No More Boardrooms As Usual In Sweden?
Nine months into Percy Barnevik's tenure as chairman of Investor, his influence is being felt in nearly every company in Sweden's Wallenberg empire. A Barnevik ally, Lars Thunell, is cleaning house at S-E-Banken, the Wallenberg bank, replacing executives and speeding up restructuring plans. Saab Aircraft is shuttering its money-losing civilian aircraft operations, and cost-cutting exercises are under way at several companies in which Investor, the Wallenberg family holding company, has major stakes.
Now, Barnevik, 56, is launching a campaign that could have an even bigger impact than his relentless demands for better performance at lower cost. He's taking on the clubby corporate system of Sweden, where a relatively small group of executives sits on the boards of many large companies. Boardroom reform is a keystone of his plan to transform the Investor group from a tight-knit Swedish cluster of companies with worldwide operations into the global keiretsu of his dreams.
Beginning with a public panel discussion in Stockholm on Jan. 23, Barnevik is expected to call for a younger, more diverse group of board members at the Wallenberg companies. Directors, he thinks, should no longer automatically expect to enjoy the "camaraderie" of board meetings until they reach the retirement age of 70. Barnevik also wants to open the way for women, rarely found on Swedish boards now. Above all, he wants to internationalize Swedish boards, which generally have at most a token foreigner--like many in Europe. "It is crazy to fill up boards with locals when 95% of the companies' business is outside of Sweden," he says.
Broadening the board was one of Barnevik's pet projects at ABB Asea Brown Boveri Ltd., where he served as CEO from 1988 to 1996 and where he remains chairman. Its board members now include an American, former G.D. Searle CEO Donald H. Rumsfeld; former European Union Commissioner Peter D. Sutherland; and Yotaro Kobayashi, CEO of Fuji Xerox. Barnevik says that having access to Kobayashi's first-person assessments of the Asian financial crisis has been "extremely important" for the ABB board.
RAMQVIST RUMORS. Barnevik's plan for the Wallenberg companies has risks. If he is not careful, he could trigger a debate that might undermine his patrons' delicately maintained control. The Wallenbergs don't have a great deal of capital. They exert influence over a network of companies worth roughly $100 billion through a system of loyal executives and special voting shares. Corporate-governance advocates frown on the arrangement, since decision-making remains out of the hands of the increasingly important outside foreign shareholders who provide the capital. Barnevik could open the door to demands for a deeper shakeup than he or the Wallenbergs want.
It's not clear how many big companies will heed his campaign, timed to influence the round of Swedish annual meetings this spring. One company to watch is Ericsson, where CEO Lars Ramqvist is expected to announce soon that he will step down. It is rumored that Barnevik is against the well-regarded Ramqvist staying on as chairman, as is traditional at Swedish corporations, because the continuity could hamper change. The Wallenbergs, who control 40% of Ericsson's voting stock, could probably block Ramqvist if they wish.
Barnevik laughs off questions about Ramqvist. Indeed, the odds are that he can reshape boards without damaging controversy or creating trouble for the Wallenbergs. He has made a career of negotiating such shoals. And the tough standards he sets mean higher stock prices for both the Wallenbergs and outside shareholders, such as Michael F. Price's Franklin Mutual Advisers, which owns 7% of Investor. Owners are likely to put up with Barnevik's outspokenness as long as he delivers.