Transparency of Directors’ Attributes : Improving Proxy Materials in Europe

The composition of the board of directors is considered key for the success of the company. The current approach to compose this board is to provide shareholders and investors with individual information of the skills and experience of (candidate) directors. The information is insufficient to qualify whether the candidate will enrich the board. Shareholders and investors are also deprived of information which composition the board considers appropriate to achieve the corporate goals. These problems can be solved with an appropriate disclosure framework. The skills and experience of the current board must be provided as well as the qualities that the new candidates will provide to the board. An example how a disclosure framework for competent boards must look like, is presented. It provides incentives for active ownership. Shareholders can vote for a specific board structure which in their opinion can best achieve the corporate goals