Corporate gouvernance
The main topic of this session is to analyze the structure of firm’s board and its evolution upon the time. Which criteria should be taken into account to form an efficient board? What is the legitimacy of the CEO as a chairman? Who should be in charge of forming the board and how?
The board is a structure of elected or appointed members who oversee the different activities of an organization or a firm. The board works on three areas of development: planning and policy, organization, finance and support. In a wide number of companies in Europe and USA, the board is composed of an average of 10 directors, among whom we found the CEO, some representatives of executive directors and some outside directors that have experience in the area of business of the company. But a particular board structure that meets the needs of one company may be completely inappropriate for another. Board structure may change according to the Governance structure and there is a widespread view that all board should have at least three committees: Audit, Compensation and Corporate Governance committees made up of different directors.
One of the main issues in the composition of a board is the question whether the chairman and the CEO roles should be separate or combined. Board is supposed to be the authority that will assess the work and the decisions made by the CEO. So how could the CEO assess himself if he is the chairman of the board?
In many companies, the CEO is usually the major shareholder, which can give him the legitimacy for the position of chairman to have an overview of the decision making process related to his firm and to feet his position of the powerful man of the company with the largest vote‘s right. In such case is it worthier to have the major shareholder as a chairman and to appoint another CEO to the company?
The paradox remains in the process of forming the board. The CEO can appoint the members of