Position papers on board composition and independence
26 October 2018
We have published three position papers on why effective boards need industry expertise, an independent chairperson and board members with sufficient time commitment.
The fund’s value is dependent on well-functioning boards in the companies we are invested in. The board is responsible for guiding company strategy, monitoring management performance and providing accountability to shareholders. We vote at around 60,000 board members elections on an annual basis. In our view there are some common features that can ensure that the board functions effectively.
“The board should collectively have a thorough understanding of the industry in which the company operates and at least two independent members should have worked in the industry. In addition, the board should exercise objective judgement on corporate affairs and be able to make decisions independently of management. To ensure this the board should be chaired by an independent non-executive member,” says Chief Corporate Governance Officer in Norges Bank Investment Management Carine Smith Ihenacho.
Further, the board members should devote sufficient time to fulfil their responsibilities effectively. They should not serve at more than five boards at a time
We are a large owner and it is important for us to be predictable in our ownership work. Clear positions create predictability for the companies we are invested in. As an owner we can influence companies by voting at their board members. Good long-term return is dependent on effective boards.
Marthe Skaar, Manager Communications and External Relations
Tel: +47 926 17 663 / +47 24 07 35 61
E-mail: [email protected]