Board appointment practices - an international overview

Discussion note 11 - 18 September 2012

Shareholders receive return on their invested equity only after the company has ensured the fulfilment of obligations to all other parties. Shareholders are therefore rightly given prerogatives to influence the company, through the approval of certain corporate decisions including, not least, the appointing of the board. This note provides a brief overview of board appointment practices in 10 equity markets. It does not seek or claim to give a full description of all relevant aspects or considerations.

MAIN FINDINGS

Despite differences in board structures, election procedures and nomination processes, significant commonalities of board appointment practices exist across the 10 major national stock markets analysed. In all markets companies have a shareholder-approved board with a responsibility to oversee management. Shareholders have no formal role in producing a recommended (“nominated”) board slate, with the exception of Sweden. Shareholder rights to propose alternative board candidates exist, but are seldom used. Informal involve ment in board nomination processes is the preferred route for shareholders wanting to yield influence over board composition.

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