Corporate Governance Review 2013

HELLENIC AMERICAN EDUCATIONAL FOUNDATION
Corporate Governance Review 2013
The Board of Directors of the companies in
FTSE/Athex Large Cap of Athens Stock Exchange
Vasileios Oikonomou
9/1/2014

Vasileios Oikonomou
Hellenic American Educational Foundation-IB1 Psychico College September 2014
1
Table of Contents
Introduction
1. Hellenic Corporate Governance Code (HCGC)
2. FTSE/Athex Large Cap
3. Research Methodology
4. European Commission’s Action Plan 2012
5. Corporate Governance Code followed by firms
6. Implementation of the principles of corporate governance
1. Size of the Board of Directors
2. Composition of the Board of Directors
3. The presence of women on Board of Directors
4. Publication of the size and composition of the Board on the Corporate Governance
Statement.
5. Publication of brief curriculum vitae on the Corporate Governance Statement
6. Existence of a Remuneration Committee
7. Remuneration Disclosure
8. Evaluation of the Board
Conclusion

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2
Introduction
The term “Corporate Governance” describes the way firms are managed and controlled.
In the past few decades, Europe has met with an extensive widespread of corporate governance issues.
Within a company, the principles of corporate governance are depicted on the corporate governance
code, a document based on the good will of each firm to adhere to the “comply or explain” principle.
After more than ten (10) years since the outbreak of corporate governance, the fundamental provisions
found in the corporate governance codes internationally have set the stage for the establishment of
international corporate governance standards in the European Union. This new approach to today’s
business world has been adopted by both the European Commission and International fora.
In Greece, the corporate governance framework has been developed by the Greek State through the
adoption of laws, such as law 3016/2002, that provide details on issues such as the composition of the
Board of Directors, Internal Audit, Remuneration and other areas which are considered critical to the
orderly functioning of the company. In addition, a number of legislative acts have contributed to the
smooth incorporation of European norms to the anomalies of Greek reality while providing a steady
basis for the future development of new standards of corporate governance.
1. Hellenic Corporate Governance Code
In Greece, the compliance to a Corporate Governance Code constitutes a prerequisite for companies to
enter the Athens Stock Exchange or any other formal market. Such a Code should have as a frame of
reference the relative regulatory framework and should be published on the official website of the
company. The company can either adopt its own code or follow the Hellenic Corporate Governance
Code (HCGC). This information should be disclosed in the company’s Corporate Governance annual
report. To the present day, the predominant Code of this kind has been the Hellenic Corporate
Governance Code (HCGC) of October 2013, which many firms have already adopted.

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2. FTSE/Athex Large Cap
The FTSE/Athex Large Cap, index consists of the 25 largest and most liquid companies that trade in the
Athens Stock Exchange. The index was developed in September 1997 out of a partnership between the
Athens Stock Exchange and FTSE International1
. The 25 companies that are currently included in the
Index and will be included in the sample of the research are:
1. METKA
2. HELLENIC PETROLEUM
3. MARFIN INVESTMENT GROUP
4. JUMBO
5. MYTILINEOS GROUP
6. PIREAUS PORT AUTHORITY S.A.
7. ALPHA BANK
8. NATIONAL BANK OF GREECE S.A.
9. PIRAEUS BANK
10. EUROBANK
11. GEK TERNA GROUP OF COMPANIES
12. TERNA ENERGY
13. OPAP
14. EYDAP
15. ATHEX GROUP
16. INTRALOT
17. MOTOROIL (HELLAS)
18. ELLAKTOR
19. OTE
20. TITAN
21. EUROBANK PROPERTIES
22. PUBLIC POWER CORPORATION S.A.
23. FF GROUP
24. VIOHALCO GROUP
25. COCA-COLA HBC
1
Source: http://www.bloomberg.com/quote/FTASE:IND

