Corporate GovernanceHealth Check (CGHC) Project

January 20, 2010

Business Ethics and Transparency Working Group

Project Context in BriefProject initiated in October 2009,based on following

considerations:– Corporate Governance (CG) is high on the agenda of company leaders, HQs,

policymakers and the public interest– HBLF has a member base, likely to be committed to address the issue– Besides obviously ongoing corporate initiative, wide scale collective efforts are not

much visible– HBLF has the gunpowder and it fits to overall objectives– Project management and passion is given by Transparency and Ethics Working

Group

Project Milestones (more detailed project scheme in Appendix II)– methodology created and agreed 8 members team – October 10– Invitations sent out to 80 companies – October 15– Initial data back from 21 companies – December 1– Interviews, mini-report delivery and data processing completed – January 8, 2010– Interpretation agreed and final report drafted – January 20

Findings: Executive Summary• Corporate Governance is clearly on the agenda, well received, but seldom proactively

done.• No other relevant benchmarks exist for others than publicly listed companies. Few

other sustainability rating exists, which do not focus on Corporate Governance• Tendency to over-regulate Corporate Governace, instead of more dialogue in

preparation and more differentiated law enforcement in application• Good citizens suffer competitive blow in some industries – overall implementation

rigor is well received• Shareholders’ rights typically are not published and not actively exercised• Foreign owned companies struggle with global decision making structures to be

embedded in Hungarian legal framework – a trend to simplify• Board member selection is mostly un-transparent process both locally and

internationally• No Stakeholder / Shareholder interest redressment mechanism in place, this

practically happens by „playing by ear”, on ad-hoc case basis• Governance as Crisis response –Risk mgt is getting stronger and integrated• Board and Supervisory Board membership – need to balance personal status and

accountability aspects, which are lopsided today.• Ownership functions are not always clearly separated from others (regulatory,

management or even client)

Participant distribution

19%

5%

14%62%

200 alatt

200-1.000

1.000-20.000

20.000 felett

10%

19%

24%

47%50 alatt

50-200

200 - 1.000

1.000 felett

Headcount in Hungary

Headcount globallyOrgnanization type

Industry breakdown

81%

5%

14%

Magáncég

Tőzsdei cég

Állami cég

5%

28%

5%24%

0%

14%

0%

19%

5%

Technológia, IT, Telecom

Energia

Gyógyszer/Egészségügy

Kereskedelem/logisztika

Szolgáltatások

Termelés

Pénzügy

Építőipar

Egyéb

Who filled the questionnaires?

21%

3%

13%

19%

3%

19%3%

19%

Vezérigazgató/Ügyvezető

Igazgatósági tag

Felsővezető

Jogtanácsos

Compliance officer/ Internal Audit

Érintett (Stakeholder)

Egyéb

Nem válaszolt

Project Deliverables offered at start

• Re-useable CG Tools • An immediate feedback: self valuation

score (see at Questionnaire)• Expert views in mini-report / comments on

improvement opportunities (1-2 pages)• Benchmarks / general report• Best Practice publication (under HBLF)• Press coverage

Glossary

A comprehensive bi-lingual glossary to clarify the most frequently used Corporate Governance (CG) terms and definitions to avoid errors due to different interpretations. Secondary use is educational. Helpingmembers to use aligned language.

QuestionnaireThis self rating tool has been

designed so as to allow a relatively simple, fast and

uniform data enquiry from the vastly different target group.

This might be further developed in the future,

allowing more specificity for differently positioned entities.

