Governance framework: beyond the boardroom

Governance framework: beyond the boardroom

How can telecom companies gain greater oversight and control over their significant investment in capital projects?

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Companies need an overall strategic framework, to provide oversight for the five stages of the capital management life cycle, and ensure that projects support key organizational goals and adapt to changing market conditions. The framework is a basis for prioritizing investment decisions, planning, budgeting and evaluating projects.

According to the respondents to KPMG’s 2015 global survey:

  • 95% have a formal capital management policy
  • 84% have a Board or executive committee to oversee capital management
  • all have a standardized and documented capital planning framework 
  • the framework typically includes clearly defined and applied capital categories 
  • only 37% align capital investment metrics with business unit and executive performance incentives.

Setting policy parameters

Respondents’ policy documents cover most elements of our capital management framework, with some variations relating to active management disciplines, planning timeframes, prioritization and evaluation criteria.

Objectives and priorities

Organizations participating in the study are acutely aware of the intense competition and their dependence on the capital markets for investment capital. 

Not surprisingly, the main objectives for capital management are to maintain or improve the organization’s market position, and to create shareholder value.

Executive remuneration

Only a third of organizations surveyed directly or indirectly link executive remuneration to capital management objectives.

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