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3. Research Methodology
The data that will be used in the sections bellow were collected as part of a contribution to Grant
Thornton’s (Greek annex) data collection for the Corporate Governance Survey that is expected to be
published in the forthcoming months. The different sections of the current Review were inspired from
those stated in the HCGC which can be found in Athex’s website2
. Finally, data were extracted from the
Statement of Corporate Governance, found in each company’s Annual Financial Report for 2013, and
corporal websites. For two of the companies (Viohalco Group and Coca Cola HBC) which are no longer
primarily traded in the Athens Stock Exchange, information was retrieved from their Corporate
Governance Code and relative publications found on their corporal websites.
The present Corporate Governance Review 2013 will focus primarily on the role and responsibilities of
the Board of Directors and will explore the extend to which companies members of the FTSE/Athex
Large Cap of the Athens Stock Exchange follow the HCGC practices and guidelines. Such practices that
will be examined have to do with the size and composition of the Board of Directors, the presence of
women on Board of Directors, the publication of the size and composition of the Board on the Corporate
Governance Statement, the publication of a brief curriculum vitae the existence of a Remuneration
Committee, Remuneration disclosure, and measures of evaluating the Board.
4. European Commission’s Action Plan 2012
Trying to build on the success of the 2003 Action Plan on Corporate Governance, the European
Commission (EC) launched another Action Plan in 2012 with the goal of improving the problems of
excess risk-taking and sort-termism that concern the market in the recent years. As described in the
memo published by the EC, the primary focus of the Action Plan is on EU liability companies, listed on a
European Stock Exchange. For this reason the Plan contains suggestions for the improvement of the
existing legal framework regarding Corporate Governance and identifies three (3) main lines of action:
Enhancing transparency, Engaging shareholders and Supporting companies.
Regarding the issue of enhancing transparency, the EC has decided that “companies need to provide
better information about their corporate governance and society at large”. However, the idea of
transparency admittedly works both ways as it is deemed essential for the companies to know who their
shareholders are and what interests they pursue if they are to codetermine their future strategies.
As for the issue of engaging shareholders, the Commission suggests that shareholders should have more
freedoms to oversee remuneration policy and related party transactions. In more detail, according to
the Green Papers published by the Commission in 2010 and 2011 there is “a perceived lack of
shareholder interest in holding management accountable for their decisions and actions, compounded
by the fact that many shareholders appear to hold their shares for only a short period of time”. This
phenomenon of sort-termism on behalf of the stakeholders and their apathy towards the assessment of
2
Source: http://www.helex.gr/web/guest/esed-hellenic-cgc

Vasileios Oikonomou
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the management seems to be strongly connected to the 2008 global financial crisis for which society
largely failed in holding accountable those who abused their power.
The last line of action that is highlighted in the Action Plan has to do with supporting companies’ growth
and competitiveness. This emphasizes the need for simplifications in the procedures of cross-border
operations of European enterprises, particularly in the case of medium-sized companies.
In addressing the above problems, the Commission targets at making the regulatory framework more
user-friendly through the use of legislation and non-complicated laws. With the global Financial Crisis of
2008 being a vivid illustration of the lack of adequate corporate governance practices, it is true that
concerted action is required on a national and an international level to improve the diversity and
efficiency of the Board of Directors and align the interests of senior management with those of the
shareholders.3
3
Sources: http://www.ecgi.org/tcgd/2012/documents/121212_company-law-corporate-governance-action-
plan_en.pdf , http://europa.eu/rapid/press-release_MEMO-12-972_el.htm

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5. Corporate Governance Code followed by firms
Analysis:
Of the 25 companies of FTSE/Athex Large Cap, seven of them (28%) adopt as their own code the Hellenic
Corporate Governance Code (HCGC), one (TITAN) follows the Corporate Governance Code of the United
Kingdom and the remaining seventeen companies (68%) follow their own Code.
0
2
4
6
8
10
12
14
16
18
Corporate Governance Code followed
Hellenic Corporate Governance
Code
Own Code
Other Code

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6. Implementation of the principles of corporate governance
6.1 Size of the Board of Directors
Analysis:
The companies under examination have been separated into two categories which can help in the
evaluation of the size of the Board of Directors: The blue category is for companies where foreign
investors participate in the share capital and the red category is for companies where the Greek State
participates in the share capital. Finally, the row in green includes all the companies of the sample.
It is observed that all two categories are within the required range of Board members (Blue Category:
11.3, Red Category: 13.2, All companies: 11.8). These results are on the same levels as in 2012 where the
average number of Board members was 124
.One encouraging observation is that there were no
companies to have less than 7 members on their Board of Directors which signals that companies have
4
Source: Corporate Governance Review 2012, Grant Thornton Greece
10 10.5 11 11.5 12 12.5 13 13.5
Size of the Board of Directors (average number of Board members)
Companies with Foreign
Investors' Participation
Companies with Greek State's
Participation
All Companies
“The board should contain no fewer than 7 and no more than 15 members.” (Hellenic Corporate
Governance Code, Special Practice 2.1)

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grasped the importance of a larger Board which can be more effective and diverse than a smaller one.
However, the same cannot be said about the upper limit for the size of the Board. Two (2) out of
twenty-five (25) companies presented Boards larger than fifteen (15) members. One common
characteristic of these companies was that the Greek State was the main shareholder in both cases, with
the ability to choose almost half the members of the Board.
In conclusion, the statistics seem to confirm an upward trend in the average size of the Board of
Directors in the past years. For 2013, the number might have decreased by 0.2 units, however it is still
notably larger compared to the 2011 statistics (11 members on Board of Directors).
6.2 Composition of the Board of Directors
Analysis:
The above graph examines the analogy between nonexecutive members (colored in blue) and executive
members (colored in red) on the Board of Directors. There are two categories in which the data have
0
2
4
6
8
10
12
14
1 2 3
1: Companies with Foreign Investors' participation
2: Companies with Greek State's participation
3: All companies
Composition of the Board of Directors (average number of
members)
executive members
nonexecutive members
“The board should be composed of a majority of non-executive board members (including
independent non-executive members) and include at least 2 executive members.” (Hellenic
Corporate Governance Code, Special Practice 2.2)

