Future governance trends: board composition going global

The FT ran an article earlier this month entitled: Europe's boards become more international, authored by Sarah Gordon. This is a trend I have witnessed first hand in the boardroom with even smaller firms having board members with backgrounds from several countries, such as France, the US, Germany, The Netherlands, and Belgium.

The article presents research done by the Hay Group, a UK based strategic management consulting firm, which examined board composition and governance trends for 376 European companies listed on 12 national stock exchanges, including the UK.  It contains some interesting results regarding signficant changes in boardroom composition over the past one or two years.  

The research demonstrates that "home" country directors are now increasingly making room for directors with a strong international background.  Some interesting stats from the report include:

- Six out of ten directors were local this year, down from seven last year, 

- UK boards have more non-UK nationals as directors than thier European and US peers, 

- Women now made up 38% of new director appointments and overall make up 23% of directorships,

- Median fee paid to NED chairs is now Eur 265k (up from Eur 249k last year), 

- Median fees paid to NEDs is now Eur 81.8k (down from Eur 86k last year), but

- There remains material disparity between UK & Italian directors versus directors in other countries.

As more and more business is being done internationally, these trends are not likely to change anytime soon. However the growing globalisation of board representation can result in a unique set of cultural challenges.  For example, a first time director from another culture where shareholder rights or boardroom norms are different than the firm's domicile may find governance practices at odds from what they expect.  Check out this article here:

http://www.ft.com/cms/s/0/6796e54c-76e1-11e4-944f-00144feabdc0.html#axzz3MY4o1SYM