Please do publish details about your board of directors!
Big, publicly listed companies don’t always do a great job describing their boards of directors to the public. Some probably think it’s not relevant. Others may not have realized what an important opportunity they are missing. Describing the significant experience and track record your board members have had as executives provides a clear message that your board is competent and relevant. Companies who don’t pay attention to this important aspect of good corporate governance might eventually be seen as lacking openness and transparency – critical preconditions for shareholders, investors, and society to be able to judge the company’s future prospects.
According to recommendations on corporate governance, it is the responsibility of the board of directors to safeguard the company’s and the shareholders’ interests with care and with due consideration for the investors and other stakeholders. This implies that the company should be able to show that its board has the right composition and characteristics for this massively important task.
And what exactly IS the right composition? That of course depends on the company’s purpose, strategies, and goals, but for the public to be able to evaluate the board, the recommendation is to include the following facts:
- Competencies and qualifications relevant to the company (including international experience and relevant details of the board member’s previous and current experience)
- Year of joining the board of directors
- Year of expiry of the current election period (to ensure fresh thinking is brought in – recommendation is reelection every year)
- Level of participation in meetings of the board of directors and committee meetings (number of meetings attended)
- Managerial duties in other commercial undertakings, including board committees, and demanding organizational assignments (to determine whether board member can realistically commit enough time to the company)
- The number of shares, options, warrants, etc. that the member holds in the company and its group companies, and any changes in such holdings during the financial year
We see some good examples, and other companies are well on the way, but many large, listed companies still have work to do in this area.
Chr. Hansen is a particularly good example of a company which gives the public good insight into the quality of its board of directors. The company shows this helpful statement on its Governance page, pulling together an easy overview of at least SOME of the important facts:
Chr. Hansen’s twelve-member Board of Directors consists of six female and six male members with French, Danish, Irish, Spanish, Swiss, German, US and British nationalities. Seven out of the eight shareholder-elected members are independent, and the average age is 60 years.
On its page for each Board Member, there is a very good description of the person’s position, gender, age, nationality, competencies and qualifications for being on the board, independence, year of joining board of directors, and managerial duties including other boards and committees. The company rule for annual reelection is published elsewhere on its governance documents. The company also shows the number of board meetings attended (“For information on meeting attendance please refer to p. 52 of the 2020 Annual Report”), and they cover all remuneration in the reports on this public page. https://www.chr-hansen.com/en/investors/governance/remuneration.
Two other companies which do a good job of describing especially the competencies and qualifications for being on the board are the Taylor Wimpey, one of the largest British based house building companies, and Pennon Group PLC, a British water utility. In this example from Taylor Wimpey, the Chair’s background and competencies are well described, as are her other duties and roles (#9 above). The same is true in this example from Pennon Group. Level of board meeting participation is published by Taylor Wimpey on the very first page of their excellent governance report here, and Pennon describes board remuneration very clearly in a separate document here. Annual re-election is the overall company policy at both companies.
It doesn’t have to be a huge task to put this information together, and if your board is already on a journey to become as professional as possible, it is worth putting some effort into this task.
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