Embracing the web era

Tony Featherstone argues that governance is too important to be a website afterthought or “brochureware”.

The third edition of the Corporate Governance Principles and Recommendations, released in late March by the ASX Corporate Governance Council, has been well received. The tone of the 64 non-confidential submissions in the consultation process was broadly positive.

Several amendments, elevated from guidance in the second edition to recommendations in the latest edition, stand out. Requiring the company secretary of a listed entity to be accountable to the board, through the chairman, on governance matters (Recommendation 1.4) is a good move, especially in smaller companies where there is less delineation in the secretary’s role.

Recommendation 2.6 – that a listed entity should have a program for inducting new directors and provide appropriate professional development opportunities to develop and maintain skills – rightly deserves to be a contemporary governance standard rather than a matter of guidance, as it was before. But it was Recommendation 6.1 – that a listed entity provide information about itself and its governance to investors on its website – that most caught my attention. Although the changes within this recommendation were subtle, they highlight a shortcoming in how boards communicate about governance to stakeholders. The ASX Corporate Governance Council said in the accompanying media release: “With supporting changes to the ASX Listing Rules, listed entities will now have much greater flexibility to make their governance disclosures on their website rather than in their annual report.”

Boards should consider how governance information can be better presented in annual reports and websites. There is huge scope to streamline annual reports and make them more readable and to take governance information on websites to a new level.

As research, I visited the websites of 10 companies in the S&P/ASX 50, 10 from outside the ASX 200 and 10 larger not-for-profit organisations to gauge how useful the information was to users.

The level and sophistication of the information can vary by organisation size: from the likes of BHP Billiton that does an excellent job, to small listed companies that have little more than short director biographies and a few published governance policies.

Sadly, governance information was hard to find on many websites, regardless of organisation size. Typically, information about a board and its governance practices were located within the “About Us” tab. Sometimes it required navigating a few links.

The Principles say the location of corporate governance disclosures should be an “intuitive and easily located link to the landing page in the navigation menu … for example under About Us, Investor Centre or Information for Shareholders/Unitholders menu item”. With the Principles encouraging boards to make more disclosures via the website, why don’t organisations simply have a governance tab in the main menu of their homepage, to raise the profile of this information and make it more accessible?

My concern is that many so-called governance landing pages on company websites are little more than a data dump of director biographies and complex policies on various governance matters. I would be surprised if many listed companies thought deeply about whether the presentation of this information provides a satisfactory experience for stakeholders.

Put yourself in the shoes of users: what do they need to make an informed decision about your governance and to feel confident the board is doing a good job on safeguarding their interests? How would they find it on websites? How would they use the information?

Some governance landing pages on websites do not even include annual reports. The reports are buried with dozens of company announcements in the News and Investors part of the website, along with other governance information that would help investors, if only packaged and presented correctly.

So much can be done. For a start, useful governance information, such as the chairman’s address at the annual general meeting, the director’s report in the annual report and any company-related speeches by the chairman, could be re-published on the landing page. Why should investors have to wade through so much other information to find it?

A skills matrix that sheds light on board composition, in addition to the usual director biographies, could help, as would a calendar of key corporate events. A video from the chairman briefly explaining how the board approaches governance would add more value than investors reading long slabs of text. Nobody expects companies or not-for-profits to turn the governance page into an elaborate, content-heavy affair, or for small companies to devote unnecessary resources to it. But nor should this information be buried, static, dull, and unreadable, as is the case with too many organisations.

Australian business, collectively, has a good story to tell about governance. It is a shame the information is often relegated to a link within a link from the homepage and is little more than “brochureware”. Governance information is too important to be a website afterthought.