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End Notes



[1]Abbreviations stand for the California Public Employees’ Retirement System, California State Teachers Retirement System, New York City Funds, College Retirement Equities Fund and State of Wisconsin Investment Board (Del Guercio and Hawkins, 1997).

[2]The term blue-sky law is “ . . . derived from an early twentieth-century sentiment that slick and clever investment bankers from Wall Street would attempt to sell securities in entities with no much more substance than the blue sky above to unwitting investors on Main Street” (Afterman, 1995:7).

[3]Information is obtained from the Delaware Division of Corporations at internet page http://www.state.de.us (Jan. 1999).

[4]The State of Delaware has granted the power to the board of directors to make or to alter by-laws.

[5]Established in 1972, The Business Roundtable is an association of 200 CEOs in Fortune 500 and other leading corporations. It was founded in the belief that “business executives should take an increased role in the continuing debates about public policy” (The Business Roundtable, 1990:241).

[6]See also Eisenberg (1990) for an extensive review of the duty of care of corporate directors and officers.

[7]Note that the data was originally obtained from a total of 51 US corporations and 32 European corporations. The figures are based on N=78.

[8]The 1995 survey was sent to nearly 6,000 CEOs in the US and to more than 1,000 CEOs in eight other countries. The response rate of the total sample was eight percent.

[9]As indicated above, corporation laws do not provide a formal distinction between the duties and responsibilities of executive and non-executive directors.

[10]See the appendix of the 1994 Report of the NACD Blue Ribbon Commission on Director Professionalism for an overview of definitions of board independence.

[11]An exception to this rule is the integration of the offices of the president and secretary of the corporation.

[12]When available, data from 1981 is included in the data set.

[13]The survey was sent to nearly 6,000 CEOs in the US. The response rate was eight percent.

[14]Data on the separation of CEO and chairman roles is not available in the Spencer Stuart data set.

[15]In November 1978, the SEC approved disclosure rules on the function of audit committees, the names of committee members, the relationships that corporate directors have with the company, the resignation of directors and the attendance of directors at board meetings. Although the SEC strongly advocates audit committees, it does not require corporations to establish such board committees.

[16]The AMEX recommended the formation of audit committees composed solely of independent directors in 1980.

[17]The study also indicates that 74 percent of corporations had at least one grey area director in their audit committees.

[18]Note: Interlocking directorships include directors who are engaged in a business venture with a member of the corporation’s management team, who are executives or directors of major suppliers or customers of the corporation or who are affiliated with the corporation’s investment banker. In table 6.1, the total of percentages is more than 32% of the 428 directors in the sample because some directors fit in more than one category (Vicknair et al., 1993:56).

[19]According to Boyd (1996:168): “The Maxwell case was the most dramatic of the cases involving abuse of power by the founder of a large public firm who acted as Chief Executive while simultaneously chairing the board.” See also Boyd (1996) for an overview of high profile failures in the UK.

[20]In comparison to the Board Indexes in the US, Spencer Stuart only recently has initiated a research program on corporate governance developments in the UK. As such, information in this series is mainly based on annual reports issued in 1995 and 1996.

[21]The Financial Reporting Council is the standard-setting body for accountants in the UK.

[22]According to Finch (1992), the Cadbury Report contains a series of mere recommendations that deal with the application of the Code. One of these states that the LSE should require corporations to publish a statement of compliance with the Cadbury Code. The Cadbury Code also contains some recommendations for legislative reform in the UK (e.g., an amendment of the Companies Act with the requirement that executive directors’ service contracts should not exceed three years without the approval of shareholders - see also section 3.1 of the Code). The Committee has also welcomed exhortations - actions by “others” like the FRC to set forth new reporting standards.

[23]Many commentators have referred to the system of co-determination in German two-tier boards and are afraid that such a system will erode the current labor relations in the UK. Chapter eight on the Dutch corporate governance system indicates that codetermination is not necessarily an attribute of the two-tier board model.

[24]See also Cadbury (1993).

[25]The Confederation of British Industry is an organization of employers in the UK.

[26]Not to be confused with the committee named after Sir Adrian Cadbury.

[27]Directors’ Remuneration. Report of a Study Group Chaired by Sir Richard Greenbury.

[28]Kelly (1996) reports that shareholders could not tell the actual costs of pensions. Greenbury requested the Institute of Faculty and Actuaries to work out a new method to disclose the figures on the true cost of pension entitlements to the corporation. The actuaries responded with the so-called “transfer value method” which received a chilly reception in the UK. This led to an intense and as yet unfinished discussion on the disclosure of pension plans in the UK.

