Degrees of Governance Separation

Clément Courteau of SquareWell comments to Accounting and Business Managzine regarding the different governance regimes. Corporate governance arrangements across Europe remain diverse and unlikely to converge on a single formula, though there are some emerging trends. Of 17 countries included in a new survey from Accountancy Europe, 13 now largely separate the roles of chief executive and chair to ensure they are held by different people.

Different approaches persist for board structure: one-tier (a single board of directors and supervisors) or two-tier (the directors and supervisory board are separate). Rules for the presence of women on boards are split fairly evenly among those jurisdictions that use prescriptive legal measures and those who leave it to companies to take voluntary action.

On employee representation, while the differences are many, the Accountancy Europe survey highlights some clear trends. For 10 of the 17 countries, employee representation on boards is neither recommended nor the norm. Five countries – Austria, Denmark, Sweden, France and, famously, Germany – mandate workers on boards.

Clément commented that “Employee representation ensures that the board has access to inside information on workers’ situation. However, outside of countries where it is mandated by law, there is no incentive to include employees’ representation. We have observed that companies find alternative channels of communication between employees and the board.”

The full article can be accessed here.