News
BackOn Wednesday, the European Parliament (EP) voted on the report on corporate governance in financial institutions. What is called for is an improvement of corporate governance in financial institutions, such as a more long-term orientation of the institutes or a better supervision. The MEPs approved the report with a large majority.
Misdirected incentives through the remuneration policy for supervisory boards are to be reduced
In June last year, the Commission published the Green Paper on Corporate Governance in Financial Institutions and Remuneration Policies, which identifies the problems of corporate governance and proposes measures for improvement. For instance, misdirected incentives for participants, for example through the remuneration policy for supervisory boards, shall be reduced and a better supervisory structure created.
EP demands 30 percent quota of women in supervisory boards
The report of the European Parliament, which was adopted with a large majority on Wednesday, finds that bad corporate governance might have been a cause for the failure of the financial institutions. That is why it is important to improve corporate governance in institutions. The composition of supervisory boards should be more diverse in future. Hence, the demand is for a 30 percent quota for women. The quota named in the draft report was still 40 percent; however, this was rejected by the conservative side. Another objective is to introduce reports on the reliability and professional suitability of board members, which are to be assessed by supervisory authorities. The number of supervisory board mandates, which a person can hold as well as secondary activities of supervisory members are to be limited. Risk committees at the same level as supervisory boards shall be established for important financial institutes. Shareholders too shall be better integrated, for example through electronic voting.
Labour representatives play an important role in supervisory boards
It is to be welcomed that the important role of labour representatives in supervisory boards is underlined. They have a long-term interest in a company. Remuneration systems should no longer orient themselves on short-term gains, but on long-term progress. However, the focus is not on introducing mandatory rules but on creating a code of conduct.
Further information:
Report on corporate governance in financial institutions (version of 03/14/2011)
Green Paper: Corporate Governance in Financial Institutions and Remuneration Policies
AK position on the Green Paper: Corporate Governance in Financial Institutions and Remuneration Policies
In June last year, the Commission published the Green Paper on Corporate Governance in Financial Institutions and Remuneration Policies, which identifies the problems of corporate governance and proposes measures for improvement. For instance, misdirected incentives for participants, for example through the remuneration policy for supervisory boards, shall be reduced and a better supervisory structure created.
EP demands 30 percent quota of women in supervisory boards
The report of the European Parliament, which was adopted with a large majority on Wednesday, finds that bad corporate governance might have been a cause for the failure of the financial institutions. That is why it is important to improve corporate governance in institutions. The composition of supervisory boards should be more diverse in future. Hence, the demand is for a 30 percent quota for women. The quota named in the draft report was still 40 percent; however, this was rejected by the conservative side. Another objective is to introduce reports on the reliability and professional suitability of board members, which are to be assessed by supervisory authorities. The number of supervisory board mandates, which a person can hold as well as secondary activities of supervisory members are to be limited. Risk committees at the same level as supervisory boards shall be established for important financial institutes. Shareholders too shall be better integrated, for example through electronic voting.
Labour representatives play an important role in supervisory boards
It is to be welcomed that the important role of labour representatives in supervisory boards is underlined. They have a long-term interest in a company. Remuneration systems should no longer orient themselves on short-term gains, but on long-term progress. However, the focus is not on introducing mandatory rules but on creating a code of conduct.
Further information:
Report on corporate governance in financial institutions (version of 03/14/2011)
Green Paper: Corporate Governance in Financial Institutions and Remuneration Policies
AK position on the Green Paper: Corporate Governance in Financial Institutions and Remuneration Policies