Inside Asian Gaming

INSIDE ASIAN GAMING | February 2013 30 FEATURES W hile there is still room for improvement, continuous progress in corporate governance is the name of the game for the wagering industry. For over a decade, HVS Executive Search has evaluated corporate governance practices in public gaming companies using our proprietary corporate governance model. As in years past, our study examined board makeup, independence, committee structure and commitment to pay-for-performance. However, there is a difference in this year’s HVS report—we have decided to add two new categories to our evaluation: • Board self-evaluation and communication practices; and • Tighter parameters for both board and NEO (Named Executive Officer) compensation that factor in a board’s stance on “say on pay,” clawbacks, stock ownership requirements, eliminating excise tax gross-ups and limiting excessive perquisites. These refinements showcase boards that have achieved significant improvements and have raised the bar on governance best practices. Board diversity, another hot topic across all industries, will be incorporated into the evaluation next year. For gaming boards, the effects of the Dodd Frank “Say on Pay” legislation are slowly being brought to bear. Of the 31 companies reviewed, only four disclosed the outcome of the shareholders’ advisory vote on executive compensation. While some may disagree with the legislation suggesting that shareholders are ill equipped to evaluate the complexities of executive compensation, gaming companies will have to put policies in place to allow shareholders to weigh in on this sensitive subject. Increased influence of watchdog organizations such as ISS will continue to keep the pressure on. Active Approach In this year’s study of the gaming industry’s best boards, HVS Executive Search determines governance improves with shareholder activism By Keith Kefgen, Juliette Boone and Mandeep Singh, HVS Executive Search The Nominating Committee The auditors The Audit Committee the Compensation Commit Proposal Audit opinion Decision and mandate The Corporate Governance Process Shareholders General Meeting Board of Directors Executive Management