December 3, 2003

What is a “Chief Governance

More companies have been naming “Chief Governance Officers” and yet there still is some confusion about what these officers do. In fact, there is a disparity among what these officers actually do, as practice depends on the company’s circumstances.

In my mind, the Chief Governance Officer’s key role is to develop relationships with key constituents of the company, with the most obvious being institutional investors. However, the CGO is not the investor relations’ officer – the CGO’s contacts at these investors are those that vote proxies, which is a different group of folks from those that invest or analyze the company. Another key constituent is the company’s regulators – which means that the CGO should be active in associations that interact with the government regularly.

None of this works if the CGO does not have the ear of the board – that’s why just sticking a new label on a corporate secretary or inhouse securities counsel doesn’t work unless it also means elevating that person’s true status within the company.

For members, we have begun posting sample job descriptions for chief governance officers.

Europe On Its Way to Adopt Weak Takeover Code

On November 18th, the European Union’s Competitiveness Council of Ministers agreed to a weaker version of a proposed pan-European takeover code that would have removed many of the obstacles to cross-border mergers. Instead, the obstacles will largely remain in effect. Fourteen EU member countries voted in favor of the amended code (Spain abstained). If only one country had voted against the amended code, the EU could have rejected it.

Originally, the EU had wanted to enact a bold plan to remove nearly all of the existing barriers to cross-border buyouts. However, strong opposition from Germany and Scandinavia left the barriers in place.

Now, the EU’s Council of Ministers and Parliment must approve the amended code – if so, it is expected to take effect in mid-2005.