1. The regulations relating to corporate governance are easily identifiable, readily available2. The framework is consistent and embraces the full spectrum of CG, as our company defines it.3. The overall effect of regulations enhances a healthier operation, better performance as opposed to increase the admin red tape4. The regulation has the right balance of sanctioning wrong and rewarding right corporate governance behaviors.5. The regulations are enforced and the administration has the capacity, integrity , tools and resources to enforce them6. The framework , identifies and mitigates risk from time to time, reacting to changes in the environment7. The framework is compliant with international standards and leading practices (OECD,EU,FCPA, SarbOx, etc)8. During implementation, assistance available on interpretation questions and concerns9. Market players in Hungary in general keep the rules and live up to the generally accepted standards of corporate governance10. The basic shareholder rights are well defined, disclosed and maintained 11. Our company ensures the equal and equitable treatment of all shareholders, including minority, foreign and institutional shareholders12. The shareholders have timely and continuous access to information regarding the functioning of the company.13. The General Shareholders Meeting prepared, managed and followed up in a way fully enhancing the full use of shareholder rights.14. In case of perceived shareholder right violation there is a clear and effective redress mechanism15. Share ownership and voting rights are proportional with ownership and disclosed16. There is a regular and independent supervision of compliance with internal and external regulations 17. Shareholders actively exercise their rights18. Foreseeable risk factors are clearly communicated to shareholders and stakeholders19. The Board members of the company are nominated and elected in a fair and transparent process ensuring the best representation of shareholder interest 20. Board responsibilities, accountabilities and remunerations are clearly defined and monitored regularly by Shareholders 21. The Board exercise strategic guidance including the following: corporate strategy, budgets and business plans, risk policy, performance objectives and

implementation, capital expenditures, investments divestitures and governance practices22. The Board exercises effective operative controls over the business conduct23. The Board has access to accurate, relevant and timely information on the Company by appropriate systems for financial and operation controls, risks

and compliance management.24. The Board oversees the process of external disclosure and communication to shareholders and stakeholders25. In case there is a Supervisory Board (Felügyelőbizottság), it practices an effective monitoring of the Board of Directors to provide objective internal

controls.26. In case there is a combined Board of Directors (Igazgatótanács), this Board ensures a majority of non-executive members and sets up Board

Committees to provide objective internal controls.27. Board members and key executives disclose, their qualifications, other functions present and past, potential conflicts of interest and other risks known

to them.28. Stakeholder groups are clearly defined and their rights by law or mutual agreement are respected.29. The company encourages active external cooperation with stakeholders for the sake of creating public wealth, jobs, sustainability and financially sound

enterprise30. Stakeholders have access to relevant, sufficient and reliable information31. Mechanism exists for and is known to stakeholders to communicate concerns and obtain effective redress in case of violation of rights32. Performance enhancing compensation and reward systems are transparent and not restricted to top management33. Public disclosure includes, but not limited to: company objectives, financial and operating results, remuneration policy for Board and Executive,

related party transactions, foreseeable risk, known stakeholder issues and governance structures and policies.34. Channels for disseminating information provides equal, timely and cost efficient access to all relevant information by stakeholders.35. The Governance process ensures that stakeholder comments, analyses, advice and concerns get routed to the Board. 36. The company actively promotes employee participation 37. A “whistle blower” system and policy is establish ed that provides sufficient protection to employees and stakeholders

The questions

InterviewC G H C project interjú vázlat

Interjúalany(ok), cég, beosztás Interjú dátum a, helye, készítő je 1 . K ik töltö tték ki a kérdő ívet – m ilyen m unkam ódszerrel (egyéni-csoportos, virtuális-fizikai) 2 . C éges „dem ográfia” adatok átnézése, ha kell pontosítása Ld kérdő ív 1. oldal 3. M ely pontokon / kérdéseknél volt nézetkülönbség vagy vita? M i volt ennek lényege? M i lett a végkim enetel? 4 . A kérdések értelm esek / értelm ezhetőek voltak? H a nem hol volt gond? 5. M elyek voltak a 0 pontos / nem értelm ezhető kérdések? Tudunk segíteni az értelm ezésben? 6. M elyek voltak az 5-6 pontot kapott kérdések? 7. M it gondol a cég C G erősségének?... R észletezze a best parctice „jelölt” m egoldásokat, ha van ilyen. 8 . M elyek voltak az 1-2 pontot kapott kérdések? 9 . M it gondol a cég fejlesztendő területének? R észletezze fejlesztési elképzeléseiket, ha van ilyen. 10. M ire kíváncsi leginkább a kérdő ív eredm ényeibő l? 11. V annak e hipotézisei az eredm ényekkel kapcsolatosan? 12. V an e olyan specifikus kérdése, elvárása am elyre a projektbő l szeretne választ, ötletet kapni 13. A publikációhoz hozzájárul e elvben – a konkrét szöveget később küldjük el. 14. Bárm i egyéb javaslat, észrevétel? M it kellene m ásképp tenni, ha újra csinálnánk? Interjú m ás interjúknál felhasználható tanulsága – készítő i m egjegyzés

