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BCC Presentation 19. September 2008

BCC Presentation 19. September 2008. Danish Corporate governance in a European perspective. Steen Thomsen st.int@cbs.dk Center for Corporate Governance Copenhagen Business School http://uk.cbs.dk/ccg. Corporate Governance Systems . Boards. One-tier system. Two-tier system.

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BCC Presentation 19. September 2008

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  1. BCC Presentation 19. September 2008 Danish Corporate governance in a European perspective Steen Thomsen st.int@cbs.dk Center for Corporate Governance Copenhagen Business School http://uk.cbs.dk/ccg

  2. Corporate Governance Systems

  3. Boards One-tier system Two-tier system Supervisory board The Board Outsiders Management board Insiders Company Company Employees

  4. Non-profits that own/operate business firms..ties to founder/family Creation by donation Independence (no owners, no members) Governance by Charter Business activity Industrial foundations

  5. 1. A. P. Møller Gruppen - APM OG CMMs Fond 2. J. Lauritzen - J.L. Fondet 3. Carlsberg – Carlsbergfondet 4. Novo Nordisk - Novo Nordisk Fonden 5. Skandinavisk Holding - Augustinus Fonden 6. Danfoss - Bitten & Mads Clausens Fond 7. Lego - Legofonden 8. Grundfos- Poul-Due Jensens Fond 9. Lundbeck - Lundbeckfonden 10. Gutenberghus - Egmont H. Petersens Fond 11. Løvens Kemiske fabrik - Leo Fondet 12. J.C. Hempel - J.C. Hempels Fond 13. Carl Allers Etablissement - Allerfonden 14. V. Kann Rasmussen - V. Kann Rasmussen Fonden 14 foundation-owned firms in Denmark´s top 100

  6. Foundation Donations (optional) Minority Investors (optional) > 50% Company (normal joint stock co.)

  7. An Example Oticon Foundation Other Investors 39% 61% Donations William Demant Holding PLC 100% 100% Oticon Hearing Aids Other Businesses

  8. Foundation-owned companies should fail lack a personal profit motive limited risk diversification But they perform well Profitability, growth, survival..vs. family- and investorowned companies No tax advantages for the company The Foundation Puzzle

  9. Two tiers Employee representation (1/3) Managers on board (but less frequently in listed companies) Mandatory Separation of chair and CEO Small boards Denmark: Board structure

  10. Board Diversity in Scandinavia 2005

  11. Chair education DK (%)

  12. Danish Board diversity (Largest companies 1994, 2000, listed companies 2005)

  13. The Danish Board network 2001

  14. The ownership network 2001

  15. Activities and incentives

  16. Listed Danish companies1983-2006(Ken Bechmann 2008)

  17. DK

  18. Danish owners are relatively strong (family/foundation ownership…) The board is relatively independent of management (two-tier system) Boards are relatively small Employee representation => Management is relatively weak (c.f. low levels of compensation) A Conclusion on Denmark

  19. Not the classical agency problem (weak owners, strong managers) Nor the Stakeholder problem (cf. Investor protection, Employee representation etc) => Active ownership is key The pertinent governance issue

  20. Novozymes – foundation ownership Coloplast – family ownership ISS – private equity Topdanmark – investor ownership Danisco – investor ownership Company cases

  21. Future Trends • Risk and governanceAudit committees, regulation.. (29. oct..) • Private equity • Social responsibility (climate….)Signing Global Compact (8. October) • Women on board • Employee ownership revisited

  22. Thank you!

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