|Fidelio was delighted to speak recently in Copenhagen on the topic of Board Evaluations and Board Dynamic at the Danish Professional Directors Association Conference. The theme is topical given the government-sponsored review being conducted by ICSA in the UK of how Board Evaluation is delivered; in the Danish market there was clear interest in what value an Evaluation adds, how is it best conducted, and by whom.
We were joined on the panel by a leading international investor who has previously joined Fidelio Board breakfasts, as well as Chairs and practitioners. A consistent theme developed. While compliance and regulation is of course important, Boards benefit substantially from an Evaluation that is able to identify the few key areas that are challenging the Board. Addressing these issues increases the Board’s effectiveness and unlocks value.
This sits very comfortably with Fidelio’s approach and one of the challenges frequently identified in an Evaluation relates to achieving greater diversity at Board and Executive level. Cognitive diversity is an attribute of an effective Board and gender diversity is an important contributor.
Scandinavia has long been considered a trailblazer in promoting gender diversity and formal quotas. Norway, for example, obliged listed companies to reserve 40% of Director seats for women in 2008, with strict sanctions. Denmark, however, is not at the forefront and in spite of a strong interest in corporate governance, performance on gender diversity remains somewhat lacklustre. A recent survey for the Danish Gender Diversity Roundtable puts Denmark very much in the middle of the pack rather than at the forefront.
Nor is Denmark alone. Hermes EOS, the investor advisor, has given German companies a “final warning” on gender diversity and is promising to vote against any Supervisory Boards that fall short of its guidelines. Despite legislation – the so-called Frauenquote – for Supervisory Boards, Germany’s performance remains poor at the operational level.
“With regard to diversity on the management board and below, Germany is still lagging very much behind internationally” – Hans-Christoph Hirt, Head of Hermes EOS