Ethics & Compliance Programs: Autonomy, Resources and Operational Efficiency. April 26, 2017

Transcription

1 Ethics & Compliance Programs: Autonomy, Resources and Operational Efficiency April 26, 2017

2 Before We Get Started Today s presentation and recording will be provided via after the webcast BELA members can access the materials directly from the resources center on the members site Please submit questions via the chat function on the left-hand side of your screen Part 1 E&C Programs: Autonomy, Resources and Operational Efficiency Today, April 26, 2017 Part 2 Measuring, Communicating and Empowering Culture Tuesday, May 9, pm ET Part 3 Governance and Program Oversight Tuesday, June 6, pm ET 2

3 Speakers Erica Salmon Byrne EVP, Governance and Compliance & Executive Director, BELA Ethisphere Korin Neff Senior Vice President and Chief Compliance Officer Wyndham Worldwide 3

4 Agenda About Ethisphere How Our Data is Comprised 2017 Honoree Profile The Ethics Premium Autonomy: Ensuring Independence for the Compliance Function Stature: A Hallmark of Leading Programs Tracking Your Risks 4

5 Ethisphere is the Global Leader in Advancing the Standards of Ethical Business Practices MEASURE AGAINST STANDARDS Our corporate ethics standards, vetted by leading experts and used for 10 years, provide an independent, objective measurement tool critical to drive business decisions and stakeholder interaction. RECOGNIZE EXCELLENCE We recognize programs and companies who ve proven that their programs and practices are extraordinary and provide mechanisms to help communicate those recognitions. INSPIRE ADVANCEMENT Ethisphere s global summits, roundtables and publications capture the leading voices in the field. And our corporate membership group provides unparalleled networking opportunities. 5

6 How Our Data is Comprised: The Ethics Quotient The Ethics Quotient framework is designed to capture data on ethical culture, compliance programs, policy and procedure as well as other aspects of an ethical organization, in a consistent and standardized way. A confidential set of data unlike any other: Five weighted assessment areas that provide a holistic view into the organization Regularly updated and refined to fit evolving expectations and regulations 6

7 Actionable Data Drives Decisions 7

8 Profile of the 2017 Honorees and Data Set 8

9 The Ethics Premium: 6.6% Performance of the 2017 Honorees as compared to the US Large Cap Index over the calendar years 9

10 Autonomy Ensuring independence for the compliance function 10

11 Job Titles Specify all job titles held by the person assigned overall ownership of the compliance and ethics program. Please select all that apply. 80% 70% 72% 60% 50% 40% 37% 30% 26% 24% 20% 10% 0% Chief Compliance and/or Ethics Officer 4% Chief Executive Officer 1% Chief Human Resources Officer 4% Chief Risk Officer General Counsel or Chief Legal Officer 5% Compliance and/or Ethics Officer Executive, Senior, or Vice President (or similar level) 2% 2% Director (or similar level) Manager (or similar level) Other (Please specify) 11

12 Percentage of Time Dedicated to C&E by Person Assigned Overall Program Responsibility The larger the company, the more time the person with overall program responsibility will likely spend on the program According to Company Size by Annual Revenues 2017 Honorees 60% 59% 44% 30% 28% 28% 27% 10% 15% Less than $1bn $1bn to $5bn Over $5bn 0-50 percent percent percent 12

13 Reporting Structure To whom does the person with overall responsibility for the compliance and ethics program administratively or managerially report? 40% 38% 35% 30% 29% 25% 20% 17% 15% 10% 11% 5% 2% 2% 2% 0% Board of Directors, a committee of the Board, or other governing authority Chairperson of the Board Committee directly overseeing the Ethics and Compliance function Chief Executive Officer General Counsel or Chief Legal Officer Chief Financial Officer Chief Administrative Officer Other (Please specify) 13

14 Policy or Process to Terminate Person Responsible for E&C Is there a formal policy or process requiring that the Board, a committee of the Board, or other governing authority be notified or approve before the person who has been assigned overall responsibility for the compliance and ethics program is terminated? 40% 38% 35% 33% 30% 29% 25% 20% 15% 10% 5% 0% Yes, notification is required before termination Yes, notification and approval is required before termination No, termination may occur without Board notification 14