Interviews designed to verify self scores and consistency of rating. Open questions allow room for identifying company / industry specificities. During the course of interviews participant typically received first hand feedback on their respective practices and relative strengths.

A cég sajátosságaiátlagnál jobb és gyengébb eredmények

Jobb

• A nemzetközi szabályok átvétele, anyavállalati harmonizáció

• Részvényesi jogok arányos érvényesülése

• Stratégiai kockázati tényezők kezelése • Igazgatóság stratégiai kontrollja• Felügyelő Bizottság ellenőrző funkciói• Független Igazgatósági tagok szerepe• Érintettek meghatározása és

kapcsolattartás• Közérdekű bejelentők kezelési

rendszere

Gyengébb

• Saját szabályozási környezetét kritikusabban ítéli meg mint az többi résztvevő

• Kisebbségi részvényesek érdekeinek védelme

• Igazgatósági működés rendszeressége, átláthatósága

• Igazgatóság külső kommunikációs szerepe

• Érintettek információ hozzáférése és kapcsolat az igazgatósággal

• Közzétételi kötelezettség megvalósítása

Megtartandó Best Practicek és fejleszthetőterületek

Best Practice

• Etikai Kódex, • Fenntarthatósági jelentés• Esélyegyenlőségi terv• Dolgozói bevonódás• Risk reporting• Compliance Audit

Fejlesztési javaslatok

• Governance megvalósítás tervszerű ellenőrzése

• Igazgatósági albizottságok működése

• Igazgatósági tagok kijelölésének átláthatósága

• Ellenőrző szervekkel folyamatos kapcsolatok

• NGO kapcsolatrendszer kezelése

ExampleThe so called mini-reports are short (6 page) and immediate (within 3 days) feedback to participant on their special issues and governance related SWOT.

The mini-reports

• Statistical analysis – weighted average and distributions scores

• Profile: graphical representation of the average results• Percentage: the average score versus the maximum

potentially available (corrected with number of questions)• Ranks: according to percentages above, 1 signaling the

best, 4 the worst scoring domain• Color codes

– Green : above 5 in average or small distribution– Yellow : between 4 and 5 average or medium distribution– Red : below 4 in average or significant distribution

Note: distribution implies divergent practices, not necessarily wrong ones, but certainly lack of consistency

Primary data analysis

0 1 2 3 4 5 6Operating environment – 62,40%(4)

34,24Össz-pontszám

3,5062Market players in Hungary in general keep the rules and live up to the generally accepted standards of corporate governance

3,9051During implementation, assistance available on interpretation questions and concerns

4,3863The framework is compliant with international standards and leading practices (OECD,EU,FCPA, SarbOx, etc)

3,5251The framework , identifies and mitigates risk from time to time,reacting to changes in the environment

3,5552The regulations are enforced and the administration has the capacity, integrity , tools and resources to enforce them

3,2561The regulation has the right balance of sanctioning wrong and rewarding right corporate governance behaviors.

4,0562The overall effect of regulations enhances a healthier operation, better performance as opposed to increase the admin red tape

4,4363The framework is consistent and embraces the full spectrum of CG, as our company defines it.

4,3863The regulations relating to corporate governance are easily identifiable, readily available

Weighted avg.MaximumMinimum

0 1 2 3 4 5 6

.