[29]The Hampel Committee is also called “Cadbury II” or “The Mark II Committee.” Compared to Cadbury I, the committee “has a much stronger business flavour than its predecessor” (Hall, 1995). The committee is chaired by Sir Ronald Hampel – the chairman of Imperial Chemical Industries (ICI) – and more than one third of the committee’s members were either chairman and/or CEO of listed corporations. Other members were a lawyer, a financier, an actuary, an accountant and an institutional shareholder.

[30]Personal comment of Sir Ronald Hampel in the Financial Times (Jan 29, 1998).

[31]According to ICMG (1995), only fifty percent of listed corporations had non-executive directors in their boards at that time. Of these directors, approximately twenty percent were categorized as independent directors. Related to this figure, ICMG does not provide a definition of the independence of these directors.

[32]The IOD published a Code of Practice for the Non-Executive Director in 1982. The Code states that every board of directors should have a minimum of two independent directors (see Tricker, 1984).

[33]Sir Ronald Hampel described such a non-executive director as an “essential safety valve” for times when shareholders find it difficult to approach senior executive directors of a company.

[34]These figures deviate from figures in the Peters Committee Report. According to the Report, 2,042 public corporations and 156,170 corporations with limited liability were incorporated in the Netherlands by January 1995!

[35]The management board is also called “Het Bestuur” in small or medium-sized corporations.

[36]Subsidiaries of a holding company that fulfil the three criteria are exempted from the structural model if the holding company itself is governed under the structure regime (see also the paragraph on the exempted regime).

[37]Although it is beyond the scope of this chapter to discuss the Works Council Act in more detail, it should be recognized that after the amendment of the Works Council Act in 1971, this Act has been amended several times to expand the rights of employees so they can become more deeply involved in corporate decision making.

[38]Under the rules of the common regime, the general meeting of shareholders appoints new members of the management board. In structure corporations, the supervisory board appoints managing directors. Yet, it should be noted that the position of the Shareholders’ Meeting can be also weakened by oligarchic clauses in corporations that operate under the rules of the common regime through the execution of “bindende voordrachtsrechten” and other mechanisms that may substantially curtail the power of shareholders in the company’s articles of association (see also box 8.1).

[39]Supervisory directors in large corporations under government control or of which the Dutch government owns a large amount of equity are sometimes appointed and dismissed by the government.

[40]The co-optation system does not hinder the transfer of shares nor does it hinder a public bidding on shares (van der Hoeven, 1995).

[41]The initial sample includes one hundred corporations listed at the AEX. Due to mergers, takeovers and other major strategic changes, the study could not always calculate changes in corporations’ supervisory board composition between 1987 and 1997. In addition, some corporations were only recently listed on the AEX. In these cases, changes were calculated after the major event or listing took place. For example, ABN and AMRO merged into ABN AMRO in 1990. In this case, changes in board composition have been calculated in the period between 1990 and 1998.

[42]Due to mergers, changes in listings etc, the number of corporations included in the 1997 data set totals to 99 corporations compared to one hundred in 1996. See also Maassen (1999a).

[43]Vergoosen en Muys-de Graaf (1997) indicate that 23 supervisory boards (out of a total of 137 corporations listed at the AEX) had formed an audit-committee in 1996. Maassen (1998b) indicates that at least 26 supervisory boards in a total of one hundred AEX-corporations had an audit committee in 1996. This suggests that prior to the recommendations of the Peters Committee, corporations have not always reported the existence of audit committees in annual reports. This should be borne in mind when the impact of the Peters Committee on corporate governance structures in the Netherlands is being assessed.

[44]Applicable to large structure corporations. Smaller corporations have a choice between a two-tier structure and a structure without a boards of directors (see also chapter 8).

[45]According to Finch (1994:57), “Self-regulatory structures are prone to a number of criticisms – that, for instance, they favour the regulated group and ignore the broader public interest; they are designed with large, well-organised, well-resourced enterprises in mind and fail to deal with those who really need to be regulated; their procedures tend to exclude third parties; they are low on accountability; they have anti-competitive effects; they tend not to enjoy public confidence; and their investigative, enforcement and sanctioning processes tend to be weak.”


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    Maassen, G.F. (2002). An International Comparison of Corporate Governance Models. A Study on the Formal Independence and Convergence of One-Tier and Two-Tier Corporate Boards of Directors in the United States of America, the United Kingdom and the Netherlands.

    Maassen, G.F. (2002). An International Comparison of Corporate Governance Models. A Study on the Formal Independence and Convergence of One-Tier and Two-Tier Corporate Boards of Directors in the United States of America, the United Kingdom and the Netherlands. Amsterdam: Spencer Stuart Executive Search.