To be among the companies with top class boards of directors, Danish companies should be evaluating their boards annually and with a high quality process.
The guidelines as of April 2020 strongly recommended the following:
• That the board of directors establish an evaluation procedure for an annual evaluation of
o the board of directors
o the individual members’ contribution and results
o the cooperation with the executive board
• Among other factors, the evaluation should include an assessment of
o the Chairman’s leadership
o the composition of the board of directors (including competencies, diversity and number of members)
o the work in the committees and the committee structure
o the organization and quality of the material submitted to the board of directors
• External assistance should be obtained at least every three years
• The evaluation procedure and the general conclusions should be described in the management commentary and on the company’s website
• The Chairman should be accountable for the evaluation of the board of directors, including the process and general conclusions at general meetings before the election of the board of directors.
Based on the above, Leadership Advisor Group analyzed how well the Danish C25 companies met these recommendations. We used systematic desk research, reading the C25 companies’ management commentary and researching their websites, then commenting on each of the companies’ written descriptions. As our assessment was based purely on what the companies have described in writing, we did not include the last criterion (whether the Chairman is accountable).
Our analysis included the extent to which the C25 companies comply with the current recommendation, and the standard (quality) with which these evaluations have been carried out.
It is our intention that this document will not only shed light on the challenges associated with these recommendations, but also inspire boards that would like to comply with the recommendations. The use of these recommendations would increase the overall effectiveness of the board, which would benefit the company, the stakeholders, and the community.
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