Shareholder relationships – 70,27%(1)Weighted avg.MaximumMinimum

37,95Össz-pontszám

5,0064Foreseeable risk factors are clearly communicated to shareholders and stakeholders

5,0062Shareholders actively exercise their rights

4,5361There is a regular and independent supervision of compliance with internal and external regulations

5,3864Share ownership and voting rights are proportional with ownership and disclosed

4,8661In case of perceived shareholder right violation there is a clear and effective redress mechanism

5,4764The General Shareholders Meeting prepared, managed and followed up in a way fully enhancing the full use of shareholder rights.

5,4464The shareholders have timely and continuous access to information regarding the functioning of the company.

5,3664Our company ensures the equal and equitable treatment of all

shareholders, including minority, foreign and institutional shareholders

5,2164The basic shareholder rights are well defined, disclosed and maintained

0 1 2 3 4 5 6Board Functions – 64,72%(3)

Weighted avg.MaximumMinimum

34,95Össz-pontszám

4,3761Board members and key executives disclose, their qualifications,

other functions present and past, potential conflicts of interest and other risks known to them.

3,6061In case there is a combined Board of Directors (Igazgatótanács),

this Board ensures a majority of non-executive members and sets up Board Committees to provide objective internal controls.

4,6261In case there is a Supervisory Board (Felügyelőbizottság), it

practices an effective monitoring of the Board of Directors to provide objective internal controls.

4,3261The Board oversees the process of external disclosure and communication to shareholders and stakeholders

5,4764The Board has access to accurate, relevant and timely information

on the Company by appropriate systems for financial and operation controls, risks and compliance management.

4,6761The Board exercises effective operative controls over the business conduct

4,7861

The Board exercise strategic guidance including the following: corporate strategy, budgets and business plans, risk policy, performance objectives and implementation, capital expenditures, investments divestitures and governance practices

4,6562Board responsibilities, accountabilities and remunerations are clearly defined and monitored regularly by Shareholders

5,0064The Board members of the company are nominated and elected in

a fair and transparent process ensuring the best representation of shareholder interest

0 1 2 3 4 5 6Stakeholder relationships – 70,16%(2)

Weighted avg.MaximumMinimum

42,10Össz-pontszám

3,9461A “whistle blower” system and policy is establish ed that provides sufficient protection to employees and stakeholders

4,3062The company actively promotes employee participation

3,9061The Governance process ensures that stakeholder comments, analyses, advice and concerns get routed to the Board.

4,6763Channels for disseminating information provides equal, timely and cost efficient access to all relevant information by stakeholders.

4,2562Public disclosure includes, but not limited to: company objectives, financial and

operating results, remuneration policy for Board and Executive, related party transactions, foreseeable risk, known stakeholder issues and governance structures and policies.

4,7661Performance enhancing compensation and reward systems are transparent and not restricted to top management

4,9064Mechanism exists for and is known to stakeholders to communicate concerns and obtain effective redress in case of violation of rights

4,7061Stakeholders have access to relevant, sufficient and reliable information

4,6062The company encourages active external cooperation with stakeholders for the

sake of creating public wealth, jobs, sustainability and financially sound enterprise

4,8562Stakeholder groups are clearly defined and their rights by law or mutual agreement are respected.

Summary: General benchmarks –strengths and weaknesses in Hungary

Strengths• Regulatory framework is well aligned

with global standards (OECD, EU, SarbOx)

• Generally well available, well identifiable rules – though sometimes not from one source

• Comprehensive and coherent regulations

• Shareholder Meetings’ functions are well defined and exercised properly

• Shareholder information channels provided, though not used continuously

• Board „conflict of interest” checks are performed at the time of nominations, but seldom repeated

• Stakeholder groups are known, but the relationship with them are reactive, not proactive

