• Are we too focused on independence at the expense of skills?  Chair of Canadian think tank, the Institute for Governance of Private and Public Organizations, Yvan Allaire argues that independence of itself is no guarantee of director/board credibility, or of maintaining effective governance standards.  
• In Brief | Why boards should take an 'activist' approach to setting strategy: Though there are a range of views as to how hands-on boards should be in setting and monitoring business strategy, Boston Consulting Group argues that given the rapid changes in the current business environment, there is scope for an 'enhanced role' for directors in 'partnering' with management to guide the company's direction.  By ensuring there is sufficient focus on the achievement of long-term objectives, actively challenging assumptions, offering counterarguments and offering the benefit of 'cross-domain insights' as well as by closely monitoring execution, boards can bring value to the process (and offer some protection against actual activist threats before they eventuate) they argue.  

• The smaller the company the fewer women on boards?  A new AICD report on the state of gender diversity in ASX 201-500 companies has found (gender) diversity declines in line with the size of the company.  
• United States | By August 31 2018, California could become the first US state to mandate board gender quotas and as things stand, meeting the new requirements will require significant change writes Equilar, but in the absence of legislation or 'proactive encouragement' change could otherwise take decades.  
• No correlation between board (gender) diversity and gender diversity in the C-suite? ISS writes that despite an overall increase in board (gender) diversity globally, there are very few women in C-suite roles in US companies suggesting that 'deeper cultural shifts' within organisations are required to achieve broader gender parity objectives.  
• In Brief | The UK Financial Reporting Council (FRC) has announced a launch event for a research project into the latest trends in FTSE 350 companies' diversity and inclusion reporting.  The event will include discussion of how FTSE 350 companies are currently reporting on diversity and inclusion in their annual reports, in particular against the principles in the UK Corporate Governance Code.  'With companies that have 250+ employees now required to publish their gender pay gap data, and other areas of diversity increasingly in the spotlight, this area of reporting is very topical and something the FRC champions, for example, as a signatory to the Government's Women in Finance Charter' the FRC writes.  The event will be held on 17 September.

• In Brief | $23m over 14 years not a competitive enough compensation package?  Equilar writes that Netflix is likely to pay the successor to outgoing CFO David Wells more, as according to Equilar's analysis, Mr Wells' pay for 2017 ($5.2 million), was both below the median and the average pay for CFOs in comparable companies. 'Attracting new talent at the executive level requires competitive pay packages, particularly on the same playing field as peer groups. It would come as no surprise if Netflix offers a pay package above the peer median to its next CFO, regardless of whoever that may be' Equilar writes.  
• In Brief | The Australian gender pay gap is at a 20 year lows according to the WGEA: Equal Pay Day will fall on 31 August this year, marking the 62 additional days from the end of the previous financial year that Australian women need to work to earn the same pay as men.  In making the announcement, WGEA Director Libby Lyons commented that the fact that the national gender pay gap has reached its lowest level in 20 years at 14.6%, is a 'great result' and testimony to the 'work employers have done in addressing issues such as pay equity' but cautions against complacency stating that 'there is still much work to do'.   

• In Brief | US Bill HR 4015 which would give companies the right to review proxy advisors' work before it goes to clients is unwarranted argues CII.  The Council of Institutional Investors has issued a statement refuting WSJ claims that proxy advisory firms dictate voting outcomes and arguing strongly against the need for legislative intervention. CII writes that 'herd voting is a myth', investor independence is clear in voting statistics, proxy advisors generally recommend voting with management, and that the Bill is unwarranted and may 'encourage proxy advisory firms to skew their reports and recommendations toward companies rather than clients'.

Australian Prudential Regulation Authority (APRA)

• In Brief | Treasurer Scott Morrison has announced that he intends to nominate former Deputy Secretary, Markets Group at the Treasury Mr John Lonsdale as APRA's second Deputy Chair for a five year term.  The appointment is conditional on the governor general's approval.   
• In Brief | APRA is seeking industry feedback on two proposed approaches intended to aid ADIs in representing and communicating their capital strength (though the proposals would not change the amount or the allocation of capital): 'The reliance of the Australian banking system on international markets for funding makes it important that investors understand and have confidence in the banks' capital strength during ordinary times and in periods of market disruption' APRA Chair Mr Byers said.  
• In Brief | APRA has released its quarterly PHI update for June 2018.  