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been arranged. The first one includes companies with Foreign Investor’s participation, meaning foreign
investment funds or firms, but not individuals. The second one includes companies with Greek State’s
participation, or any other institution controlled by the Greek State. Finally, the column includes all
companies found in the FTSE/Athex Large Cap Index.
Clearly, nonexecutive members constitute the majority of the members in both categories. This is a
positive sign which reveals that almost all companies have complied with the relative special practice of
the Hellenic Greek Corporate Governance Code. Another interesting piece of evidence that arose from
data collection has to do with the fact that the number of independent nonexecutive members is almost
half the number of all nonexecutive members. Moreover, according to the Corporate Governance
Review 2012 and Corporate Governance Review 2011 conducted by Grant Thornton Greece, the overall
number of nonexecutive members has remained stable since 2011.
6.3 Presence of women on Board of Directors
Findex
Analysis:
As it can be seen from special practice 2.8 of the HCGC, there is no specific pretext that gives a definite
number of women on Board of Directors. However, companies are called upon to present and explain
0 0.2 0.4 0.6 0.8 1 1.2 1.4
Women on Board of Directors (average number of women per
Board)
Companies with Foreign Investors'
Participation
Companies with the Greek State's
participation
All companies
“The diversity policy including, gender balance, for board members, as adopted by the board, shall be
published on the company’s website. The corporate governance statement shall make specific
reference to the diversity policy applied by the company in relation to the composition of its board
and the percentage of each gender represented on board and senior executive team.” (Hellenic
Corporate Governance Code, Special Practice 2.8)

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their diversity strategy, which implies putting them on the spot for the sadly small number of women on
their Board of directors. The same separation as in the previous two sections exists.
The average number of women on Board of Directors is 1 which is a very low and dissatisfying number
given that this number is kept relatively stable in the past years while at the same time the number of
Board members is on the rise. What is more, many out of the 25 women on the Board of Directors seem
to be somehow related to the President of the Board. There are cases in which the only woman on the
Board of Director is the wife of the President of the Board who also happens to be the major
shareholder of the company. In addition, none of the companies is close to achieving the target of the
European Commission for gender equality, namely for women to comprise close to 40% of the
nonexecutive Board members. Lastly, there are nine (9) companies in the FTSE/Athex Large Cap which
have no women on their Boards. With that in mind, and also looking at the blue relative to the red
category, there are reasons to believe that the already low percentage of women on the Board (8.5%)
could be even lower if the Greek government chooses to proceed with the policy of privatization, as the
Greek State is responsible for allocating most of the women on the Boards it influences.
All in all, women on the Board of Directors are very few in number. Companies should be encouraged to
increase their numbers of women. The above numbers for the Greek market are considerably lower
than those in other European Markets. Therefore, the Greek State, in association with the European
Commission should attempt to incentivize shareholders and companies towards nominating and
including more women as members of the Board of Directors.
6.4 Publication of the size and composition of the Board on the Corporate
Governance statement
Analysis:
All the companies included in the sample publish in their Corporate Government Statements the
composition of the Board of Directors, the names of the Board’s members and the names of the
Committees of the Board. Lastly, all companies determine the number of nonexecutive members on the
Board.
“A corporate governance statement included in the annual report should provide information on
the board’s composition and include the names of the chairman, the vice-chairman, the chief
executive, as well as the heads and members of all board committees and the company Secretary.
In addition, the Statement shall name the non-executive members the board considers to be
independent.” (Hellenic Corporate Governance Code, Special Practice 2.6)

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6.5 Publication of brief curriculum vitae on the Corporate Governance
Statement
Analysis:
Eight out of twenty three companies (35%) publish brief curriculum vitae for each member of the
company’s Board. Six companies (26%) do not abide by the special practice while 9 companies (39%),
refer investor’s to their website for more information via a link that is provided beneath a relative
statement. It is worth mentioning, that in this section, there are data from only 23 companies as Coca-
Cola HBC and Viohalco are not included.
It is also worth-noting that according to a more recent provision of the HCGC, the post of the Special
Secretariat has become mandatory for the companies following the code. In the case that this provision
is not followed, the firm will have to publicly explain the reason for its choice not to have a Special
0
1
2
3
4
5
6
7
8
9
10
YES
NO
Refer investors to company's
website
“The corporate governance statement should state the term of appointment of each board
member and contain a brief curriculum vitae of each member, as well as a brief curriculum vitae of
the company Secretary.”(Hellenic Corporate Governance Code, Special Practice 2.7)