• Fair and transparent performance enhancement / incentive systems in place

• Improving risk awareness and communication

• Industry regulatory bodies exercise meaningful professional controls

Weaknesses• Tendency for over-regulation instead of

enforcement of existing rules and regulations• Little differentiation and incentives for good citizens:

system is only sanctioning• More dialogues required between regulators and

market players / stakeholders• Generally missing Shareholder and stakeholder

interest violation redressment mechanisms• Communication and risk management to be

improved• Supervisory Board control role to be strengthened –

improved beyond only formal role• Independent directors’ role to be enhanced, when

applicable• Publication practices to be extended beyond the

legally required minimum• Stakeholders direct channel with Board to be

established (like investor relations)• Whistle Blower system to be trained and

encouraged by leaders• Clarifying Board / SB members personal

accountabilities to balance status attractiveness17

Differentiating issues: private firms* vs. others

Better than average

• Annual General (Shareholder) meeting is well prepared and well implemented.

• The Board exercised full operational and strategic controls

• More frequent use of external Board member services for external controls

Poorer than average• Shareholder rights as well as other

non-compulsory disclosure items are not transparent / published. Publish only legal minimum

• No formal shareholder nor stakeholder interest violation redressment mechanism – informal procedures instead

• No independent external compliance audit – rather internal controls

• Board selection processes and remunerations are not fully transparent

• Whistle blower mechanism stays formal, in reality under-used Overall: a balanced score

*Definition: all firms not publicly traded (Stock Exchange) or State owned (directly or indirectly)

Differentiating issues:Multinationals*

Better than average

• The Board has full access to operations details

• Whistle Blower mechanism is in place, functions in reality

Poorer than average• Typically one effective shareholder

controls the operation directly : shareholder minority rights etc are not applicable

• Strategy management happens at global / international levels- local management has formal role/responsibility

• Board member nomination is a function of internal „black boxes”.

• No direct interface between Stakeholders and Board Overall: rely heavily on mother company solutionsUn-used local potential

*Definition: local affiliate of Multinational mother company, not the MNC corporate!

Differentiating issues: large firms*

Better than average…overall a strong performance

• Can define and identify regulatory environment better

• Existing shareholder and stakeholder interest redressment mechanism

• Board responsibilities and remunerations are well defined

• Functioning Whistle Blower policy

Poorer than average

• No independent external compliance audit – rather internal controls only

• No external Board members• Performance incentive

systems are not transparent and available for all

• Information is frequently hard to find, not made easy for stakeholders Overall: best scoring group

* Definition: firms with local headcount exceeding 1000 employees

Differentiating issues: mid-sized* growth firms

Better than average

• Performance incentives are usually well spread across the full company

• Publication practice often exceeds the legally required minimum

Poorer than average…overall problematic!

• Shareholder rights are rather formal and not supported systematically

• The Board member selection, responsibilities, remmunarationsand strategic functions are not transparent and/or not structured well

• Stakeholder relationships are not structured and promoted consciously by the firm

Overall: problematic, Which was not expected

*Definition: firms with local headcount between 200 and 1000 employees

Differentiating issues: SMEs*Better than average

• Shareholder rights are well defined and equitable

• Shareholders are more active in continuous participation and controls

• Board member selection process is clear and transparent

• Board provide external controls

Poorer than average

• Board responsibilities are not formally structured and published

• Typically no well functioning Supervisory Board inn place

• No Whistle Blower system implemented

Overall: better than expectedInformal solutions do work

*Definition: firms with less than 200 employees globally

Differentiating issues: Industry(example: Energy)

Better than average

• The regulatory environment is easier to identify

• The regulations has an overall positive impact

• The shareholder relationship management is well transparent and equitable

• Well exercised strategic guidance by the Board

• Stakeholder issue management is more developed than average

• The publication practices frequently exceed the legally required minimum

Poorer than average

• Ownership and voting rights are not always proportional – some are „more equal” than others

• Information is not equally available and easily accessible for all stakeholders

• The Whistle Blower mechanisms may well stay formal, not fully used by all

Other industry specific findingsDialogue vs. Top down orders• Vivid and value creating dialogue with the regulator ( Transport and Finance)• Strong political pressures create too short cycles for proper dialogue

(Finance/Insurance/Energy: e.g.. Foreign currency loan regulations)