Overseas Developments

• Hong Kong | The Hong Kong Securities and Futures Commission has released its latest quarterly report summarising key developments from April to June 2018.  

• United States | Legislating a social licence to operate? Democratic Senator Elizabeth Warren has flagged plans to introduce a Bill requiring large companies to look beyond maximising shareholder value, and instead to take into account the interests of employees and other stakeholders in company decisions.  
• In Brief | RIAA Benchmark Report 2018 New Zealand released: Following on from the recent release of RIAA's Australian RI Benchmark Report, the NZ report has identified similar growth and trends in NZ.  According to the report, the majority of professionally managed investments are now invested as responsible investments, with total assets under management having more than doubled in just two years driven primarily by client demand. 'In that short amount of time, we have seen nearly the entire investment industry move to put in place a responsible investment approach, from 2.5% of the industry two years ago' said Simon O'Connor, CEO of Responsible Investment Association Australasia (RIAA).

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission)

• Top Story | Financial Services Royal Commission Round 5 Superannuation Hearings week 2: Overview of week 2 case studies.
• The latest Governance Institute Ethics Index has found that Australians are losing faith in corporate ethics, particularly in the banking, finance and insurance sectors, in wake of recent scandals and issues emerging from the Financial Services Royal Commission hearings.
• In Brief | Calls for the timeline and terms of reference to be extended?  The senate has agreed to Senator Fraser Anning's non-binding senate motion for the terms of reference for the Financial Services Royal Commission to be extended to include the actions of receivers, liquidators and valuers; and for the timeframe for completion to be extended to allow more time for farmers to be heard.  Reportedly, the senator has said he will withhold his support for government legislation if his demands are not met.
• Where are the CEOs?  The Australian has questioned why CEOs (in the main) have not appeared as witnesses at the Financial Services Royal Commission, given the cultural and governance issues being revealed, and the inability of some witnesses to respond to questions.  'The CEOs are the ultimate spokespeople for any bank — they are invariably the highest paid, they are 100 per cent responsible for the culture of a bank' The Australian argues.  

Other Developments

• Top Story | Empowering consumer choice – ACCC to regulate the Consumer Data Right.
•  The senate committee has recommended that the 'Protecting your Super' Bill — Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 — be passed.
• In Brief | RBS to pay a record penalty for (alleged) crisis-era misconduct: The US Department of Justice has announced that it has reached a settlement with the Royal Bank of Scotland group plc (RBS) to resolve federal civil claims that RBS misled investors in the underwriting and issuing of residential mortgage-backed securities between 2005 and 2008.  According to The DOJ the penalty is the largest imposed to date for financial crisis-era misconduct at a single entity under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
• In Brief | US SEC has announced that Citigroup will pay $10.5 million in penalties to settle two SEC enforcement actions alleging 'it fell short of its obligations to supervise its traders and maintain appropriate controls to guard against fraud'.  'Citigroup's lax supervision and weak internal accounting controls allowed a handful of rogue traders to mismark positions over several years and, separately, resulted in the unnecessary loss of hundreds of millions of dollars of its shareholders' assets to fraud' SEC writes.

• Should ASIC 'name and shame' firms that perform poor quality audits? Incoming Deloitte CEO Richard Deutsch argues that it should.  

• In Brief | Australia should look to China on innovation: The 2018 edition of the Global Innovation Index (GII) on the theme 'Energizing the World with Innovation' has ranked Australia 20th overall, and 6th in the South East Asia, East Asia and Oceania region behind Singapore (4th overall, 1st in the region); The Republic of Korea (12th overall, 2nd in the region); Japan (13th overall, 3rd in the region); Hong Kong (14th overall, 4th in the region); and China (17th overall, 5th in the region).   The report argues that 'China's rapid rise [in the rankings] shows the way for other middle income economies'.
• In Brief | Could a Code of Conduct prevent a 'speak up' culture? The Australian Medical Association has cautioned that proposed revisions to the Code of Conduct for doctors 'could be interpreted as coercing doctors into complying with relevant laws that are inconsistent with professional accepted standards of medical ethics in Australia' including (among others) raising concerns that proposed revisions could be seen as 'trying to control what doctors say in the public arena by stifling doctors' right to publicly express both personal and professional opinions'.  The draft code's public consultation period has been extended until August 17.

• Top Story | Legislation to combat illegal phoenix activity released for consultation.