Governance Committee
Measuring the Effectiveness of Fund Boards Print E-mail
Written by C. Meyrick Payne and Sara D. Yerkey of Management Practice Inc. (MPI)   
     Every year fund directors undertake a carefully conducted but somewhat subjective board effectiveness evaluation. Typically, counsel to the independent directors administers a well-honed questionnaire about independence, preparation and attendance. The directors often confidentially review their own performance in addition to the board as a whole. The process creates an opportunity for discussion and ultimately the strengthening of the board, benefiting the fund shareholder. The addition of tangible measurements, which are not commonly used, can give further insight and enhance the evaluation experience. This bulletin explores a quantitative focus for measuring fund board effectiveness.
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Working to Improve a Fund Stewardship Grade - March 2009 Print E-mail
Written by By C. Meyrick Payne and Jay Keeshan of Management Practice Inc. (MPI)   

Most fund directors are aware that Morningstar assesses the governance and ethics of mutual funds by assigning a Stewardship Grade. This process was started about five years ago but has recently been rejuvenated and reemphasized. Morningstar’s overall intent with the grades is to “shine a light on better/best practices.” They have currently rated about 1,000 out of 7,000 funds representing about 30% of all fund assets.

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The Costs and Benefits of an Independent Chair - August 2006 Print E-mail
Written by C. Meyrick Payne based on comments submitted to the SEC   

Management Practice Inc. (MPI), a professional consulting firm specializing in
mutual fund governance and the publisher of 15 consecutive years of independent third party research into mutual fund director compensation, would like to highlight several facts about the proposed Independent Chairman rule.

Cost of Independent Chairs

On average the annual additional cost of compensating an Independent Chair is approximately $30,000. There are about 500 fund complexes which would be required toappoint an Independent Chair. Therefore the incremental cost would be approximately $15 million, a miniscule percentage of both the $70 billion in total mutual fund fees and the $9.5 trillion in mutual fund assets. While the Independent Chair may choose to increase the use of consultants, staff, and analytical resources, the incremental cost should not be attributed to the proposed rule, but rather to other new or pre-existing regulations or legislation, such as Sarbanes-Oxley.

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Evaluating Board and Trustee Performance Print E-mail
Written by C. Meyrick Payne   

Guidance to trustees about how to comply with the SEC's new requirement that Mutual Fund directors annually evaluate the board's performance. This SEC requirement follows an earlier ICI recommended “best practice”.

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