Competitive disadvantage vs. Fair Play• In industries with heavy grey economy (Construction, Tobacco, Retail) the rule

followers suffer direct competitive blow from respecting rules vis a vis those „under radar screen” (tax evasion, labor law, conflicts of interest and corruption issues)

• Heavily regulated industries ( Financial, Insurance, Energy, Health) see smaller room for interpretations and unfair behaviors, thus creating equal competitive environment

Ex ante vs. ex post regulations• Very advanced role in played by regulatory bodies, which issue quasi best practice

recommendation, before making it legally binding – thus allowing proper time for alignment and also provide regularly detailed checks ( e.g.. Internal security rules by PSZÁF – Finance, Telecommunications, Transport)

• Regulations and interpretative detail are published well after the market practices are formed – no capacity to look ahead, the regulations often follow the practice (Finance, Technology, Telecommunications)

Overall comments / Regularory recommendations by participants

• Think more of the Corporate Governance regulations – if it sets norms, orientated and provokes healthy self critique- this is well received!

• Issue less additional rules in case of non-compliance. Instead, put more efforts on controls, implementation help and law enforcement

• Simplify the rules – rather use scarce recourses in keeping the existing regulationsconsistent and up-to-date with current trends and dare to think ahead.

• Differentiate more – be more strict with notorious non-compliers (personal responsibility) and more tolerant with benevolent mistake makers (chance for self correction before sanctioning) and find out rewards (red tape reduction) with consistent followers)

• Rely more on good local (Municipality) relations where personal trust and relationship help in sensitive situations

• Introduce more Client service orientation in public institutes: recognize the individuals in true „public service” and correct authority driven behaviors

• Create more and direct dialogue between different regulatory arm of the government – particularly Tax (APEH) and professional bodies with different regulatory agenda and focus

• Address the specifics of state only ownership situations and develop special Governance Principles at State Property Council (Vagyontanács)

Recognized Best Practices

• Based on individual field interviews and presented practices• Further evidence is provided in writing for project repository• No practice field verification within project scope, strictly self declared• Organized in sub categories: Shareholder relations, Board/SB functions,

Compliance and controls, Risk management, External Stakeholder relations, Employee involvement, Whistle Blower mechanisms

• The „why” field summarizes the differentiating factor, in other words why we think this practice could be exemplary for others and worth being recognized

• Publicity policy: no company names should be used in outgoing communications (other than within project participants) without the prior explicit consent by the party

• Further information on best practices and details of contacts at practice host companies can be obtained from the project contacts – see end of the presentation

• Legal disclaimer!

Best Practice – Shareholder relations

Systemicdetailed

„Assurance Process” – violation redressment mechanism

Goes beyond expected as state owned

Preliminary Stock Exchange readiness inventory project Shareholder education

Organized, resourced

Dedicated responsibility for managing Shareholder relations, proactively for institutional investor and on-demand for small shareholders.

SimplificationResponsibility assumed

procedures and resources

Why

The Governance system simplification pro-active by the means of Shareholder Resolutions and regular periodic reviews on how the system functions, adapting to changing environment

Effective handling of shareholder right violation perceptions – at affiliate operating company level

Best practice description

structuredcollaboration

Well defined cooperation matrix among the Board, Supervisory Committee, Executive Committee and Audit Committee.

multi-channelhands-on

Supervisory Board functioning: regular and ad-hoc meetings, informal discussion too, remote voting and so called , „jour fix”personalized context briefings

External controls

Double external controls guarantee by external Board members an Supervisory Committee with clearly separated roles

structuredcollaboration

Why

Structured, regularly scheduled collaboration between the Board and the Management

Best practice description

Best Practice – Board / Supervisory Functions- system level

goes wellbeyond expected

Existence of external directors even for a privately owned company

content capacity

The representative mix of the Board ensures the cross functionalcontrols and real vivid dialogue

content capacity

Annual Strategy revision and functioning Board Strategic sub-committee

WhyBest practice description

Best Practice – Board / Supervisory Functions- operations level

Best Practice – compliance and controls

transparencyCorporate Governance is well documented, the published regulations extend over almost all aspects.

