Brussels, 05/04/2011 (Agence Europe) - The European Commission has launched a consultation exercise that will run until Friday 22 July on whether EU action is required to diversify the membership of management boards of companies quoted on stock exchanges in the European Union (see EUROPE 10351). Draft legislation has already been announced for the end of the year, once the consultation exercise and its outcome have been analysed.
In Europe, there is a sharp difference in the number of women on management boards from one country to another. In Scandinavia, women make up between 18% and 33% of management boards. France has introduced legislation in this domain, while in Italy 70%, in Portugal 55%, and in Austria 50% of listed companies have no women on the board. Likewise, when it comes to nationality, the situation varies widely from one member state to the next. In Poland, there is nobody from any country other than Poland on the board of 68% of companies quoted on the stock exchange, but in the Netherlands, there are more people from outside than the Netherlands on boards than there are Dutch people (54%). The European Commission is eager to get management boards to think outside the box, particularly in big companies, and is asking stakeholders whether it would help if the EU introduced legislation to bring a wider range of backgrounds onto boards of management. Should there be a quota of women, for example, or an upper limit on the number of companies on whose board any one individual can sit?
Criticising the short-term mindset of some types of shareholders but without wanting to restrict the right to invest where one wants, the Commission is looking for ways to get shareholders involved in corporate decision making for companies quoted on the stock exchange. It comments: “Shareholder oversight is one of the checks and balances in the corporate governance system and is an essential tool to hold management accountable for its decisions and actions”. The Commission is asking interested parties to list what areas of EU legislation encourage shareholders to take a short-term view of company performance. What can be done to ensure that commission paid to professional portfolio managers does not encourage them to seek a fast buck? What measures could encourage better shareholder cooperation within the same company? The Commission will also be asking how shareholders can be identified and how minority shareholders can be protected.
Proxy advisors. Proxy advisors (treasury trainers like RiskMetrix) exercise considerable influence on shareholder voting at AGMs, particularly institutional shareholders. The Commission wonders whether EU action is required to make their methodology more transparent and reduce the risk of conflicts of interest (recommending certain behaviour in the interest of the companies whose shareholders they are advising). (M.B./transl.fl)