Trends in board composition show that Danish boards are becoming more diverse, but there is still more to be done
Research shows that having a diverse professional board of directors encourages a variety of perspectives in the decision-making process and therefore contributes to safeguarding the future of the company.
The Danish Committee on Corporate Governance (CCG) states that the composition of the board of directors must enable it to manage duties relating to strategy, management and supervision/control, and that “diversity increases the quality of the work and the interaction on the board of directors and ensures diverse approaches to solving the tasks of the board of directors”.
Leadership Advisor Group has conducted in-depth desk research to track the details of the boards of the Danish C25 since 2018, and this report compares the findings from 2018 and 2022 (based on review of publicly-available data as well as approximately 170 CVs).
The research covers these key diversity dimensions:
- Type of experience of the board members (Finance, CEO, Strategy, HR, etc)
- Breadth of experience types on the board (e.g., avoiding a concentration of people with mainly Finance backgrounds or similar)
- Nationality (% Danish vs non-Danish)
- Size of the board (number of board members)
- Tenure of the board members
The main findings are these:
- The most significant development (compared to 2018) is increased diversity across gender and nationality.
- Average % female across the C25 boards is up 12 points to 39%
- Average % non-Danes is up 11 points, to 56%
- These are good signs that companies are striving for a broader range of opinions.
- In terms of experience types, all boards seem to agree that CEO / MD and financial / CFO experiences are needed and have minimum one board member with these competences. Boards still seem to recruit a narrow set of experiences, while several other experience types (HR, Legal, IT, to name a few) are not sought after. The question could be asked whether some of these boards may have a critical knowledge gap?
- The average age of board members has not changed significantly (still around 60 years old), and data shows that most board members are between the age of 55 and 65, so one could ask whether boards might be missing out by not getting input from other age groups.
- Board size is still, on average, about 7 NEDs (same as in 2018)
- However, board size ranges from a low of 5 for Demant to a high of 9 for Carlsberg, Danske Bank, Novo Nordisk and Tryg.
- While a small board might be easier for the Chair to lead, it will be inherently difficult to compose in a diverse way.
- As for tenure, the average is 5 years, but there is a large range, from a low of an average of 2 years for Netcompany board members (meaning this board hasn’t had a lot of experience with Netcompany yet) to, for example, 8 years for Bavarian Nordic
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