More Sunlight On European Boards Of DirectorsGene Koretz
It has been a long time coming, but many of the same pressures that forced boards of U.S. corporations to assume more independent, activist roles are now being felt by their European counterparts. According to a new Conference Board report, a combination of scandals at major companies, rising shareholder pressures, and the growing multinational scope of corporate operations is "challenging European directors to improve their stewardship of the companies they oversee."
The most significant development has been in Britain, where a special panel drawn from the financial and business communities recently issued the so-called Cadbury report (named for the panel's chairman, Sir Adrian Cadbury), which recommends a code of practice for boards of directors. The code seeks to strengthen independent monitoring of corporate affairs and ensure reliable reporting of financial information.
While other European nations have tighter laws regarding board structure and duties, the Conference Board reports that they, too, are holding directors' feet closer to the fire. The big push on the Continent is to improve the selection of independent, capable outside directors and to increase accountability.