Miners top governance survey

Rio Tinto, BHP Billiton and Intercontinental Hotels Group have taken top honours among large UK companies in a new, wide-ranging corporate governance survey that rates FTSE 100 companies on everything from compensation to community relations. Miners and oil and gas companies on average did better than other sectors on Resources Global Index, while financial services companies tended to do worse. HSBC, which came in tenth, was top in the sector and Standard Chartered was one of the largest companies to be absent from the top half in the survey, by Resources Global Professionals, a consultancy. The index is much broader than many existing corporate rating programmes - which tend to focus on a single issue, such as the composition of the executive board or investment in environmental programmes. The new rankings include points for more than 60 different categories grouped into three letter grades for compliance, capacity and commitment. No single measure counts for more than 4.6 per cent of the total. Some are as simple as asking whether the company follows the combined code on issues such as to split chief executive role from chairmanships. Others involved value judgments and complex calculations based on figures in annual reports. Companies did better on the rankings when executive compensation moved in tandem with corporate results. They also gained points for avoiding layoffs in the first part of a downturn and if chief executive compensation was a relatively small multiple of average employee pay. David Jackman, who put together the rankings, acknowledged some of the measures may attract argument: "We'd like to see debate about what constitutes good governance and whether we are reporting the right things." He calculates that slightly more than half of the measures are "tick-box" categories that measure whether a company has a policy about particular issues or is structured according to accepted corporate norms. About 11 per cent of the points come from greenrelated issues; 22 per cent have to do with pay; and nearly 15 per cent with the role played by non-executive directors, including numbers and time. Larger companies and those that are dual-listed, or that offer depository receipts to US investors, tended to do better, probably because they have more resources and have to comply with corporate governance standards in more than one country. .Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.