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Secretariat. According to the research made, of the 25 companies of the sample, 8 of them have
established a Special Secretariat whilst only 4 of them publish his/her curriculum vitae.
6.6 Existence of a Remuneration Committee
Analysis
The issue that is addressed in this section is the question of the existence of a Remuneration Committee,
comprised of Board members, as it is declared in the relative statement of the Hellenic Corporate
Governance Code. More specifically, within the jurisdictions of the Committee should be advising the
Board for the salary of each of its members, providing assistance in shaping the corporate remuneration
policy and submitting suggestions regarding stock option programs etc.
Research showed that 61% of the companies in the sample have actually formed a remuneration
committee which has the above jurisdictions while the rest 39% have not adopted this measure. The
existence of a remuneration committee is very important for a company. It ensures its proper
0 10 20 30 40 50 60 70
Has the company formed a Remunaration Committee?
NO (%)
YES (%)
“The remuneration setting process should be performed with objectivity, transparency and
professionalism, and be free from conflicts of interests. For this purpose, the process should be
assigned to a board remuneration committee, entirely composed of non-executive members the
majority of whom should be independent members.” (Hellenic Corporate Governance Code, Level
and Structure of Remuneration, Context)

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functioning and the alignment of the interests of senior management with those of the shareholders.
Unfortunately, although the majority of companies have complied with the provisions of the HCGC,
there is still a sizeable minority, which does not do so.
6.7 Remuneration Disclosure
Analysis:
According to the above practice taken by the Hellenic Corporate Governance Code, listed companies
should publish the remuneration of each of their Board Members. This should include, the wage,
bonuses and compensations that each member receives for his participation on Board Committees or
any other services that he provides to the company.
Research conducted on the above issue showed that no company publishes the remuneration of its
members according to the requirements provided by the Hellenic Corporate Governance Code. In the
past few years, this practice of the HCGC has been much debated as some critics of the above provision
suggest that disclosing such information regarding the remuneration of the Board members constitutes
a violation of their privacy and leaves them exposed to public malpractice.
“The remuneration report of board members should be part of the corporate governance statement.
The remuneration report for the financial year should contain:
 the policy and principles of the company on executive remuneration;
 the method of assessing performance and calculating variable compensation for board
members, including the qualitative and quantitative performance criteria used;
 the main elements of the individual board member service contracts, including duration of
the contract;
 the total remuneration paid to each board member during the year for their services in the
company and its affiliates, broken down into salary, bonuses, eventual severance payments,
as well as a description of the type and amount of any other awards or benefits granted;
 the number of shares and stock options granted to individual board members during the
financial year, including vesting, exercise and expiry dates, options price, as well as the
number of such rights exercised.” (Hellenic Corporate Governance Code, Special Practice
1.11)

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6.8 Evaluation of the Board
Analysis:
HCGC determines that there should be a process for the evaluation of the efficiency of the Board of
Directors and its Committees. This process should be clearly described on the corporate governance
statement and should be led by the President of the Board of Directors. This process should target at
recognizing and work towards improving the Board’s weaknesses.
Research showed that just 17% of the companies listed in FTSE/Athex Large Cap disclose such
information in their Corporate Governance Statement. This is a negative sign which shows that there is
still room for improvement in this area. This finding is also particularly relevant to the problems of sort-
termism and stakeholder sluggishness which concern the Board.
0 10 20 30 40 50 60 70 80 90
Board evaluation plan
NO (%)
YES (%)
“The board should briefly describe in the annual corporate governance statement how the
performance evaluation of the board and its committees has been conducted.” (Hellenic Corporate
Governance Code, Special Practice 7.3)

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Conclusion
The current Corporate Governance Review 2013 has brought to light evidence that highlight both
improvements to the current state of Corporate Governance in Greece but also weaknesses that persist
from previous years. As an overall observation, companies seem to abide by the spirit of the HCGC
regarding issues that concern the proper functioning of the Board, although there are major steps that
should be taken to ensure gender diversity and stronger women’s presence in places of senior
management. Additionally, it seems that most companies have not yet adopted the advised measures to
engage their shareholders in issues of Corporate Governance and especially those relative to the
remuneration of the Board. Nevertheless, Corporate Governance seems to be more important than ever
and should take priority as it is a potent tool in preserving transparency and accountability in today’s
business world.
Bibliography
1. http://www.bloomberg.com/quote/FTASE:IND
2. http://www.helex.gr/web/guest/esed-hellenic-cgc
3. http://www.ecgi.org/tcgd/2012/documents/121212_company-law-corporate-governance-
action-plan_en.pdf
4. http://europa.eu/rapid/press-release_MEMO-12-972_el.htm
5. Corporate Governance Review 2012, Grant Thornton Greece

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