15 Performance Review 50% 45% Who conducts the annual performance review of the person assigned overall responsibility for the compliance and ethics program? 43% 40% 35% 30% 25% 20% 18% 19% 20% 15% 10% 5% 0% The Board (or other governing authority) and/or the Board committee that has oversight of compliance and ethics The direct manager (if other than the Board or other governing authority) The direct manager (if other than the Board or other governing authority) with input from the entire Board or other governing authority The direct manager (if other than the Board or other governing authority) with input from the Board committee that has oversight of compliance and ethics 15

16 Compensation Decisions Who makes compensation decisions for the person assigned overall responsibility for the compliance and ethics program? 50% 45% 44% 40% 35% 30% 25% 26% 20% 18% 15% 12% 10% 5% 0% The Board (or other governing authority) and/or the Board committee that has oversight of compliance and ethics The direct manager (if other than the Board or other governing authority) The direct manager (if other than the Board or other governing authority) with input from the entire Board or other governing authority The direct manager (if other than the Board or other governing authority) with input from the Board committee that has oversight of compliance and ethics 16 16

17 Stature: A Hallmark of Leading Programs How does the compliance function compare with other strategic functions in the business? 17

18 Frequency of Board Communication How often does the person with overall responsibility for the compliance and ethics program normally communicate with the Board, a Board committee or other governing authority? 100% 90% 80% 70% 60% 50% 40% 47% 40% 30% 20% 10% 0% Regularly scheduled, more often than quarterly Regularly scheduled, quarterly 2% 4% 5% Regularly scheduled, three times per year Regularly scheduled, twice per year Regularly scheduled, annually 2% 0% Ad hoc only; as needed Never 18

19 Authorities Given to Program Lead Identify which of the following authorities, if any, are granted to the person with overall responsibility for the compliance and ethics program and/or the person with day-to-day operational responsibility for the compliance program Honorees 2015 Honorees 2016 Honorees 2017 Honorees 97% 94% 95% 95% 92% 92% 95% 89% 84% 82% 78% 73% 57% 60% 52% 47% 76% 77% 67% 63% Primary budget responsibility for all C&E programs Primary hiring authority for all positions in the C&E function Final approval authority for field compliance operations and initiatives Significant input/ role in product or services decisions Significant input/ role in product/ supplier sourcing strategy 19

20 Trending towards increased reach, influence of Compliance across the organization Leading organizations have an engaged Compliance function with influence Select the types of interactions the compliance and ethics function has with other functional groups in your company Honorees 2015 Honorees 2016 Honorees 2017 Honorees 96% 96% 97% 98% 98% 98% 93% 89% 90% 85% 82% 83% Design audits and receive audit results Add C&E questions to employee surveys Given time in sales/marketing meetings (excluding sales training) 20

21 Tracking Your Risks What methodology is used to identify, analyze and address your particular risks? 21

22 Trend is More Robust Practices What is considered when conducting a C&E risk assessment? 98% 100% 99% 96% 82% 89% 88% 88% 68% 73% 40% 44% 45% 45% 29% 31% Recently passed regulations, trends, developments in C&E Adequacy of current policies, procedures, and controls Employee focus groups Employee interviews Employee surveys and assessments Focus groups of management Interviews of management Other 2016 Honorees 2017 Honorees 22

23 Risks that are Reviewed During the Standalone C&E Risk Assessment Process 2017 Honoree Data 51% 55% 45% 43% 41% 39% 43% 40% Risk Topic 23

24 Risks that are Reviewed as Part of a Standalone During the E&C Risk Assessment Process Note: CLOs and GCs cover more topics more often than CECO counterparts Chief Compliance and/or Ethics Officer General Counsel or Chief Legal Officer 57% 57% 52% 52% 56% 55% 39% 38% 38% 37% 46% 46% 41% 40% 44% 43% 44% 44% 43% 43% 45% 45% 29% 29% Intellectual Property Social Media Non- Retaliation Financial Integrity Insider Trading EEO, Diversity Anti- Corruption, Bribery Fair Dealing Gifts & Entertainment Human Trafficking Records Management Harassment 24

25 Thank You Contact Us Erica Salmon Byrne (720)