personal accountability

Code of Conduct to be signed personally by all new employees, and well trained

personal accountability

Compliance expectations are fully personalized (104 check items)with fully demonstrated Management commitment, tools and trainings on the matter.

integrated,simplified

The Risk Management and Internal Controls are integrated and report directly to corporate level Supervisory Board, cutting service loops short

independenceInternal Control Department under the Supervisory Board

clarity, org. accountability

systemic,beyond formalities

Why

Differentiation between Internal Controls (ex post) and Compliance (ex ante) in terms of expectations and focus

Compulsory personal compliance audit at every leadership assignment – focused on potential conflicts of interest

Best practice description

Best Practice – Risk Management

Systems evolution

Enterprise Risk Management: quarterly overall update and annual adjustment on systems level

regular,integrated

Rigorous monthly Risk assessment and mitigation system integrated in monthly management reporting

focusedForecasting regulatory risks and monthly monitoring

Integrated,differentiated

Risk urgency rating system and alarm mechanism directly to Supervisory Board / Shareholders

Personal accountability

Risk Register – regular, structured risk monitoring system clarifying ownership of each issues

Holistic, collaborative

Enterprise Risk Mgt Project with multi functional collaboration and holistic approach

risk and mitigation aligned

Why

Industry specific risk assessment methods implementation (Basel 2) –aligning the risk and reserve accumulation policies

Best practice description

Best Practice – external stakeholder relations

Involving, motivating

Rewarding responsible behaviors at Occupational Health and Safety: green, yellow and red cards – incentivizing the transporting partners

Application discipline

Outgoing Board communication well regulated and implemented withfull discipline – organized by subject and not by target group / channel

comprehensive

creative, multi channeled

Long term thinking

Why

Publication practice of Corporate Governance related matters, comprehensive content, which is readily available on web.

Stakeholder involvement tools: Infopanel, Community Advisory Panel, „Egymás Mellett” civil bulleting, Environment day, etc…

Net Promoter Score (NPS) – fair information pushed to the clients and decision makers– even against the short term (selling) interest

Best practice description

Best Practice – employee involvement

Institutionalcreative

Creating an internal Ombudsman

transparencyPerformance Compensation System (PCS) adapted to local conditions, bonuses directly controlled by the shareholder

transparentinvolving

„Ideas to Success” – proactive employee involvement system in action

transparent involving

Innovative,participative

Institutional involvement

Why

The strategy deployment process top down and bottom up – with maximum transparency and interactivity

Employee partnership Program – Phantom shares

Continuous consultations with various employee representations -Full scale Equal Chance policy

Best practice description

Best Practice – Whistle Blower mechanism

Independence security

TELAF system for handling Whistle Blowers: involving an independent external firm for collecting and analyzing the claims

Independence transparency

Whistle Blower claims handled by the Ethics Committee, independently led, and the publication of claim statistics

management commitment

Why

Demonstrated management commitment and intro campaign– result about approx. 30 annual reports out of which 20 are worthy of further examination

Best practice description

Project Members and acknowledgements

• Herey we would like to thank for all participating individuals and companies

• András Posztl - Horváth & Partners DLA Piper• Flora Karpati - HBLF• Iren Marta - Holcim• Janos Kuhn - Siemens• Dr. Jozsef Fenyvesi - Oppenheim• Dr. Karoly Nagy – BKF• Kincso Adriany - HBLF• Noemi Alexa – Transparency International• Maria Rusz - Shell• Richard Skene - Holcim• Zoltan Toth – 3i• Zsolt Szelecki – Project Leader

• thanks to Z. Batar (Hewitt) for statistical processing

Contacts

• Adriany Kincső - kincso.adriany@hblf.hu– HBLF membership, publicity

• Richard Skene - richard.skene@holcim.com– Target Group Membership

• Zsolt Szelecki – zsolt.szelecki@hotmail.com– Corporate Governance content matters