(Number of Independent board members to executives)
3. Assess VODAFONE adherence to the COMPOSITION, SUCCESSION AND EVALUATION principles, by critically assessing the extent of VODAFONE compliance to board evaluation. In the implications, section apprise the importance of board evaluation on improving board effectiveness in particular and firm performance in general. Review VODAFONE’s case based on your analysis? (15 marks)
Accountability components Approach
Did the Company comply with the code? Explain/Provide Evidence from the codes as well as the VODAFONE annual report Implications
Board evaluation
(when was the last time the firm took an external perspective to this)
4. Investigate VODAFONE approach to AUDIT, RISK AND INTERNAL CONTROL by examining its compliance to external auditor rotation? In the implication section, discuss the importance of external auditors’ rotation/ independence on firm exposure to risks. Reflect on the case of VODAFONE based on the literature findings? (15 marks)
The answers should be structured as follows:
Accountability components Approach
Did the Company comply with the code? Explain/Provide Evidence from the codes as well as the VODAFONE annual report Implications
External Auditors
(who are the auditor of the firm, what is the time scale of their contract)
5. Review the extent of the company in reporting remuneration, for that critically evaluate if there are enough details? What is the structure of the compensation committees?. And examine the importance and the implications of these characteristics on the going concern of the firm. (15 Marks)
The answers should be structured as follows:
Remuneration characteristics Approach
Did the Company comply with the code? Explain/Provide Evidence Implications
Structure of Remuneration (Components of Pay/ Clawback/ Long-term targets)
Structure of compensation committee (nb of independent board members)
6. Assess the firm complies with all code all UK code’s principles, and critically evaluate, if the company, is missing any of the code requirements and whether it is explaining the reason behind that? (10 marks)
7. Professional / academic quality (10 marks)
Synthesise information by bringing together various aspects of corporate governance and present interpretations clearly and logically. All analysis must be supported with evidence from the literature review.
Board practices:
Spencer Stuart (2017). UK Board Index. available from: https://www.spencerstuart.com/-/media/pdf%20files/research%20and%20insight%20pdfs/ukbi2017_b.pdf?la=en&hash=5EAE22A1951490A78BDC1A7431DEF49173C536F6 [accessed date: 11 Nov 2018]
Global board of directors survey (2016). available from: https://www.spencerstuart.com/~/media/images/infographics/infg_2016-wcd-report_042216.pdf?la=en [accessed date: 11 Nov 2018]
Board evaluation:
ICSA (2015). Why external board evaluation matters. available from: https://www.icsa.org.uk/about-us/press-office/news-releases/why-external-board-evaluation-matters [accessed date: 11 Nov 2018]
ICAEW (2018) Board evaluations and effectiveness reviews. Available from: https://www.icaew.com/technical/corporate-governance/uk-corporate-governance/board-evaluations-and-effectiveness-reviews
