Striving for best practice
Offshore drilling services provider Ensco beat other nominees in the international governance category by demonstrating its commitment to best practices through recent governance changes, culminating last June in the separation of its chair and CEO roles. Other changes included establishing a strong board succession process focused in part on appointing more women to the board, and encouraging meetings between shareholders and independent directors.
Last year Ensco completed a three-year process of evaluating and upgrading its governance policies and practices. As directed by its independent nominating and governance committee, Ensco asked advisers and management to carry out a gap analysis between best practices and principles and the company’s practices and principles. The committee then enlisted the full board in discussions about proposed improvements, which Ensco implemented at various points during the three-year process. Among the improvements Ensco made throughout this process were:
- Establishing a formal outreach program with proxy advisory groups ISS and Glass Lewis and meeting with the policy teams of each annually to discuss governance and compensation matters
- Creating a formal outreach program with shareholders, announced in the 2014 proxy statement
- Improving alignment with shareholders by increasing stock ownership guidelines for non-employee directors from three to five times their annual retainer, increasing stock ownership guidelines for the CEO from three to six times base salary, and setting minimum holding periods for stock and options until stock ownership guidelines are met.
‘Our business model has completely changed,’ says chairman Dan Rabun. ‘You have to make corporate governance fit for purpose. That’s an evolutionary process, especially after moving over to England five years ago. There are no specific priorities, but it’s a continually evolving process to turn us into a global firm.’
Ensco took up the banner of increasing diversity on the board a long time ago. ‘We’re big believers in diversity in terms of nationalities, race and sex,’ Rabun continues. ‘We believe it gives us a great perspective. It’s become part of our normal process. There are two women on the board now.’
The judges also praised Ensco’s efforts to get the US Department of Justice (DoJ) to agree to early termination of a deferred prosecution agreement (DPA) imposed on Pride International for bribes paid to foreign government officials by a subsidiary before Ensco acquired Pride in 2011. Ensco’s stellar compliance record, and its efforts to go beyond the DPA requirements, resulted in the DoJ ending the DPA one year early – the only time in the history of the FCPA that this has been done.
For photos of the awards, click here.